Docoh
Loading...

Bank 2018-BNK10

Filed: 22 Jan 18, 7:00pm

 

  FREE WRITING PROSPECTUS
  FILED PURSUANT TO RULE 433
  REGISTRATION FILE NO.: 333-206677-22
   

 

(WELLS FARGO LOGO)  (BANK OF AMERICA LOGO)(MORGAN STANLEY LOGO) 

 

Free Writing Prospectus 

Structural and Collateral Term Sheet

 

$1,287,148,920

(Approximate Initial Pool Balance)

 

  

$1,071,471,000

(Approximate Aggregate Certificate Balance of Offered Certificates)

 

BANK 2018-BNK10

as Issuing Entity

 

Wells Fargo Commercial Mortgage Securities, Inc.

as Depositor

 

Morgan Stanley Mortgage Capital Holdings LLC

 Wells Fargo Bank, National Association

 Bank of America, National Association

 National Cooperative Bank, N.A.

 

as Sponsors and Mortgage Loan Sellers

 

 

Commercial Mortgage Pass-Through Certificates
Series 2018-BNK10
 

 

  

January 22, 2018

 

WELLS FARGO
SECURITIES

BofA MERRILL 

LYNCH 

MORGAN 

STANLEY

   

Co-Lead Manager and 

Joint Bookrunner 

Co-Lead Manager and 

Joint Bookrunner 

Co-Lead Manager and 

Joint Bookrunner 

   
 

Academy Securities 

Co-Manager 

 

 

 

 

 

STATEMENT REGARDING THIS FREE WRITING PROSPECTUS

 

The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (‘‘SEC’’) (SEC File No. 333-206677) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the depositor, any underwriter, or any dealer participating in the offering will arrange to send you the prospectus after filing if you request it by calling toll free 1-800-745-2063 (8 a.m. – 5 p.m. EST) or by emailing wfs.cmbs@wellsfargo.com.

 

Nothing in this document constitutes an offer of securities for sale in any jurisdiction where the offer or sale is not permitted. The information contained herein is preliminary as of the date hereof, supersedes any such information previously delivered to you and will be superseded by any such information subsequently delivered and ultimately by the final prospectus relating to the securities. These materials are subject to change, completion, supplement or amendment from time to time.

 

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

 

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

 

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

 

This free writing prospectus contains certain forward-looking statements. If and when included in this free writing prospectus, the words “expects”, “intends”, “anticipates”, “estimates” and analogous expressions and all statements that are not historical facts, including statements about our beliefs or expectations, are intended to identify forward-looking statements. Any forward-looking statements are made subject to risks and uncertainties which could cause actual results to differ materially from those stated. Those risks and uncertainties include, among other things, declines in general economic and business conditions, increased competition, changes in demographics, changes in political and social conditions, regulatory initiatives and changes in customer preferences, many of which are beyond our control and the control of any other person or entity related to this offering. The forward-looking statements made in this free writing prospectus are made as of the date stated on the cover. We have no obligation to update or revise any forward-looking statement.

 

Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including but not limited to Wells Fargo Securities, LLC, a member of NYSE, FINRA, NFA and SIPC, Wells Fargo Prime Services, LLC, a member of FINRA, NFA and SIPC, and Wells Fargo Bank, N.A. Wells Fargo Securities, LLC and Wells Fargo Prime Services, LLC are distinct entities from affiliated banks and thrifts.

 

IMPORTANT NOTICE REGARDING THE OFFERED CERTIFICATES

 

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

 

The underwriters described in these materials may from time to time perform investment banking services for, or solicit investment banking business from, any company named in these materials. The underwriters and/or their affiliates or respective employees may from time to time have a long or short position in any security or contract discussed in these materials.

 

The information contained herein supersedes any previous such information delivered to any prospective investor and will be superseded by information delivered to such prospective investor prior to the time of sale.

 

IMPORTANT NOTICE RELATING TO AUTOMATICALLY-GENERATED EMAIL DISCLAIMERS

 

Any legends, disclaimers or other notices that may appear at the bottom of any email communication to which this free writing prospectus is attached relating to (1) these materials not constituting an offer (or a solicitation of an offer), (2) any representation that these materials are accurate or complete and may not be updated or (3) these materials possibly being confidential, are not applicable to these materials and should be disregarded. Such legends, disclaimers or other notices have been automatically generated as a result of these materials having been sent via Bloomberg or another system.

 

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

 

2

 

 

BANK 2018-BNK10Certificate Structure

 

I.        Certificate Structure

 

ClassExpected Ratings
(DBRS/Fitch/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-1AAA(sf)/AAAsf/Aaa(sf)$31,307,00030.000%(7)2.7403/18  -  01/2341.9%17.5%
A-2AAA(sf)/AAAsf/Aaa(sf)$3,822,00030.000%(7)4.9201/23  -  01/2341.9%17.5%
A-3AAA(sf)/AAAsf/Aaa(sf)$4,623,00030.000%(7)6.9201/25  -  01/2541.9%17.5%
A-SBAAA(sf)/AAAsf/Aaa(sf)$53,452,00030.000%(7)7.3301/23  -  09/2741.9%17.5%
A-4AAA(sf)/AAAsf/Aaa(sf)$160,000,00030.000%(7)9.7709/27  -  12/2741.9%17.5%
A-5AAA(sf)/AAAsf/Aaa(sf)$602,750,00030.000%(7)9.8812/27  -  01/2841.9%17.5%
X-AAAA(sf)/AAAsf/Aaa(sf)$855,954,000(8)N/AVariable(9)N/AN/AN/AN/A
X-BA(high)(sf)/A-sf/NR$215,517,000(10)N/AVariable(11)N/AN/AN/AN/A
A-SAAA(sf)/AAAsf/Aa3(sf)$103,937,00021.500%(7)9.9201/28 - 01/2847.0%15.6%
BAA(high)(sf)/AA-sf/NR$55,025,00017.000%(7)9.9201/28 - 01/2849.6%14.7%
CA(sf)/A-sf/NR$56,555,00012.375%(7)10.0101/28 - 02/2852.4%13.9%
         
Non-Offered Certificates      
X-DBBB(sf)/BBB-sf/NR$62,668,000(12)N/AVariable(13)N/AN/AN/AN/A
X-EBB(sf)/BB-sf/NR$27,512,000(14)N/AVariable(15)N/AN/AN/AN/A
X-FB(sf)/NR/NR$19,871,000(16)N/AVariable(17)N/AN/AN/AN/A
X-GNR/NR/NR$41,269,474(18)N/AVariable(19)N/AN/AN/AN/A
DBBB(low)(sf)/BBB-sf/NR$62,668,0007.250%(7)10.0102/28 - 02/2855.5%13.2%
EBB(low)(sf)/BB-sf/NR$27,512,0005.000%(7)10.0102/28 - 02/2856.8%12.9%
FB(low)(sf)/NR/NR$19,871,0003.375%(7)10.0102/28 - 02/2857.8%12.6%
GNR/NR/NR$41,269,4740.000%(7)10.0102/28 - 02/2859.8%12.2%
         
Non-Offered Eligible Vertical Interest    
RR InterestNR/NR/NR$64,357,446.03N/AWAC(20)9.5703/18  -  02/28N/AN/A

 

Notes:
(1)The expected ratings presented are those of DBRS, Inc (“DBRS”), Fitch Ratings, Inc. (“Fitch”) 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 January 22, 2018 (the “Preliminary Prospectus”). DBRS, Fitch 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, Class X-B, Class X-D, Class X-E, Class X-F and Class X-G certificates (collectively referred to herein as Class X certificates) may vary depending upon the final pricing of the classes of principal balance certificates whose certificate balances comprise such notional amounts and, if as a result of such pricing the pass-through rate of any class of the Class X certificates would be equal to zero at all times, such class of certificates will not be issued on the closing date of this securitization.
  
(3)The approximate initial credit support with respect to the Class A-1, A-2, A-3, A-SB, A-4 and A-5 Certificates represents the approximate credit enhancement for the Class A-1, A-2, A-3, A-SB, A-4 and A-5 Certificates in the aggregate. The RR Interest only provides credit support to the limited extent that losses incurred on the underlying mortgage loans are allocated to it, on the one hand, and to the Offered Certificates and the Non-Offered Certificates, on the other hand,pro rata, in accordance with their respective Percentage Allocation Entitlements.
  
(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-2, A-3, A-SB, A-4 and A-5 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 senior to such Class of Certificates and the denominator of which is the total initial Certificate Balance of all of the Principal Balance Certificates (other than the RR Interest). The Certificate Principal to Value Ratio for each of the Class A-1, A-2, A-3, A-SB, A-4 and A-5 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 aggregate Certificate Balances of such Classes of Certificates and the denominator of which is the total initial Certificate Balance of all of the Principal Balance Certificates (other than the RR Interest).  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 STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

3

 

 

BANK 2018-BNK10Certificate Structure

 

(6)The Certificate Principal U/W NOI Debt Yield for each Class of Certificates (other than the Class A-1, A-2, A-3, A-SB, A-4 and A-5 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 (other than the RR Interest) and the denominator of which is the total initial Certificate Balance for such Class of Certificates and all Classes of Principal Balance Certificates senior to such Class of Certificates.  The Certificate Principal U/W NOI Debt Yield for each of the Class A-1, A-2, A-3, A-SB, A-4 and A-5 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 (other than the RR Interest) and the denominator of which is the total aggregate initial Certificate Balances for the Class A-1, A-2, A-3, A-SB, A-4 and A-5 Certificates. In any event, however, cash flow from each mortgaged property supports only the related mortgage loan and will not be available to support any other mortgage loan.
  
(7)The pass-through rates for the Class A-1, A-2, A-3, A-SB, A-4, A-5, A-S, B, C, D, E, F and G Certificates will be one of the following:  (i) a fixed rateper 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 rateper 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 rateper 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 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, A-2, A-3, A-SB, A-4 and A-5 Certificates outstanding from time to time. The Class X-A Certificates will not be entitled to distributions of principal.
  
(9)The pass-through rate for the Class X-A Certificates for any distribution date will be aper annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the weighted average of the pass-through rates on the Class A-1, A-2, A-3, A-SB, A-4 and A-5 Certificates for the related distribution date, weighted on the basis of their respective Certificate Balances outstanding immediately prior to that distribution date. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis.
  
(10)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, B and C Certificates outstanding from time to time. The Class X-B Certificates will not be entitled to distributions of principal.
  
(11)The pass-through rate for the Class X-B Certificates for any distribution date will be aper 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, B and C Certificates for the related distribution date, weighted on the basis of their respective Certificate Balances outstanding immediately prior to that distribution date. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis.
  
(12)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.
  
(13)The pass-through rate for the Class X-D Certificates for any distribution date will be aper 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.
  
(14)The Class X-E Certificates are notional amount certificates. The Notional Amount of the Class X-E Certificates will be equal to the Certificate Balance of the Class E Certificates outstanding from time to time. The Class X-E Certificates will not be entitled to distributions of principal.
  
(15)The pass-through rate for the Class X-E Certificates for any distribution date will be aper annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the pass-through rate on the Class E Certificates for the related distribution date. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis.
  
(16)The Class X-F Certificates are notional amount certificates. The Notional Amount of the Class X-F Certificates will be equal to the Certificate Balance of the Class F Certificates outstanding from time to time. The Class X-F Certificates will not be entitled to distributions of principal.
  
(17)The pass-through rate for the Class X-F Certificates for any distribution date will be aper annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the pass-through rate on the Class F Certificates for the related distribution date. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis.
  
(18)The Class X-G Certificates are notional amount certificates. The Notional Amount of the Class X-G Certificates will be equal to the Certificate Balance of the Class G Certificates outstanding from time to time. The Class X-G Certificates will not be entitled to distributions of principal.
  
(19)The pass-through rate for the Class X-G Certificates for any distribution date will be aper annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the pass-through rate on the Class G Certificates for the related distribution date. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis.
  
(20)The effective interest rate for the RR Interest will be a variable rateper annum (described in the table as “WAC”) equal to the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date. For purposes of calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis.
            

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

 

4

 

 

BANK 2018-BNK10Transaction Highlights

 

II.       Transaction Highlights

 

Mortgage Loan Sellers:

 

Mortgage Loan Seller Number of
Mortgage
Loans
 Number of
Mortgaged
Properties
 Aggregate Cut-off
Date Balance
  % of Initial
Pool
Balance
Morgan Stanley Mortgage Capital Holdings LLC  18   89   $551,420,924   42.8%
Wells Fargo Bank, National Association  22   23   390,979,745   30.4 
Bank of America, National Association  12   53   287,334,293   22.3 
National Cooperative Bank, N.A.  16   16   57,413,959   4.5 
Total  68   181   $1,287,148,920   100.0%

 

Loan Pool:

 

Initial Pool Balance:$1,287,148,920
Number of Mortgage Loans:68
Average Cut-off Date Balance per Mortgage Loan:$18,928,661
Number of Mortgaged Properties:181
Average Cut-off Date Balance per Mortgaged Property(1):$7,111,320
Weighted Average Mortgage Interest Rate:4.369%
Ten Largest Mortgage Loans as % of Initial Pool Balance:51.1%
Weighted Average Original Term to Maturity or ARD (months):120
Weighted Average Remaining Term to Maturity or ARD (months):118
Weighted Average Original Amortization Term (months)(2):354
Weighted Average Remaining Amortization Term (months)(2):353
Weighted Average Seasoning (months):1

 

(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):2.35x
Weighted Average U/W Net Operating Income Debt Yield(1):12.2%
Weighted Average Cut-off Date Loan-to-Value Ratio(1):59.8%
Weighted Average Balloon or ARD Loan-to-Value Ratio(1):55.2%
% of Mortgage Loans with Additional Subordinate Debt(2):27.2%
% of Mortgage Loans with Single Tenants(3):12.7%

 

(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 relatedpari passucompanion loan(s) but exclude any related subordinate companion loan(s) (unless otherwise stated). For mortgaged properties securing residential cooperative mortgage loans, the debt service coverage ratio and debt yield for each such mortgaged property are calculated using U/W Net Operating Income or U/W Net Cash Flow, as applicable, for the related residential cooperative property which is the projected net operating income or net cash flow, as applicable, reflected in the most recent appraisal obtained by or otherwise in the possession of the related mortgage loan seller as of the cut-off date, and the loan-to-value ratio is calculated based upon the appraised value of the residential cooperative property determined as if such residential cooperative property is operated as a residential cooperative, inclusive of the amount of the underlying debt encumbering such residential cooperative property. The debt service coverage ratio, debt yield and loan-to-value ratio information do not take into account any subordinate debt (whether or not secured by the related mortgaged property), that currently exists or is allowed under the terms of any mortgage loan. See “Description of the Mortgage Pool—Mortgage Pool Characteristics” in the Preliminary Prospectus and Annex A-1 to the Preliminary Prospectus.
(2)Thirteen (13) of the mortgage loans, each of which is secured by a residential cooperative property, currently have in place subordinate secured lines of credit to the related mortgage borrowers that permit future advances (such loans, collectively, the “Subordinate Coop LOCs”). The percentage figure expressed as “% of Mortgage Loans with Additional Subordinate Debt” is determined as a percentage of the initial pool balance and does not take into account any future subordinate debt (whether or not secured by the mortgaged property), if any, that may be permitted under the terms of any mortgage loan or the pooling and servicing agreement. See “Description of the Mortgage Pool—Additional Indebtedness—Other Unsecured Indebtedness” and “Description of the Mortgage Pool—Additional Debt Financing for Mortgage Loans Secured by Residential Cooperatives” in the Preliminary Prospectus.
(3)Excludes mortgage loans that are secured by multiple single tenant properties.

 

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

 

5

 

 

BANK 2018-BNK10Transaction Highlights

 

Loan Structural Features:

 

Amortization:Based on the Initial Pool Balance, 46.4% of the mortgage pool (44 mortgage loans) has scheduled amortization, as follows:

 

25.5% (32 mortgage loans) requires amortization during the entire loan term; and

 

21.0% (12 mortgage loans) provides for an interest-only period followed by an amortization period.

 

Interest-Only:Based on the Initial Pool Balance, 53.6% of the mortgage pool (24 mortgage loans) provides for interest-only payments during the entire loan term. The weighted average Cut-off Date Loan-to-Value Ratio and weighted average U/W Net Cash Flow DSCR for those mortgage loans are 58.2% and 2.47x, respectively.

 

Hard Lockboxes: Based on the Initial Pool Balance, 36.5% of the mortgage pool (14 mortgage loans) has hard lockboxes in place.

 

Reserves:The mortgage loans require amounts to be escrowed monthly as follows (excluding any mortgage loans with springing provisions):

 

Real Estate Taxes:  80.8% of the pool
Insurance:25.1% of the pool
Capital Replacements:  61.5% of the pool
TI/LC:  52.1% 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:

 

89.2% of the mortgage pool (47 mortgage loans) features a lockout period, then defeasance only until an open period;

 

6.2% of the mortgage pool (four mortgage loans) features a lockout period, then the greater of a prepayment premium or yield maintenance or defeasance until an open period;

 

4.5% of the mortgage pool (16 mortgage loans) features no lockout period, but requires the greater of a prepayment premium or yield maintenance, then a prepayment premium until an open period; and

 

0.1% of the mortgage pool (one mortgage loan) features a lockout period, then the greater of a prepayment premium or yield maintenance 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 STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

6

 

 

BANK 2018-BNK10Issue Characteristics

 

III.Issue Characteristics

 

Securities Offered: $1,071,471,000 approximate monthly pay, multi-class, commercial mortgage REMIC pass-through certificates consisting of eleven classes (Classes A-1, A-2, A-3, A-SB, A-4, A-5, A-S, 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: Morgan Stanley Mortgage Capital Holdings LLC (“MSMCH”), Wells Fargo Bank, National Association (“WFB”), Bank of America, National Association (“BANA”) and National Cooperative Bank, N.A. (“NCB”)
   
Joint Bookrunners and Co-Lead Managers: Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co. LLC
   
Co-Manager: Academy Securities, Inc.
   
Rating Agencies: DBRS, Inc., Fitch Ratings, Inc. and Moody’s Investors Service, Inc.
   
Master Servicers: Wells Fargo Bank, National Association and National Cooperative Bank, N.A.
   
Special Servicers: Torchlight Loan Services, LLC and National Cooperative Bank, N.A.
   
Certificate Administrator: Wells Fargo Bank, National Association
   
Trustee: Wilmington Trust, National Association
   
Operating Advisor: Pentalpha Surveillance LLC
   
Asset Representations Reviewer: Pentalpha Surveillance LLC
   
U.S. Credit Risk Retention: For a discussion of the manner in which the U.S. credit risk retention requirements are being addressed by Wells Fargo Bank, National Association, as the retaining sponsor, see “Credit Risk Retention” in the Preliminary Prospectus.
   
EU Risk Retention: None of the sponsors, the depositor or the issuing entity intends to retain a material net economic interest in the securitization constituted by the issue of the Offered Certificates in accordance with the EU risk retention and due diligence requirements or to take any other action which may be required by EEA-regulated investors for the purposes of their compliance with the EU risk retention and due diligence requirements or similar requirements.
   
Risk Retention Consultation Party: Wells Fargo Bank, National Association
   
Initial Majority Controlling Class Certificateholder: Torchlight Investors, LLC or another affiliate of Torchlight Loan Services, LLC.
   
Cut-off Date: The Cut-off Date with respect to each mortgage loan is the due date for the monthly debt service payment that is due in February 2018 (or, in the case of any mortgage loan that has its first due date in March 2018, the date that would have been its due date in February 2018 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 February 13, 2018.
   
Determination Dates: The 11th day of each month (or if that day is not a business day, the next succeeding business day), commencing in March 2018.
   
Distribution Dates: The fourth business day following the Determination Date in each month, commencing in March 2018.
   
Rated Final Distribution Date: The Distribution Date in February 2061.
   
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.

 

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

 

7

 

 

BANK 2018-BNK10Issue Characteristics

 

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., Markit Group Limited, Interactive Data Corp., BlackRock Financial Management, Inc., CMBS.com, Inc., Moody’s Analytics and Thomson Reuters Corporation.

 

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

 

8

 

 

BANK 2018-BNK10Characteristics of the Mortgage Pool

 

IV.Characteristics of the Mortgage Pool(1)

A.Ten Largest Mortgage Loans
Mortgage Loan SellerMortgage Loan NameCityStateNumber of Mortgage Loans / Mortgaged Properties Mortgage Loan  Cut-off Date Balance ($)% of Initial Pool Balance (%)Property TypeNumber of SF/ Rooms / UnitsCut-off Date Balance Per SF/ Room / UnitCut-off
Date LTV
Ratio (%)(2)
Balloon or ARD LTV Ratio (%)(2)U/W NCF DSCR (x)U/W NOI Debt Yield (%)
WFBApple Campus 3SunnyvaleCA1 / 1$94,000,000   7.3%Office882,657$38544.0%44.0%3.55x  12.2%
MSMCHLARP I PortfolioVariousVarious1 / 1890,000,0007.0Multifamily97991,93164.064.01.628.5
BANAIron Guard Storage PortfolioVariousVarious1 / 2286,000,0006.7Self Storage1,352,2396462.662.61.888.9
MSMCHWisconsin Hotel PortfolioVariousWI1 / 1174,600,0005.8Hospitality1,25559,44263.247.81.5112.9
MSMCHBrookwood Chase PortfolioVariousVarious1 / 965,000,0005.0Self Storage916,7337158.958.92.379.9
MSMCHExtra Space Self Storage PortfolioVariousVarious1 / 3660,000,0004.7Self Storage2,668,2187365.065.02.018.7
MSMCHBaybrook Lifestyle and Power CenterFriendswoodTX1 / 160,000,0004.7Retail636,84522058.158.12.8011.3
WFB2020 Southwest 4th AvenuePortlandOR1 / 144,250,0003.4Office226,81519567.967.92.339.6
BANARoedel Hotel PortfolioVariousVarious1 / 342,909,9553.3Hospitality349122,95173.060.31.7212.6
MSMCHMoffett Towers II - Building 2SunnyvaleCA1 / 141,250,0003.2Office362,56345547.042.42.0811.9
Top Three Total/Weighted Average  3 / 41$270,000,00021.0%   56.6%56.6%2.37x9.9%
Top Five Total/Weighted Average  5 / 61$409,600,00031.8%   58.2%55.4%2.22x10.5%
Top Ten Total/Weighted Average  10 / 103$658,009,95551.1%   59.7%56.8%2.22x10.5%
Non-Top Ten Total/Weighted Average  58 / 78$629,138,96548.9%   59.9%53.5%2.48x14.0%

 

(1)With respect to any mortgage loan that is part of a whole loan, Cut-off Date Balance Per SF/Room/Unit, loan-to-value ratio, debt service coverage ratio and debt yield calculations include the relatedpari passu companion loan(s) but exclude any related subordinate companion loan(s) (unless otherwise stated). With respect to each mortgage loan, debt service coverage ratio, debt yield and loan-to-value ratio information do not take into account 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.
(2)With respect to the Baybrook Lifestyle and Power Center mortgage loan, the Appraised Value represents the “As-Completed” Value which assumes the under construction improvements of the Life Time Fitness expansion are completed with Life Time Fitness taking occupancy. The appraiser’s “as-is” concluded value, excluding the Life Time Fitness parcel and lease, of $203,860,000 would result in a Cut-off Date LTV Ratio and LTV Ratio at and Maturity Date or ARD of approximately 58.9%, after accounting for the estimated pay-down based on certain assumptions of the Baybrook Lifestyle and Power Center Whole Loan, and payment of the prepayment consideration provided for in the loan documents, resulting from the $22,000,000 Life Time Fitness Reserve. The actual amount of the pay-down and the prepayment consideration may be different from the assumed amounts.

 

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

 

9

 

 

BANK 2018-BNK10Characteristics of the Mortgage Pool

 

B.Summary of the Whole Loans
Property NameMortgage Loan Seller in BANK 2018-BNK10Note(s)(1)Original BalanceHolder of NoteLead Servicer for Whole LoanMaster Servicer Under Lead Securitization Servicing AgreementSpecial Servicer Under Lead Securitization Servicing Agreement
Apple Campus 3WFBA-1$80,000,000WFBNoWells Fargo Bank, National  AssociationTorchlight Loan Services, LLC
A-2$30,000,000WFBNo
A-3$94,000,000BANK 2018-BNK10Yes
A-4$68,000,000Deutsche Bank AG,  New York Branch No
A-5$68,000,000Goldman Sachs Mortgage CompanyNo
Extra Space Self Storage PortfolioMSMCHA-1$92,000,000MSC 2017-HR2YesWells Fargo Bank, National AssociationLNR Partners, LLC
A-2$60,000,000BANK 2018-BNK10No
A-3$42,400,000MSBNANo
Baybrook Lifestyle and Power CenterMSMCHA-1$50,000,000MSC 2017-HR2YesWells Fargo Bank, National AssociationLNR Partners, LLC
A-2$40,000,000BANK 2018-BNK10No
A-3$30,000,000MSC 2017-HR2No
A-4$20,000,000BANK 2018-BNK10No
Moffett Towers II - Building 2MSMCHA-1$43,000,000Barclays Bank PLC(2)Yes(2)Wells Fargo Bank, National AssociationLNR Partners, LLC
A-2$40,750,000Barclays Bank PLCNo
A-3$40,000,000WFCM 2017-C42No
A-4$41,250,000BANK 2018-BNK10No
One Newark CenterMSMCHA-1$32,000,000MSBNANoWells Fargo Bank, National AssociationTorchlight Loan Services, LLC
A-2$20,000,000BANK 2018-BNK10Yes
A-3$14,580,000BANK 2018-BNK10No
Courtyard Los Angeles Sherman OaksWFBA-1$28,000,000BANK 2018-BNK10YesWells Fargo Bank, National  Association Torchlight Loan Services, LLC
A-2$27,000,000WFCM 2017-C42No
Warwick MallBANAA-1$30,000,000BANK 2017-BNK9YesWells Fargo Bank, National  Association Rialto Capital Advisors, LLC
A-2$27,500,000BANK 2018-BNK10No
A-3$17,500,000BANANo
Kirkwood PlazaMSMCHA-1$23,790,000BANK 2018-BNK10YesWells Fargo Bank, National AssociationTorchlight Loan Services, LLC
A-2$15,000,000MSC 2017-HR2No

 

(1)No assurance can be provided that any unsecuritized note will not be split further.

(2)The related whole loan is serviced under the WFCM 2017-C42 pooling and servicing agreement until the securitization of the related control note, after which the related whole loan will be serviced under the pooling and servicing agreement governing such securitization of the related control note. The master servicer and special servicer for such securitization will be identified in a notice, report or statement to holders of the BANK 2018-BNK10 certificates after the closing of such securitization

 

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

 

10

 

 

BANK 2018-BNK10Characteristics of the Mortgage Pool

 

C.Mortgage Loans with Additional Secured and Mezzanine Financing(1)
Loan No.Mortgage
Loan
Seller
Mortgage Loan NameMortgage Loan Cut-off Date Balance ($)% of Initial Pool Balance (%)Subordinate Debt Cut-off Date Balance ($)Mezzanine Debt Cut-off Date Balance ($)Total Debt Interest Rate (%)(2)Mortgage Loan U/W NCF DSCR (x)(3)Total Debt U/W NCF DSCR (x)Mortgage Loan Cut-off Date U/W NOI Debt Yield (%)(3)Total Debt Cut-off Date U/W NOI Debt Yield (%)Mortgage Loan Cut-off Date LTV Ratio (%)(3)Total Debt Cut-off Date LTV Ratio (%)
1WFBApple Campus 3$94,000,0007.3%NAP$235,000,0004.160%3.55x1.70x  12.2%  7.2%44.0%74.3%
2MSMCHLARP I Portfolio90,000,0007.0NAP18,000,0005.4201.62  1.248.57.164.076.9
3BANAIron Guard Storage Portfolio86,000,0006.7NAP12,150,0005.3011.88  1.428.97.862.6(4)71.1(4)
10MSMCHMoffett Towers II - Building 241,250,0003.2NAP105,000,0004.5062.08  1.2311.97.347.076.9
Total/Weighted Average$311,250,00024.2% $370,150,0004.890%2.34x1.43x  10.2%  7.4%55.3%74.5%

 

(1)In addition, thirteen (13) of the mortgage loans, each of which is secured by a residential cooperative property, currently have in place Subordinate Coop LOCs, that permit future advances. See “Description of the Mortgage Pool—Additional Indebtedness—Other Unsecured Indebtedness” and “Description of the Mortgage Pool—Additional Debt Financing for Mortgage Loans Secured by Residential Cooperatives” in the Preliminary Prospectus.

(2)Total Debt Interest Rate for any specified mortgage loan reflects the weighted average of the interest rates on the respective components of the total debt.

(3)With respect to any loan that is part of a whole loan, the loan-to-value ratio, debt service coverage ratio and debt yield calculations include the relatedpari passu companion loan(s).

(4)Calculated based on an “as portfolio” appraised value, which includes a $15,650,000 portfolio premium over the aggregate “as is” appraised values of the mortgaged properties. The Mortgage Loan Cut-off Date LTV Ratio and Total Debt Cut-off Date LTV Ratio excluding such portfolio premium are 70.6% and 80.6%, respectively.

 

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

 

11

 

 

BANK 2018-BNK10Characteristics of the Mortgage Pool

 

D.Previous Securitization History(1)

 

Loan
No.
Mortgage Loan SellerMortgage
 Loan or Mortgaged
Property Name
CityStateProperty
Type
Mortgage Loan
or Mortgaged Property Cut-off Date Balance ($)
% of
Initial Pool Balance (%)
Previous Securitization
2.01MSMCHBlackwoodChicagoILMultifamily$17,000,0001.3%FREMF 2014-K714
2.02MSMCH5500 CornellChicagoILMultifamily12,333,3331.0GSMS 2011-GC5
2.03MSMCHClyde ManorKansas CityMOMultifamily8,333,3330.6GSMS 2011-GC3
2.04MSMCHWoodlawn TerraceChicagoILMultifamily6,875,0000.5FNA 2014-M1
2.06MSMCHMaple CourtChicagoILMultifamily5,416,6670.4FNA 2011-M5
2.07MSMCHEllis StreetChicagoILMultifamily5,416,6670.4GSMS 2012-GC6
2.08MSMCHDrexel GrandChicagoILMultifamily5,041,6670.4FNA 2013-M12
2.10MSMCHKenwood CourtChicagoILMultifamily4,541,6670.4CMLT 2008-LS1
3.01BANACamasCamasWASelf Storage8,255,0000.6CGCMT 2014-GC25
3.02BANAWebsterWebsterTXSelf Storage6,890,0000.5CGCMT 2014-GC25
3.03BANAGum BranchJacksonvilleNCSelf Storage5,447,0000.4CGCMT 2014-GC25
3.04BANA6th AvenueBirminghamALSelf Storage4,548,0000.4JPMBB 2015-C28
3.05BANAKatyKatyTXSelf Storage4,463,0000.3CGCMT 2014-GC25
3.06BANALa PorteLa PorteTXSelf Storage4,435,0000.3JPMBB 2015-C28
3.08BANAPrater WaySparksNVSelf Storage4,060,0000.3CGCMT 2014-GC25
3.09BANAShurlingMaconGASelf Storage4,032,0000.3CGCMT 2014-GC25
3.10BANAAdamsvilleBirminghamALSelf Storage3,975,0000.3JPMBB 2015-C28
3.11BANATroyMontgomeryALSelf Storage3,961,0000.3CGCMT 2015-GC35
3.12BANAConroeConroeTXSelf Storage3,947,0000.3CGCMT 2015-GC35
3.13BANADel ValleDel ValleTXSelf Storage3,763,0000.3CGCMT 2015-GC35
3.14BANATomballTomballTXSelf Storage3,636,0000.3CGCMT 2015-GC35
3.15BANACanyon LakeCanyon LakeTXSelf Storage3,325,0000.3CGCMT 2015-GC35
3.16BANARiversideDanvilleVASelf Storage3,049,0000.2CGCMT 2014-GC25
3.17BANABertramAugustaGASelf Storage2,653,0000.2CGCMT 2014-GC25
3.18BANACenterJacksonvilleNCSelf Storage2,617,0000.2CGCMT 2014-GC25
3.19BANAKeyMaconGASelf Storage2,476,0000.2CGCMT 2014-GC25
3.20BANAWyldsAugustaGASelf Storage2,440,0000.2CGCMT 2014-GC25
3.21BANAMarineJacksonvilleNCSelf Storage2,108,0000.2CGCMT 2014-GC25
3.22BANADonnaDonnaTXSelf Storage1,676,0000.1CGCMT 2015-GC35
4.01MSMCHHoliday Inn – Madison WestMadisonWIHospitality13,550,0001.1JPMCC 2008-C2

 

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

 

12

 

 

BANK 2018-BNK10Characteristics of the Mortgage Pool

 

Loan
No.
Mortgage Loan SellerMortgage
 Loan or Mortgaged
Property Name
CityStateProperty
Type
Mortgage Loan
or Mortgaged Property Cut-off Date Balance ($)
% of
Initial Pool Balance (%)
Previous Securitization
4.03MSMCHHoliday Inn – Fond Du LacFond Du LacWIHospitality8,350,0000.6JPMCC 2008-C2
4.05MSMCHBaymont Inn – MadisonMadisonWIHospitality6,020,0000.5JPMCC 2008-C2
4.06MSMCHComfort Inn & Suites – Appleton AirportGrand ChuteWIHospitality5,900,0000.5JPMCC 2008-C2
4.07MSMCHHoliday Inn Express – OshkoshOshkoshWIHospitality5,876,0000.5JPMCC 2008-C2
4.08MSMCHComfort Inn & Suites – Milwaukee AirportOak CreekWIHospitality5,820,0000.5JPMCC 2008-C2
4.09MSMCHComfort Inn & Suites –Madison WestMadisonWIHospitality5,067,0000.4JPMCC 2008-C2
4.10MSMCHHoliday Inn Express –Milwaukee AirportMilwaukeeWIHospitality4,710,0000.4JPMCC 2008-C2
4.11MSMCH

Comfort Inn & Suites –

Fond Du Lac 

Fond Du LacWIHospitality2,646,0000.2JPMCC 2008-C2
9.01BANAHilton Garden Inn – ManchesterManchesterNHHospitality20,725,2161.6UBSBB 2012-C3
9.02BANAHilton Garden Inn – FishkillFishkillNYHospitality12,041,0590.9UBSBB 2012-C3
9.03BANAHoliday Inn Express – AuburnAuburnMAHospitality10,143,6800.8UBSBB 2012-C3
11WFBOne Kennedy SquareDetroitMIOffice36,400,0002.8JPMCC 2012-C8
12MSMCHOne Newark CenterNewarkNJOffice34,580,0002.7BSCMS 2006-PWR14
14WFBCourtyard Los Angeles Sherman OaksSherman OaksCAHospitality28,000,0002.2BACM 2007-5
16BANA11311 McCormick RoadHunt ValleyMDOffice24,375,0001.9JPMCC 2012-LC9
20MSMCHWoodbridge CommonsWoodbridgeNJRetail22,100,0001.7VNO 2010-VNO
37.01BANAValkillHyde ParkNYManufactured Housing Community4,965,5170.4LBUBS 2002-C2
37.02BANAMoorgateEast FishkillNYManufactured Housing Community2,408,2760.2LBUBS 2002-C2
52WFBEsplanade Mini StorageOxnardCASelf Storage4,000,0000.3BACM 2008-1
57WFB6340 Middlebelt RoadRomulusMIIndustrial3,215,0000.2GCCFC 2005 - GG5
 Total    $407,607,08231.7% 

 

(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.

 

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

 

13

 

 

BANK 2018-BNK10Characteristics of the Mortgage Pool

 

E.Mortgage Loans with Scheduled Balloon Payments and Related Classes

 

Class A-2(1)
Loan No.Mortgage Loan SellerMortgage Loan NameStateProperty TypeMortgage Loan Cut-off Date Balance ($)% of Initial Pool Balance (%)Mortgage Loan Balance at Maturity ($)% of Class A-2 Certificate Principal Balance (%)(2)SF

Loan 

Per
SF ($) 

U/W NCF DSCR
(x)
U/W NOI Debt Yield (%)Cut-off Date LTV Ratio (%)

Balloon

LTV Ratio (%) 

Rem. IO Period (mos.)Rem. Term to Maturity (mos.)
57WFB6340 Middlebelt RoadMIIndustrial$3,215,0000.2%$3,215,00084.1%77,508$411.75x9.6%64.9%64.9%5959
Total/Weighted Average  $3,215,0000.2%$3,215,000 84.1%  1.75x9.6%64.9%64.9%5959

 

(1)The table above presents the mortgage loan whose balloon payments would be applied to pay down the principal balance of the Class A-2 Certificates, assuming a 0% CPR and applying the “Structuring Assumptions” described in the Preliminary Prospectus, including the assumptions that (i) none of the mortgage loans in the pool experience prepayments prior to maturity (or, in the case of an ARD loan, its anticipated repayment date), defaults or losses; (ii) there are no extensions of maturity dates of any mortgage loans in the pool; and (iii) each mortgage loan in the pool is paid in full on its stated maturity date (or, in the case of an ARD loan, its anticipated repayment date). Each Class of Certificates evidences undivided ownership interests in the entire pool of mortgage loans. 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 any mortgage loan. See Annex A-1 to the Preliminary Prospectus.

(2)Reflects the percentage equal to the Balloon Balance divided by the initial Class A-2 Certificate Balance.

 

Class A-3(1)
Loan No.Mortgage Loan SellerMortgage Loan NameStateProperty TypeMortgage Loan Cut-off Date Balance ($)% of Initial Pool Balance (%)Mortgage Loan Balance at Maturity ($)% of Class A-3 Certificate Principal Balance (%)(2)SF

Loan 

Per
SF ($) 

U/W NCF DSCR
(x)
U/W NOI Debt Yield (%)Cut-off Date LTV Ratio (%)

Balloon 

LTV Ratio (%) 

Rem. IO Period (mos.)Rem. Term to Maturity (mos.)
48WFBAmerican Mini Storage Colorado SpringsCOSelf Storage$5,200,0000.4%$4,865,865 105.3%77,720$671.68x10.6%56.2%52.6%3583
Total/Weighted Average  $5,200,0000.4%$4,865,865 105.3%  1.68x10.6%56.2%52.6%3583

  

(1)The table above presents the mortgage loan(s) whose balloon payments would be applied to pay down the principal balance of the Class A-3 Certificates, assuming a 0% CPR and applying the “Structuring Assumptions” described in the Preliminary Prospectus, including the assumptions that (i) none of the mortgage loans in the pool experience prepayments prior to maturity (or, in the case of an ARD loan, its anticipated repayment date), defaults or losses; (ii) there are no extensions of maturity dates of any mortgage loans in the pool; and (iii) each mortgage loan in the pool is paid in full on its stated maturity date (or, in the case of an ARD loan, its anticipated repayment date). Each Class of Certificates evidences undivided ownership interests in the entire pool of mortgage loans. 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 any mortgage loan. See Annex A-1 to the Preliminary Prospectus.

(2)Reflects the percentage equal to the Balloon Balance divided by the initial Class A-3 Certificate Balance.

 

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

 

14

 

  

BANK 2018-BNK10Characteristics of the Mortgage Pool

 

F.Property Type Distribution(1)

 

(PIE CHART) 

   

Property TypeNumber of Mortgaged PropertiesAggregate
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
(%)
Office11$321,062,77124.9%58.5%54.0%2.36x11.3%10.6%3.967%
Suburban7203,688,78715.852.448.42.6411.711.23.806
CBD3115,230,0009.069.263.81.8810.69.54.250
Medical12,143,9840.261.361.32.189.59.04.088
Retail31285,173,68822.261.357.62.0310.49.84.306
Anchored7109,193,8088.565.159.01.749.99.24.515
Lifestyle Center160,000,0004.758.158.12.8011.310.73.770
Single Tenant1750,497,3103.962.762.72.029.18.64.245
Shadow Anchored328,407,5702.263.355.81.5810.09.64.504
Regional Mall127,500,0002.147.543.42.0113.312.24.445
Unanchored29,575,0000.764.358.41.8410.59.84.607
Self Storage75272,027,96421.161.261.12.089.39.24.333
Self Storage75272,027,96421.161.261.12.089.39.24.333
Hospitality19190,548,45014.866.152.81.7113.011.45.028
Limited Service1390,871,9017.164.850.11.6513.211.55.188
Full Service349,900,0003.963.652.41.6412.210.74.850
Select Service349,776,5493.970.758.11.8813.412.04.914
Multifamily35152,646,40311.947.645.94.5422.722.24.539
Garden1460,503,2784.764.663.01.618.78.44.965
Cooperative1657,413,9594.519.816.99.4046.145.33.808
Mid Rise417,729,1661.464.064.01.628.58.25.004
High Rise117,000,0001.364.064.01.628.58.25.004
Industrial648,689,6453.865.657.31.5610.19.14.465
Flex545,474,6453.565.656.81.5410.19.14.428
Warehouse13,215,0000.264.964.91.759.68.94.990
Manufactured Housing Community39,000,0000.762.142.81.5210.610.54.377
Manufactured Housing Community39,000,0000.762.142.81.5210.610.54.377
Other18,000,0000.657.652.71.539.69.34.510
Leased Fee18,000,0000.657.652.71.539.69.34.510
Total/Weighted Average:181$1,287,148,920100.0%59.8%55.2%2.35x12.2%11.5%4.369%
            
(1)Because this table presents information relating to the mortgaged properties and not the mortgage loans, the information for mortgage loans secured by more than one mortgaged property is based on allocated amounts (allocating the principal balance of the mortgage loan to each of those properties according to the relative appraised values of the mortgaged properties or the allocated loan amounts or property-specific release prices set forth in the related mortgage loan documents or such other allocation as the related mortgage loan seller deemed appropriate). For mortgaged properties securing residential cooperative mortgage loans, the debt service coverage ratio and debt yield for each such mortgaged property is calculated using U/W Net Operating Income or U/W Net Cash Flow, as applicable, for the related residential cooperative property which is the projected net operating income or net cash flow, as applicable, reflected in the most recent appraisal obtained by or otherwise in the possession of the related mortgage loan seller as of the cut-off date and the loan-to-value ratio, is calculated based upon the appraised value of the residential cooperative property determined as if such residential cooperative property is operated as a residential cooperative, inclusive of the amount of the underlying debt encumbering such residential cooperative property. With respect to any mortgage loan that is part of a whole loan, the loan-to-value ratio, debt service coverage ratio and debt yield calculations include the relatedpari passu companion loan(s) but exclude any related subordinate companion loan(s) (unless otherwise stated). With respect to each mortgage loan, debt service coverage ratio, debt yield and loan-to-value ratio information do not take into account any subordinate debt (whether or not secured by the related mortgaged property) that currently exists or is allowed under the terms of such mortgage loan. See Annex A-1 to the Preliminary Prospectus.

 

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

 

15

 

 

BANK 2018-BNK10Characteristics of the Mortgage Pool

 

G.Geographic Distribution(1)(2)

 

(MAP) 

 

LocationNumber 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 (%)
California16$261,722,05120.3%53.0%50.4%2.50x11.2%10.7%3.917%
Northern7185,729,08814.449.346.92.7411.611.23.701
Southern975,992,9635.962.059.11.9210.19.64.445
Texas18118,453,9639.260.359.32.3510.39.84.138
Illinois1991,061,0647.164.563.21.688.88.44.820
New Jersey977,872,6576.162.457.02.0111.710.54.224
Wisconsin1174,600,0005.863.247.81.5112.911.05.330
Louisiana1274,295,7075.859.359.32.359.89.74.077
New York2173,780,8795.732.827.57.4236.936.14.098
Other(3)75515,362,60040.065.459.41.8310.69.94.537
Total/Weighted Average181$1,287,148,920100.0%59.8%55.2%2.35x12.2%11.5%4.369%

 

(1)The mortgaged properties are located in 33 states.

(2)Because this table presents information relating to the mortgaged properties and not the mortgage loans, the information for mortgage loans secured by more than one mortgaged property is based on allocated amounts (allocating the principal balance of the mortgage loan to each of those properties according to the relative appraised values of the mortgaged properties or the allocated loan amounts or property-specific release prices set forth in the related mortgage loan documents or such other allocation as the related mortgage loan seller deemed appropriate). For mortgaged properties securing residential cooperative mortgage loans, the debt service coverage ratio and debt yield for each such mortgaged property is calculated using U/W Net Operating Income or U/W Net Cash Flow, as applicable, for the related residential cooperative property, which is the projected net operating income or net cash flow, as applicable, reflected in the most recent appraisal obtained by or otherwise in the possession of the related mortgage loan seller as of the cut-off date, and the loan-to-value ratio, is calculated based upon the appraised value of the residential cooperative property determined as if such residential cooperative property is operated as a residential cooperative, inclusive of the amount of the underlying debt encumbering such residential cooperative property. With respect to any mortgage loan that is part of a whole loan, the loan-to-value ratio, debt service coverage ratio and debt yield calculations include the relatedpari passu companion loan(s) but exclude any related subordinate companion loan(s) (unless otherwise stated). With respect to each mortgage loan, debt service coverage ratio, debt yield and loan-to-value ratio information do not take into account any subordinate debt (whether or not secured by the related mortgaged property) that currently exists or is allowed under the terms of such mortgage loan. See Annex A-1 to the Preliminary Prospectus.

(3)Includes 26 other states.

 

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

 

16

 

 

BANK 2018-BNK10Characteristics of the Mortgage Pool

 

H.       Characteristics of the Mortgage Pool(1)

 

CUT-OFF DATE BALANCE
Range of Cut-off Date
Balances ($)
Number of
Mortgage
Loans
Aggregate Cut-
off Date Balance
% of Initial
Pool Balance
1,100,000 - 2,000,0009$14,863,2541.2%
2,000,001 - 3,000,00012,596,3470.2
3,000,001 - 4,000,000724,908,8781.9
4,000,001 - 5,000,000312,995,0701.0
5,000,001 - 6,000,000527,119,7502.1
6,000,001 - 7,000,000426,453,6292.1
7,000,001 - 8,000,00017,500,0000.6
8,000,001 - 9,000,000217,389,1741.4
9,000,001 - 10,000,000329,680,3872.3
10,000,001 - 15,000,000781,290,7226.3
15,000,001 - 20,000,000586,988,5216.8
20,000,001 - 30,000,0008192,931,94015.0
30,000,001 - 50,000,0006232,831,24918.1
50,000,001 - 70,000,0003185,000,00014.4
70,000,001 - 80,000,000174,600,0005.8
80,000,001 - 90,000,0002176,000,00013.7
90,000,001 - 94,000,000194,000,0007.3
Total:68$1,287,148,920100.0%
Average:$18,928,661  

 

UNDERWRITTEN NOI DEBT SERVICE COVERAGE RATIO
Range of U/W NOI
DSCRs (x)
Number of
Mortgage
Loans
Aggregate Cut-
off Date Balance
% of Initial
Pool Balance
1.44 - 1.501$23,703,2551.8%
1.51 - 1.60673,637,6585.7
1.61 - 1.706133,485,22410.4
1.71 - 1.805117,577,6789.1
1.81 - 1.908122,149,1749.5
1.91 - 2.006204,239,95515.9
2.01 - 2.5016392,442,01830.5
2.51 - 3.00264,000,0005.0
3.01 - 3.5014,500,0000.3
3.51 - 4.003107,631,3198.4
4.01 - 60.621443,782,6403.4
Total:68$1,287,148,920100.0%
Weighted Average:2.47x  

 

UNDERWRITTEN NCF DEBT SERVICE COVERAGE RATIO
Range of U/W NCF
DSCRs (x)
Number of
Mortgage
Loans
Aggregate Cut-
off Date Balance
% of Initial
Pool Balance
1.37 - 1.401$23,703,2551.8%
1.41 - 1.50660,999,9184.7
1.51 - 1.7522483,739,77137.6
1.76 - 2.004110,340,1018.6
2.01 - 2.2511253,901,91619.7
2.26 - 2.755138,550,00010.8
2.76 - 3.00160,000,0004.7
3.01 - 59.8518155,913,95912.1
Total:68$1,287,148,920100.0%
Weighted Average:2.35x  
LOAN PURPOSE
Loan PurposeNumber of
Mortgage
Loans
Aggregate Cut-
off Date Balance
% of Initial
Pool Balance
Refinance48$847,549,21765.8%
Acquisition18289,599,70322.5
Recapitalization2150,000,00011.7
Total:68$1,287,148,920100.0%

 

MORTGAGE RATE
Range of Mortgage Rates
(%)
Number of
Mortgage
Loans
Aggregate Cut-
off Date Balance
% of Initial
Pool Balance
3.365 - 3.5001$94,000,0007.3%
3.501 - 3.750558,283,7204.5
3.751 - 4.00014144,630,23811.2
4.001 - 4.2508243,460,46818.9
4.251 - 4.50014196,315,64515.3
4.501 - 4.75017298,288,89923.2
4.751 - 5.000321,669,8161.7
5.001 - 5.2503138,929,95510.8
5.251 - 5.330391,570,1787.1
Total:68$1,287,148,920100.0%
Weighted Average:4.369%  

 

UNDERWRITTEN NOI DEBT YIELD
Range of U/W NOI
Debt Yields (%)
Number of
Mortgage
Loans
Aggregate Cut-
off Date Balance
% of Initial
Pool Balance
8.4 - 9.08$313,447,15724.4%
9.1 - 10.012272,580,04921.2
10.1 - 11.01089,931,8987.0
11.1 - 12.010249,875,00019.4
12.1 - 13.05227,730,13417.7
13.1 - 14.0336,852,4072.9
14.1 - 15.0334,818,3172.7
15.1 - 16.014,500,0000.3
16.1 - 297.01657,413,9594.5
Total:68$1,287,148,920100.0%
Weighted Average:12.2%  

 

UNDERWRITTEN NCF DEBT YIELD
Range of U/W NCF
Debt Yields (%)
Number of
Mortgage
Loans
Aggregate Cut-
off Date Balance
% of Initial
Pool Balance
7.8 - 8.02$29,193,9022.3%
8.1 - 9.012418,663,23432.5
9.1 - 10.012231,289,06018.0
10.1 - 11.014282,037,90821.9
11.1 - 12.05102,370,2358.0
12.1 - 13.04133,612,30610.4
13.1 - 14.0228,068,3172.2
14.1 - 15.014,500,0000.3
15.1 - 293.31657,413,9594.5
Total:68$1,287,148,920100.0%
Weighted Average:11.5%  


(1)    For mortgaged properties securing residential cooperative mortgage loans, the debt service coverage ratio and debt yield for each such mortgaged property is calculated using U/W Net Operating Income or U/W Net Cash Flow, as applicable, for the related residential cooperative property, which is the projected net operating income or net cash flow, as applicable, reflected in the most recent appraisal obtained by or otherwise in the possession of the related mortgage loan seller as of the cut-off date, and the loan-to-value ratio is calculated based upon the appraised value of the residential cooperative property determined as if such residential cooperative property is operated as a residential cooperative, inclusive of the amount of the underlying debt encumbering such residential cooperative property. With respect to any mortgage loan that is part of a whole loan, the loan-to-value ratio, debt service coverage ratio and debt yield calculations include the related pari passu companion loan(s) but exclude any related subordinate companion loan(s) (unless otherwise stated). With respect to each mortgage loan, debt service coverage ratio, debt yield and loan-to-value ratio information do not take into account any subordinate debt (whether or not secured by the related mortgaged property), that currently exists or is allowed under the terms of such mortgage loan. See Annex A-1 to the Preliminary Prospectus. Prepayment provisions for each mortgage loan reflects the entire life of the loan (from origination to maturity).

 

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

 

17

 

 

BANK 2018-BNK10Characteristics of the Mortgage Pool

 

ORIGINAL TERM TO MATURITY OR ARD 
Original Terms to
Maturity or ARD (months)
Number of
Mortgage
Loans
Aggregate Cut-
off Date Balance
% of Initial
Pool Balance
601$3,215,0000.2%
8415,200,0000.4
120661,278,733,92099.3
Total:68$1,287,148,920100.0%
Weighted Average:120 months  
     
REMAINING TERM TO MATURITY OR ARD
Range of Remaining Terms
to Maturity or ARD (months)
Number of
Mortgage
Loans
Aggregate Cut-
off Date Balance
% of Initial
Pool Balance
591$3,215,0000.2%
8315,200,0000.4
115 - 120661,278,733,92099.3
Total:68$1,287,148,920100.0%
Weighted Average:118 months  

 

ORIGINAL AMORTIZATION TERM(2)
Range of Original
Amortization Terms
(months)
Number of
Mortgage
Loans
Aggregate Cut-
off Date Balance
% of Initial
Pool Balance
Non-Amortizing24$689,336,29453.6%
276 - 3005105,802,6238.2
36033466,756,72236.3
480625,253,2812.0
Total:68$1,287,148,920100.0%
Weighted Average(3):354 months  

 

REMAINING AMORTIZATION TERM(4)
Range of Remaining
Amortization Terms

(months)
Number of
Mortgage
Loans
Aggregate Cut-
off Date Balance
% of Initial
Pool Balance
Non-Amortizing24$689,336,29453.6%
276 - 3005105,802,6238.2
357 - 36033466,756,72236.3
477 - 480625,253,2812.0
Total:68$1,287,148,920100.0%
Weighted Average(3):353 months  

 

LOCKBOXES
Type of LockboxNumber of
Mortgage
Loans
Aggregate Cut-
off Date Balance
% of Initial
Pool Balance
Springing29$714,929,71255.5%
Hard/Springing Cash Management10311,569,93524.2
Hard/Upfront Cash Management4157,665,00012.2
None25102,984,2748.0
Total:68$1,287,148,920100.0%

 

PREPAYMENT PROVISION SUMMARY
Prepayment ProvisionNumber of
Mortgage
Loans
Aggregate Cut-
off Date Balance
% of Initial
Pool Balance
Lockout / Defeasance / Open47$1,148,272,93089.2%
Lockout / GRTR 1% or YM or Defeasance / Open479,664,0696.2
GRTR 1% or YM / 1% / Open1657,413,9594.5
Lockout / GRTR 1% or YM / Open11,797,9640.1
Total:68$1,287,148,920100.0%

(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.

(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.


CUT-OFF DATE LOAN-TO-VALUE RATIO
Range of Cut-off Date LTV
Ratios (%)
Number of
Mortgage
Loans
Aggregate Cut-
off Date Balance
% of Initial
Pool Balance
3.6 - 20.011$30,689,0882.4%
20.1 - 30.0313,093,5521.0
30.1 - 40.028,194,8340.6
40.1 - 45.0194,000,0007.3
45.1 - 50.0690,484,4487.0
50.1 - 55.0226,350,0002.0
55.1 - 60.08195,912,30615.2
60.1 - 65.014455,470,29835.4
65.1 - 70.011223,422,93517.4
70.1 - 74.910149,531,46011.6
Total:68$1,287,148,920100.0%
Weighted Average:59.8%  

 

BALLOON OR ARD LOAN-TO-VALUE RATIO
Range of Balloon or ARD LTV Ratios (%)Number of
Mortgage
Loans
Aggregate Cut-
off Date Balance
% of Initial
Pool Balance
3.1 - 20.013$36,782,6402.9%
20.1 - 30.0210,694,8340.8
30.1 - 35.014,500,0000.3
35.1 - 40.0215,936,4841.2
40.1 - 45.06180,297,96414.0
45.1 - 50.0598,172,5867.6
50.1 - 55.0793,792,7187.3
55.1 - 60.012263,245,63020.5
60.1 - 65.017509,326,06539.6
65.1 – 67.9374,400,0005.8
Total:68$1,287,148,920100.0%
Weighted Average:55.2%  

 

AMORTIZATION TYPE
Type of AmortizationNumber of
Mortgage
Loans
Aggregate Cut-
off Date Balance
% of Initial
Pool Balance
Interest-only, Balloon23$595,336,29446.3%
Amortizing Balloon32327,625,12625.5
Interest-only, Amortizing Balloon12270,187,50021.0
Interest-only, ARD194,000,0007.3
Total:68$1,287,148,920100.0%

 

ORIGINAL TERM OF INTEREST-ONLY PERIOD FOR PARTIAL IO LOANS

IO Terms (months)Number of
Mortgage
Loans
Aggregate Cut-
off Date Balance
% of Initial
Pool Balance
241$5,325,0000.4%
366138,717,50010.8
605126,145,0009.8
Total:12$270,187,50021.0%
Weighted Average:47 months  

 

SEASONING

Seasoning (months)Number of
Mortgage
Loans
Aggregate Cut-
off Date Balance
% of Initial
Pool Balance
       010$249,970,00019.4%
       131509,345,23539.6
       220435,995,62333.9
       3550,038,0623.9
       4127,500,0002.1
       5114,300,0001.1
Total:68$1,287,148,920100.0%
Weighted Average:1 month  


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

 

18

 

 

BANK 2018-BNK10Certain Terms and Conditions

 

V.       Certain Terms and Conditions

 

Allocation Between the
RR Interest and the
Non-Retained Certificates:
Amounts available for distributions to the holders of the Certificates (including the RR Interest) will be allocated between amounts available for distribution to the holders of the RR Interest, on the one hand, and to all other Certificates, referred to herein as the “Non-Retained Certificates”, on the other hand.  The portion of such amount allocable to (a) the RR Interest will at all times be the product of such amount multiplied by 5% and (b) the Non-Retained Certificates will at all times be the product of such amount multiplied by 95% (each, the respective “Percentage Allocation Entitlement”).
Interest Entitlements:The interest entitlement of each Class of Non-Retained Certificates 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 for such Distribution Date as described below.  If prepayment interest shortfalls arise from voluntary prepayments (without the applicable Master Servicer consent) on particular non-specially serviced loans during any collection period, the applicable Master Servicer is required to make a compensating interest payment to offset those shortfalls, generally up to an amount equal to the portion of its master servicing fees that accrue at 0.25 basis pointsper annum.  The remaining amount of prepayment interest shortfalls will be allocated between the RR Interest, on one hand, and the Non-Retained Certificates, on the other hand, in accordance with their respective Percentage Allocation Entitlements.  The prepayment interest shortfalls allocated to the Non-Retained Certificates (other than the Class V and Class R Certificates) will be allocated among such Classes of Certificates entitled to interest, on apro ratabasis, based on their respective amounts of accrued interest for the related Distribution Date, to reduce the interest entitlement on each such Class of Certificates.  If a Class receives less than the entirety of its interest entitlement on any Distribution Date, then the shortfall (excluding any shortfall due to prepayment interest shortfalls), together with interest thereon, will be added to its interest entitlement for the next succeeding Distribution Date.
Aggregate Principal
Distribution Amount:
The Aggregate 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 applicable 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.  The Non-Retained Certificates will be entitled to the portion of the Aggregate Principal Distribution Amount equal to their Percentage Allocation Entitlement, which is referred to herein as the “Principal Distribution Amount”.
Subordination, Allocation
of Losses and Certain Expenses
The chart below describes the manner in which the payment rights of certain Classes of Non-Retained Certificates will be senior or subordinate, as the case may be, to the payment rights of other Classes of Non-Retained Certificates. The chart also shows the allocation between the RR Interest and the Non-Retained Certificates and the corresponding entitlement to receive principal and/or interest of certain Classes of Non-Retained 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 between the RR Interest and the Non-Retained Certificates and the manner in which the Non-Retained Certificate allocations are further allocated to certain Classes of those Certificates in ascending order (beginning with the Non-Offered Certificates, other than the Class V and Class R certificates and the RR Interest) to reduce the balance of each such class to zero;provided that no principal payments or mortgage loan losses will be allocated to the Class X-A, Class X-B, Class X-D, Class X-E, Class X-F, Class X-G, Class V or Class R Certificates, although principal payments and losses may reduce the notional amounts of the Class X-A, Class X-B, Class X-D, Class X-E, Class X-F and Class X-G certificates and, therefore, the amount of interest they accrue.

 

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

 

19

 

 

BANK 2018-BNK10Certain Terms and Conditions

 

  

(FLOW CHART) 

  (1)The Class X-A, Class X-B, Class X-D, Class X-E, Class X-F and Class X-G Certificates are interest-only certificates.
  (2)The Class X-D, Class X-E, Class X-F and Class X-G Certificates and the RR Interest are Non-Offered Certificates.
  (3)Other than the Class X-D, Class X-E, Class X-F, Class X-G, Class V and Class R Certificates and the RR Interest.
    
Distributions:On each Distribution Date, funds available for distribution from the mortgage loans, net of specified trust fees, expenses and reimbursements that are allocable to the Non-Retained Certificates will generally be distributed in the following amounts and order of priority (in each case to the extent of remaining available funds):
 1.Class A-1, A-2, A-3, A-SB, A-4, A-5, X-A, X-B, X-D, X-E, X-F and X-G Certificates: To interest on the Class A-1, A-2, A-3, A-SB, A-4, A-5, X-A, X-B, X-D, X-E, X-F and X-G Certificates,pro rata, according to their respective interest entitlements.
 2.Class A-1, A-2, A-3, A-SB, A-4 and A-5 Certificates: To principal on the Class A-1, A-2, A-3, A-SB, A-4 and A-5 Certificates in the following amounts and order of priority: (i) first, to principal on the Class A-SB Certificates, in an amount up to the Principal Distribution Amount for such Distribution Date until their Certificate 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-2 Certificates until their 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-3 Certificates, until their Certificate Balance is reduced to zero, up to the remainder of the Principal Distribution Amount for such Distribution Date; (v) fifth, to principal on the Class A-4 Certificates until their Certificate Balance is reduced to zero, up to the remainder of the Principal Distribution Amount for such Distribution Date; (vi) sixth, to principal on the Class A-5 Certificates, until their Certificate Balance is reduced to zero, up to the remainder of the Principal Distribution Amount for such Distribution Date; and (vii) seventh, to principal on the Class A-SB Certificates until their Certificate 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 and every Class of Principal Balance Certificates, other than the Class A-1, A-2, A-3, A-SB, A-4 and A-5 Certificates and the RR Interest, has been reduced to zero as a result of the allocation of Mortgage Loan losses and expenses and any of the Class A-1, A-2, A-3, A-SB, A-4 and A-5 Certificates remains outstanding, then the Principal Distribution Amount will be distributed to the Class A-1, A-2, A-3, A-SB, A-4 and A-5 Certificates,pro rata, based on their respective outstanding Certificate Balances, until their Certificate Balances have been reduced to zero.

 

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

 

20

 

 

BANK 2018-BNK10Certain Terms and Conditions

 

  3.Class A-1, A-2, A-3, A-SB, A-4 and A-5 Certificates: To reimburse the holders of the Class A-1, A-2, A-3, A-SB, A-4 and A-5 Certificates,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.
  4.Class A-S Certificates: To make distributions on the Class A-S Certificates as follows: (a) first, to interest on the Class A-S Certificates in the amount of the interest entitlement for that Class; (b) next, to the extent of the portion of the Principal Distribution Amount remaining after distributions in respect of principal to each Class with a higher distribution priority (in this case, the Class A-1, A-2, A-3, A-SB, A-4 and A-5 Certificates), to principal on the Class A-S Certificates until their Certificate Balance is reduced to zero; and (c) next, to reimburse the holders of the Class A-S 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.
  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, A-2, A-3, A-SB, A-4, A-5 and A-S Certificates), 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 remaining after distributions in respect of principal to each Class with a higher distribution priority (in this case, the Class A-1, A-2, A-3, A-SB, A-4, A-5, A-S and B Certificates), 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-2, A-3, A-SB, A-4, A-5, A-S, B and C Certificates are paid all amounts to which they are entitled, the remaining funds available for distribution will be used to pay interest, principal and loss reimbursement amounts on the Class D, E, F and G Certificates sequentially in that order in a manner analogous to the Class C Certificates.
    
Allocation of Yield Maintenance 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: (x)(1) to each of the Class A-1, A-2, A-3, A-SB, A-4, A-5, A-S, B, C and D Certificates, the product of (a) the Non-Retained Certificates’ Percentage Allocation Entitlement of the yield maintenance charge or prepayment premium, (b) the related Base Interest Fraction (as defined in the Preliminary Prospectus) for such Class, 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 all Principal Balance Certificates (other than the RR Interest) for that Distribution Date, (2) to the Class X-A Certificates, the excess, if any, of (a) the product of (i) the Non-Retained Certificates’ Percentage Allocation Entitlement of such yield maintenance charge or prepayment premium and (ii) a fraction, the numerator of which is equal to the amount of principal distributed to the Class A-1, A-2, A-3, A-SB, A-4 and A-5 Certificates for that Distribution Date, and the denominator of which is the total amount of principal distributed to all Principal Balance Certificates (other than the RR Interest) for that Distribution Date, over (b) the amount of such yield maintenance charge or prepayment premium distributed to the Class A-1, A-2, A-3, A-SB, A-4 and A-5 Certificates as described above, and (3) to the Class X-B Certificates, any remaining portion of the Non-Retained Percentage of such yield maintenance charge or prepayment premium not distributed as described above, and (y) to the RR Interest, its Percentage Allocation Entitlement of the yield maintenance charge or prepayment premium.

 

No prepayment premiums or yield maintenance charges will be distributed to the holders of the Class X-D, X-E, X-F, X-G, E, F, G, 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

 

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

 

21

 

 

BANK 2018-BNK10Certain Terms and Conditions

 

 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-2, A-3, A-SB, A-4, A-5, A-S, B, C, D, E, F and G Certificates, will be reduced without distribution on any Distribution Date as a write-off to the extent of the Non-Retained Certificates’ Percentage Allocation Entitlement 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 Class G Certificates; second, to the Class F Certificates; third, to the Class E Certificates; fourth, to the Class D Certificates; fifth, to the Class C Certificates; sixth, to the Class B Certificates; seventh, to the Class A-S Certificates; and, finally,pro rata, to the Class A-1, A-2, A-3, A-SB, A-4 and A-5 Certificates based on their outstanding Certificate Balances.

 

The notional amount of the Class X-A Certificates will be reduced by the amount of all losses that are allocated to the Class A-1, A-2, A-3, A-SB, A-4 or A-5 Certificates 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, 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 their Certificate Balance. The notional amount of the Class X-E Certificates will be reduced by the amount of all losses that are allocated to the Class E Certificates as write-offs in reduction of their Certificate Balance. The notional amount of the Class X-F Certificates will be reduced by the amount of all losses that are allocated to the Class F Certificates as write-offs in reduction of their Certificate Balance. The notional amount of the Class X-G Certificates will be reduced by the amount of all losses that are allocated to the Class G Certificates as write-offs in reduction of their Certificate Balance.

P&I Advances:Each Master Servicer or, if such Master Servicer fails to do so, the Trustee, will be obligated to advance delinquent debt service payments with respect to the mortgage loans it services (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, which with respect to the Non-Retained Certificates will be applied in reverse alphabetical order of their Class designations (except that interest payments on the Class A-1, A-2, A-3, A-SB, A-4, A-5, X-A, X-B, X-D, X-E, X-F and X-G Certificates would be affected on apari passu basis).
Servicing Advances:Each Master Servicer or, if such 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 related 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 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 whole loan, any Appraisal Reduction Amount will be allocated first to the related subordinate companion loan, if any, and then to the related mortgage loan and the relatedpari passu companion loan(s).

 

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

 

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

 

22

 

 

BANK 2018-BNK10Certain Terms and Conditions

 

 

of (i) the stated principal balance of such AB modified loan (taking into account the related junior note(s) and anypari 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 (or in the calculation of any related Appraisal Reduction Amount) 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) and solely to the extent not reflected or taken into account in the calculation of any related Appraisal Reduction Amount) held by the lender with respect to the mortgage loan as of the date of such determination.

 

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.

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, 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-2, A-3, A-SB, A-4, A-5, A-S, B, C and D Certificates 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 R Certificates and the RR Interest) 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 (other than the Class V, Class R Certificates and the RR Interest) of certificates would have to voluntarily participate in the exchange.

Liquidation Loan Waterfall:Following the liquidation of any loan or property, the net liquidation proceeds generally will be applied (after reimbursement of advances and certain trust fund expenses), first, as a recovery of accrued interest, other than delinquent interest that was not advanced as a result of Appraisal Reduction Amounts, second, as a recovery of principal until all principal has been recovered, and then as a recovery of delinquent interest that was not advanced as a result of Appraisal Reduction Amounts. Please see “Description of the Certificates—Distributions—Application Priority of Mortgage Loan Collections or Whole Loan Collections” in the Preliminary Prospectus.
Control Eligible Certificates:The Class E, F and G 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”, which means the most subordinate class of Certificates among the Control Eligible Certificates.

 

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) 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 and the RR Interest 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 G Certificates.

Control and Consultation/
Replacement of Special
Servicer by Directing
Certificateholder:

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 (i) the Class E 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 Balance of that class or (ii) a holder of the Class E Certificates is the majority Controlling Class Certificateholder and has irrevocably waived its right, in writing, to exercise any of the rights of the Controlling Class Certificateholder and such rights have not been reinstated to a successor

 

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

 

23

 

 

BANK 2018-BNK10Certain Terms and Conditions

 

 

controlling class certificateholder as described below;provided,however, 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 and the RR Interest have been reduced to zero as a result of principal payments on the Mortgage Loans.

 

A “Consultation Termination Event” will occur when (i) 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; or (ii) a holder of a majority of the Class E Certificates is the majority Controlling Class Certificateholder and has irrevocably waived its right, in writing, to exercise any of the rights of the Controlling Class Certificateholder and such rights have not been reinstated to a successor controlling class certificateholder pursuant to the terms of the BANK 2018-BNK10 pooling and servicing agreement;provided that no Consultation Termination Event resulting solely from the operation of clause (ii) will be deemed to have existed or be in continuance with respect to a successor holder of the Class E Certificates that has not irrevocably waived its right to exercise any of the rights of the Controlling Class Certificateholder;provided,however, 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 and the RR Interest 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) with respect to the directing certificateholder (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 DBRS, Fitch and Moody’s (and any Rating Agency rating any securities backed by anypari 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 anypari 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 as to such party) and the Operating Advisor in connection with asset status reports and material special servicing actions.

 

If a Consultation Termination Event has occurred and is continuing, the Special Servicer must seek to consult with the Operating Advisor in connection with asset status reports and material special servicing actions, and, in general, 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 relatedpari 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 each non-serviced whole loan, the applicable servicing agreement for the related controllingpari passucompanion 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 controllingpari passu companion loan(s).

 

The control rights and consent and consultation rights described in the three 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, if 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

 

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

 

24

 

 

BANK 2018-BNK10Certain Terms and Conditions

 

 

information as may be specified in the BANK 2018-BNK10 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.

 

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 BANK 2018-BNK10 pooling and servicing agreement with respect to such mortgage loan, and such controlling class certificateholder will be referred to as an “excluded controlling class holder”.

 

“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. With respect to a mortgage loan secured by a residential cooperative property, a person will not be considered a “Borrower Party” solely by reason of such person holding one or more cooperative unit loans that are secured by direct equity interests in the related borrower or owning one or more residential cooperative units comprising the related mortgaged property as a result of any foreclosure, transfer in lieu of foreclosure or other exercise of remedies with respect to any such unit loan(s).

Risk Retention Consultation Party:

A risk retention consultation party may be appointed by the holder or holders of more than 50% of the RR Interest, by Certificate Balance. The majority RR Interest holder will have a continuing right to appoint, remove or replace the risk retention consultation party in its sole discretion. This right may be exercised at any time and from time to time.

 

Except with respect to an Excluded Loan as to such party, the risk retention consultation party will be entitled to consult with each Special Servicer, upon request of the risk retention consultation party, with respect to certain material servicing actions proposed by such Special Servicer.

Replacement of Special
Servicer by General Vote of
Certificateholders:
If a Control Termination Event has occurred and is continuing, either 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 Principal Balance Certificates other than the RR Interest.  The certificateholders who initiate a vote on a termination and replacement of a Special Servicer without cause must cause DBRS, Fitch 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, either Special Servicer may be replaced by the directing certificateholder, subject to DBRS, Fitch and Moody’s (and any Rating Agency rating any securities backed by anypari passu companion loan(s) serviced under this transaction) confirming the then-current ratings of the Certificates (and any certificates backed by anypari passucompanion loans serviced under this transaction) or declining to review the matter.
Excluded Special Servicer:In the event that, with respect to any mortgage loan, a Special Servicer is a Borrower Party, such 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 applicable Special Servicer with respect to an excluded special servicer loan, such resigning Special Servicer will be required to use reasonable efforts 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 applicable 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.  Such Special Servicer must thereafter determine whether, based on its assessment of such second appraisal, any

 

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

 

25

 

 

BANK 2018-BNK10Certain Terms and Conditions

 

 recalculation of the Appraisal Reduction Amount or Collateral Deficiency Amount is warranted, and if so warranted, the Special Servicer will recalculate such Appraisal Reduction Amount or Collateral Deficiency Amount. 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 BANK 2018-BNK10 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 directing certificateholder for any securitization holding apari passu companion loan will have consent and/or consultation rights as the holder of an interest in the related mortgage loan, as described in the Preliminary Prospectus.

 

With respect to any serviced whole loan, if such whole loan becomes a defaulted loan under the BANK 2018-BNK10 pooling and servicing agreement, the Special Servicer will generally be required to sell both the mortgage loan and the relatedpari passu companion loan(s) as a single whole loan. If the subject whole loan includes one or more subordinate companion loans, those subordinate companion loans may be included in such sale as well.

 

With respect to each non-serviced whole loan, the applicable servicing agreement governing the servicing of such whole loan generally will provide that, if the relatedpari 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 applicablepari passu companion loan(s) constitute 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 relatedpari passu companion loan(s) as a whole loan. The directing certificateholder for this securitization generally will have consent and/or consultation rights as the holder of an interest in the related mortgage loan, as described in the Preliminary Prospectus. If the subject whole loan includes one or more subordinate companion loans, those subordinate companion loans may be included in such sale as well.

 

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.

 

“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 applicable Special Servicer are permitted if the principal balance of a mortgage loan is less than $2,000,000.
Operating Advisor:

The Operating Advisor will perform certain review duties if a Control Termination Event has occurred and is continuing, which will generally include a limited annual review of, and the delivery of a report regarding, certain actions of each Special Servicer with respect to the resolution and/or liquidation of specially serviced loans to the Certificate Administrator.  The review and report generally will be based on any asset status reports and additional information delivered to the Operating Advisor by each Special Servicer. In addition, if a Control Termination Event has occurred and is continuing, each Special Servicer must seek to consult with the Operating Advisor (in addition to the directing certificateholder if no Consultation Termination Event has occurred and is continuing) in connection with material special servicing actions with respect to specially serviced loans serviced by such Special Servicer. Furthermore, under certain circumstances, but only if a Consultation Termination Event has occurred and is continuing, the Operating Advisor may recommend the replacement of a Special Servicer, in which case the Certificate Administrator will deliver notice of such recommendation to the certificateholders, and certificateholders with specified percentages of the voting rights may direct the replacement of such Special Servicer at their expense.

 

If a Consultation Termination Event has occurred and is continuing, the Operating Advisor may be removed and replaced without cause upon the affirmative direction of certificate owners holding at least 75% of the appraisal-reduced voting rights of all Certificates (other than the RR Interest), following a proposal from certificate owners holding not less than 25% of the appraisal-reduced voting rights of all Principal Balance Certificates (other than the RR Interest).

 

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

 

26

 

 

BANK 2018-BNK10Certain Terms and Conditions

 

 The certificateholders who initiate a vote on a termination and replacement of the Operating Advisor without cause must cause DBRS, Fitch 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.  The Operating Advisor generally may be discharged from its duties if and when the Class A-1, A-2, A-3, A-SB, A-4, A-5, A-S, B, C, D and E Certificates are retired.
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 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 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 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 Appraisal Reduction Amounts), the Trustee will terminate all of the rights and obligations of the Asset Representations Reviewer under the BANK 2018-BNK10 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 BANK 2018-BNK10 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 applicable 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

 

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

 

27

 

 

BANK 2018-BNK10Certain Terms and Conditions

 

 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 BANK 2018-BNK10 pooling and servicing agreement. See “Pooling and Servicing Agreement—Dispute Resolution Provisions” in the Preliminary Prospectus.
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 BANK 2018-BNK10 pooling and servicing agreement. Any certificateholder wishing to communicate with other certificateholders regarding the exercise of its rights under the terms of the BANK 2018-BNK10 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.
Certain Fee Offsets:If a workout fee is earned by a 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 each 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” tab.  Investors may access the deal website following execution of a certification and confidentiality agreement.
Initial Majority Controlling Class Certificateholder:It is expected that Torchlight Investors, LLC or another affiliate of Torchlight Loan Services 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 bepari 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 applicable master servicer and applicable special servicer under such lead servicing agreement.

 

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

 

28

 

 

(THIS PAGE INTENTIONALLY LEFT BLANK)

 

29

 

 

APPLE CAMPUS 3

 

The pictures below are artist’s renderings of the Apple Campus 3 Property as it is generally proposed to be completed, and are not actual photographs or depictions of the current construction status of the related improvements. Furthermore, such renderings may differ in material aspects from the final design or the final, as-built condition of the completed improvements. Apple has taken possession of the Apple Campus 3 Property and is currently constructing its interior improvements.

 

(GRAPHICS) 

 

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

 

30

 

 

APPLE CAMPUS 3

 

(GRAPHICS) 

 

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

 

31

 

 

APPLE CAMPUS 3

 

No. 1 – Apple Campus 3
 
Loan Information Property Information
Mortgage Loan Seller:Wells Fargo Bank, National Association Single Asset/Portfolio:Single Asset
Credit Assessment (DBRS/Fitch/Moody’s):AA(high)/BBB-sf/Baa2 Property Type:Office
Original Principal Balance(1):$94,000,000 Specific Property Type:Suburban
Cut-off Date Balance(1):$94,000,000 Location:Sunnyvale, CA
% of Initial Pool Balance:7.3% Size:882,657 SF
Loan Purpose:Refinance Cut-off Date Balance Per SF(1):$385.20
Borrower Name:CW SPE LLC Year Built/Renovated:2017/NAP
Borrower Sponsor:Paul Guarantor LLC Title Vesting:Fee
Mortgage Rate:3.365% Property Manager:Self-managed
Note Date:December 14, 2017 4thMost Recent Occupancy(4):NAP
Anticipated Repayment Date:January 6, 2028 3rdMost Recent Occupancy(4):NAP
Maturity Date:April 6, 2031 2ndMost Recent Occupancy(4):NAP
IO Period:120 months Most Recent Occupancy(4):NAP
Loan Term (Original):120 months Current Occupancy(5):100.0% (2/1/2018)
Seasoning:1 month  
Amortization Term (Original):NAP Underwriting and Financial Information:
Loan Amortization Type:Interest-only, ARD   
Interest Accrual Method:Actual/360 4thMost Recent NOI(4):NAP
Call Protection:L(25),D(88),O(7) 3rdMost Recent NOI(4):NAP
Lockbox Type:Hard/Upfront Cash Management 2ndMost Recent NOI(4):NAP
Additional Debt(1)(2):Yes Most Recent NOI(4):NAP
Additional Debt Type(1)(2):Pari Passu;Mezzanine  
   U/W Revenues:$46,190,545
   U/W Expenses:$4,804,932
Escrows and Reserves(3):  U/W NOI:$41,385,613
     U/W NCF:$41,209,082
Type:InitialMonthlyCap (If Any) U/W NOI DSCR(1):3.57x
Taxes$0$249,368NAP U/W NCF DSCR(1)(2):3.55x
Insurance$0SpringingNAP U/W NOI Debt Yield(1)(2):12.2%
Replacement Reserves$0SpringingNAP U/W NCF Debt Yield(1):12.1%
TI/LC Reserves$2,979,839$0NAP Stabilized Appraised Value(6):$773,600,000
Rent Concession Reserve$42,706,326$0NAP Stabilized Appraisal Valuation Date(6):June 1, 2019
Punchlist Reserve$93,750SpringingNAP Cut-off Date LTV Ratio(1)(2)(6):44.0%
     LTV Ratio at ARD(1)(2)(6):44.0%
       

 

(1)See “The Mortgage Loan” section. All statistical information related to balances per square foot, loan-to-value ratios, debt service coverage ratios and debt yields are based on the Apple Campus 3 Whole Loan (as defined below).

(2)See “Subordinate and Mezzanine Indebtedness” section. The equity interest in the borrower has been pledged to secure senior mezzanine indebtedness with an original principal balance of $117,500,000 and junior mezzanine indebtedness with an original principal balance of $117,500,000. All statistical information related to the balance per square foot, loan-to-value ratios, debt service coverage ratios and debt yields are based solely on the Apple Campus 3 Whole Loan. As of the Cut-off Date, the U/W NCF DSCR, U/W NOI Debt Yield, Cut-off Date LTV Ratio and LTV Ratio at ARD based on the Apple Campus 3 Total Debt (as defined below) are 1.70x, 7.2%, 74.3% and 74.3%, respectively.

(3)See “Escrows” section.

(4)Historical occupancy and financial information is not applicable as the Apple Campus 3 Property (as defined below) was built in 2017.

(5)Apple has taken possession of its space, is currently constructing its interior improvements and is expected to begin taking occupancy in September 2018.

(6)

See “Appraisal” section. The stabilized appraised value shown assumes that contractual tenant improvement and leasing commission (“TI/LC”) obligations have been fulfilled and there is no outstanding free rent. The borrower deposited upfront reserves totaling $45,779,915 for such contractual TI/LC obligations and free rent (see “Escrows” section). The As-Is Appraised Value is $624,600,000 as of November 7, 2017, equating to a Cut-off Date LTV Ratio and LTV Ratio at ARD of 54.4%.

The Mortgage Loan. The mortgage loan (the “Apple Campus 3 Mortgage Loan”) is part of a whole loan (the “Apple Campus 3 Whole Loan”) evidenced by fivepari passu notes secured by a first mortgage encumbering the fee interest in a 882,657 square foot, four-story, class A, single-tenant office building located in Sunnyvale, California (the “Apple Campus 3 Property”). The Apple Campus 3 Whole Loan was co-originated on December 14, 2017 by Wells Fargo Bank, National Association; Deutsche Bank AG, New York Branch; and Goldman Sachs Mortgage Company. The Apple Campus 3 Whole Loan had an original principal balance of $340,000,000, has an outstanding principal balance as of the Cut-off Date of $340,000,000 and accrues interest at an interest rate of 3.365%per annum (the “Initial Interest Rate”) through the anticipated repayment date (“ARD”); provided, however, that upon the occurrence and continuance of an event of default, the Apple Campus 3 Whole Loan accrues interest at an interest rate equal to the Initial Interest Rate plus 5.000%. The Apple Campus 3 Whole Loan had an initial term of 120 months, has a remaining term to the ARD of 119 months as of the Cut-off Date and requires payments of interest only through the ARD. The ARD is January 6, 2028

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

 

32

 

 

APPLE CAMPUS 3

 

and the final maturity date is April 6, 2031. In the event the Apple Campus 3 Whole Loan is not paid off in full on or before the ARD, the borrower will be required to make (a) interest payments based on an interest rate equal to the greater of (i) the Initial Interest Rate plus 1.500%per annum, and (ii) the swap rate plus 1.500%per annum; provided, however, that upon the occurrence and continuance of an event of default, the interest rate will be equal to (1) the greater of (i) and (ii), plus (2) 5.000%; and (b) principal payments based on a 30-year amortization assuming the Initial Interest Rate. The ARD automatically triggers a Cash Trap Event Period (see “Lockbox and Cash Management” section) whereby all excess cash flow will be used to pay down the principal balance of the Apple Campus 3 Whole Loan. See “Description of the Mortgage Pool— Certain Terms of the Mortgage Pool-ARD Loans” in the Preliminary Prospectus.

Note A-3, which will be contributed to the BANK 2018-BNK10 Trust, had an original principal balance of $94,000,000, has an outstanding principal balance as of the Cut-off Date of $94,000,000 and represents the controlling interest in the Apple Campus 3 Whole Loan. The non-controlling Notes A-1, A-2, A-4 and A-5, which have an aggregate original principal balance of $246,000,000, are currently held by Wells Fargo Bank, National Association (Notes A-1 and A-2), Deutsche Bank AG, New York Branch (Note A-4) and Goldman Sachs Mortgage Company (Note A-5) and are expected to be contributed to future securitization trusts. The mortgage loans evidenced by Note A-1, A-2, A-4 and A-5 are collectively referred to herein as the “Apple Campus 3 Companion Loans”. The lender provides no assurances that any non-securitizedpari passu notes will not be split further. 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

 

NotesOriginal Balance Note HolderControlling Interest
A-1$80,000,000 Wells Fargo Bank, NANo
A-2$30,000,000 Wells Fargo Bank, NANo
A-3$94,000,000 BANK 2018-BNK10Yes
A-4$68,000,000 Deutsche Bank AGNo
A-5$68,000,000 Goldman Sachs Mortgage CompanyNo
Total$340,000,000   

 

Following the lockout period, on any date before July 6, 2027, the borrower has the right to defease the Apple Campus 3 Whole Loan in whole, but not in part. In addition, the Apple Campus 3 Whole Loan is prepayable without penalty on or after July 6, 2027. The lockout period will expire on the earlier to occur of (i) two years after the closing date of the securitization that includes the last note to be securitized and (ii) December 14, 2021.

 

Sources and Uses

 

Sources    Uses   
Original loan amount$340,000,000 59.1% Loan payoff$385,679,999  67.1%
Mezzanine debt235,000,000 40.9 Reserves45,779,915 8.0
     Closing costs2,636,016 0.5
     Return of equity140,904,070 24.5
Total Sources$575,000,000 100.0% Total Uses$575,000,000 100.0%

 

The Property. The Apple Campus 3 Property is a class A LEED Platinum office campus totaling 882,657 square feet and located in Sunnyvale, California. Built in 2017 and situated on a 17.8-acre site, the Apple Campus 3 Property comprises three interconnected, four-story office buildings totaling approximately 849,000 square feet, an amenities facility, outdoor common area and a seven-story parking structure. The Apple Campus 3 Property is 100.0% leased to Apple Inc. (“Apple”; NYSE: AAPL) through February 2031, with two, seven-year extension options and no termination options. Apple took possession of the Apple Campus 3 Property on December 1, 2017 and is currently constructing its interior improvements. As of January 2018, Apple is expected to begin taking occupancy of its space at the Apple Campus 3 Property in September 2018.

 

The interconnected office buildings within the Apple Campus 3 Property comprise Building A (308,659 square feet), Building B (269,997 square feet) and Building C (270,002 square feet), and the combined office floorplates average approximately 180,000 square feet. The amenities facility at the Apple Campus 3 Property totals approximately 34,000 square feet and is expected to serve as a cafeteria for Apple employees. Building A, Building B, the parking structure and the amenities building are collectively known as “Phase I” of the Apple Campus 3 Property; and Building C is known as “Phase 2”. Amenities at the Apple Campus 3 Property include a fitness/wellness center, coffee bar, general store, barber shop, bike repair shop, dry cleaning/laundry service and a conference center. Additional outdoor amenities at the Apple Campus 3 Property include a mini amphitheater situated in the center courtyard, outdoor seating, sport courts and athletic fields, bus/shuttle stops and green roof accessibility on the third floor of the office buildings.

 

According to the appraisal, as of 2016, Apple was the second largest employer in Sunnyvale, California, and the second largest space user in Silicon Valley. The Apple Campus 3 Property is situated approximately 3.5 miles north of both Apple Park and One Infinite Loop. Apple Park is Apple’s new 175-acre corporate headquarters campus, which comprises the 2.8 million square foot “spaceship” structure in addition to several associated research and development buildings. One Infinite Loop was originally developed as Apple’s headquarters in 1993 and totals approximately 850,000 square feet.

 

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

 

33

 

 

APPLE CAMPUS 3

 

The following table presents certain information relating to the tenancy at the Apple Campus 3 Property:

 

Major Tenant

 

Tenant NameCredit 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     
Apple(3)NR/Aa1/AA+882,657100.0%$48.35$42,675,300100.0%2/28/2031(4)
Total Major Tenant882,657100.0%$48.35$42,675,300100.0% 
        
Vacant Space 00.0%    
        
Collateral Total882,657100.0%    
        

 

(1)The entity on the lease is Apple Inc., which is the rated entity.

(2)Annual U/W Base Rent PSF and Annual U/W Base Rent reflect the average rent over the remaining lease term. Apple is currently in a free rent period, as outlined in the footnote below, and will begin paying rent of $41.28 per square foot on Phase I in February 2019 and Phase II in June 2019.

(3)Apple has taken possession of its space and is currently constructing its interior improvements. Apple is currently in a free rent period for (i) Phase 1 (approximately 69.4% of its space) through and including December 2018 and (ii) Phase 2 (approximately 30.6% of its space) through and including May 2019. In January 2019, Apple will pay reduced rent of approximately $6.93 per square foot on Phase I only. Through and including February 2018, Apple is required to pay reimbursements for utilities only, and commencing March 2018, the tenant will be required to pay reimbursements for utilities, operating expenses, taxes and insurance. All future rent credits and abatements under the Apple lease were reserved at the origination of the Apple Campus 3 Whole Loan (see “Escrows” section).

(4)Apple has two, 7-year renewal options at 95% of fair market value with 360 days’ written notice.

 

The following table presents certain information relating to the lease rollover schedule at the Apple Campus 3 Property:

 

Lease Expiration Schedule(1)

 

Year Ending
 December 31,
No. of Leases ExpiringExpiring
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
MTM000.0%00.0%$00.0%$0.00
2018000.0%00.0%$00.0%$0.00
2019000.0%00.0%$00.0%$0.00
2020000.0%00.0%$00.0%$0.00
2021000.0%00.0%$00.0%$0.00
2022000.0%00.0%$00.0%$0.00
2023000.0%00.0%$00.0%$0.00
2024000.0%00.0%$00.0%$0.00
2025000.0%00.0%$00.0%$0.00
2026000.0%00.0%$00.0%$0.00
2027000.0%00.0%$00.0%$0.00
2028000.0%00.0%$00.0%$0.00
Thereafter1882,657100.0%882,657100.0%$42,675,300100.0%$48.35
Vacant000.0%882,657100.0%$00.0%$0.00
Total/Weighted Average1882,657100.0%  $42,675,300 100.0%$48.35

 

(1)Information obtained from the underwritten rent roll.

 

The following table presents historical occupancy percentages at the Apple Campus 3 Property:

 

Historical Occupancy

 

12/31/2013(1)

12/31/2014(1)

12/31/2015(1)

12/31/2016(1)

2/1/2018(2)(3)

NAPNAPNAPNAP100.0%

 

(1)The Apple Campus 3 Property was built in 2017.

(2)Apple has taken possession of its space at the Apple Campus 3 Property and is currently constructing its interior improvements. As of January 2018, Apple is expected to begin taking occupancy of its space at the Apple Campus 3 Property in September 2018.

(3)Information obtained from the underwrittenrent roll.

 

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

 

34

 

 

APPLE CAMPUS 3

 

Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the underwritten net cash flow at the Apple Campus 3 Property:

 

Cash Flow Analysis(1)

 

 U/W % of U/W Effective Gross Income U/W $ per SF 
Base Rent$42,675,300(2) 92.4% $48.35 
Grossed Up Vacant Space0 0.0 0.00 
Total Reimbursables3,981,816 8.6 4.51 
Other Income0 0.0 0.00 
Less Vacancy & Credit Loss

(466,571)(3)

 

(1.0)

 

(0.53)

 
Effective Gross Income$46,190,545 100.0% $52.33 
       
Total Operating Expenses$4,804,932 10.4% $5.44 
       
Net Operating Income$41,385,613 89.6% $46.89 
TI/LC0 0.0 0.00 
Capital Expenditures

176,531

 

0.4

 

0.20

 
Net Cash Flow$41,209,082  89.2% $46.69 
       
NOI DSCR(4)3.57x     
NCF DSCR(4)3.55x     
NOI DY(4)12.2%     
NCF DY(4)12.1%     

 

(1)Historical operating statements are not applicable, as the Apple Campus 3 Property was built in 2017.

(2)Base Rent reflects the average rent over the lease term (see “Major Tenant” section).

(3)The underwritten economic vacancy is 1.0%. The Apple Campus 3 Property was 100.0% leased as of February 1, 2018.

(4)The debt service coverage ratios and debt yields are based on the Apple Campus 3 Whole Loan.

 

Appraisal.The appraiser concluded to an “as-stabilized” appraised value of $773,600,000 with a valuation date of June 1, 2019, which assumes that contractual TI/LC obligations have been fulfilled and there is no outstanding free rent. The borrower deposited upfront reserves totaling $45,779,915 for such TI/LC obligations and free rent periods (see “Escrows” section). As of the appraisal valuation date of November 7, 2017 the Apple Campus 3 Property had an “as-is” appraised value of $624,600,000. The appraiser also concluded to a “Go Dark” value of $566,750,000 as of November 7, 2017.

 

Environmental Matters. According to the Phase I Environmental Assessment dated November 20, 2017, there are recognized environmental conditions at the Apple Campus 3 Property related to (i) potential soil, gas and groundwater contamination and (ii) residual soil impacts and possible vapor intrusion concerns. The Phase I assessment recommended no further action aside from continued implementation of a site management plan and vapor-intrusion mitigation system. In regard to the groundwater contamination, the responsible parties are Advanced Micro Devices, Inc., Northrop Grumman and Locus Technologies (a subsidiary of the Philips Electronics Company). The RECs are further described under “Description of the Mortgage Pool—Mortgage Pool Characteristics–Environmental Considerations” in the Preliminary Prospectus.

 

Market Overview and Competition. The Apple Campus 3 Property is located in Sunnyvale, California near the intersection of Central Expressway and Wolfe Road. Sunnyvale is the seventh most populous city in the San Francisco Bay Area and one of the major cities comprising Silicon Valley. According to a third party market research report, as of the third quarter of 2017, the San Jose/Sunnyvale/Santa Clara metropolitan statistical area had an unemployment rate of 3.2% and reported an 8.9% GDP growth rate over the past five years, compared to an overall 2.4% growth rate for the United States.

 

The Apple Campus 3 Property is centrally located within 1.4 miles of two Santa Clara Valley Transportation Authority Light Rail stations (the Sunnyvale station in the Heritage District Downtown and the Lawrence Station in eastern Sunnyvale), 3.9 miles from the Downtown Mountain View Caltrain Station, and within close proximity to highways 101, 280, 237 and 85. According to a third-party market research report, the 2017 estimated population within a one-, three- and five-mile radius of the Apple Campus 3 Property was 26,490, 193,228, and 466,901, respectively; while the 2017 estimated average household income within the same radii was $121,630, $133,362, and $141,198, respectively.

 

According to a third-party market research report, as of the third quarter of 2017, the Sunnyvale submarket contained approximately 10.9 million square feet of office space exhibiting a vacancy rate of approximately 3.1% and an average asking rental rate of $64.44 per square foot, gross. The appraiser identified 15 comparable class A office properties totaling approximately 2.4 million square feet, which reported a 99.7% occupancy rate and average asking rents of $50.58 per square foot, triple net.

 

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

 

35

 

 

APPLE CAMPUS 3

 

The following table presents certain information relating to comparable office leases for the Apple Campus 3:

 

Comparable Leases(1)

 

Property Name/LocationYear Built/ RenovatedTotal GLA
(SF)
Distance
from
Subject
Tenant NameLease Date/TermLease
Area
(SF)
Annual
Base Rent PSF
Lease Type

Moffett Towers II

905 11th Avenue

Sunnyvale, CA

2016/NAV350,6633.0 mileLab 126

March 2017/

10.0 Yrs

 

350,663$47.40NNN

Moffett Gateway

1225 Crossman

Avenue

Sunnyvale, CA

2016/NAV298,9242.3 milesGoogle, Inc.November 2016/ 11.0 Yrs298,924$44.40NNN

10900 Tantau Avenue

Cupertino, CA

2008/NAV102,5403.5 milesPanasonicMay 2017/
5.0 Yrs
43,034$51.00NNN

Tree Farm

4440 El Camino Real

Los Altos, CA

1999/NAV96,5626.8 mileToyota

March 2017/

5.5 Yrs

 

96,562$63.00NNN

Moffett Tower II Bldg. 2

905 11th Avenue

Sunnyvale, CA

2017/NAV362,6003.0 milesAmazonDecember 2016/ 10.0 Yrs362,600$48.00NNN

 

(1)Information obtained from third party market report

 

The Borrower.The borrower is CW SPE LLC, a Delaware limited liability company and single purpose entity with two independent directors. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the Apple Campus 3 Whole Loan. Paul Guarantor LLC is the guarantor of certain nonrecourse carveouts under the Apple Campus 3 Whole Loan. The Apple Campus 3 Borrower is affiliated with the borrower under the Moffett Towers II – Building 2 Mortgage Loan.

  

The Borrower Sponsor.The borrower sponsor is Paul Guarantor LLC, which is 100% directly owned by Jay Paul Company, a privately held real estate firm based in San Francisco, California. Founded in 1975, Jay Paul Company concentrates on the acquisition, development, and management of commercial properties throughout California. Jay Paul Company has developed over 11.0 million square feet of institutional quality space, and since 2000, has closed on more than $12.0 billion in debt and equity financings.

 

Escrows.The Apple Campus 3 Whole Loan documents provide for upfront escrows in the amount of $42,706,326 for rent abatement periods, $2,979,839 for outstanding TI/LCs, and $93,750 for the estimated cost to complete outstanding punchlist items. The Apple Campus 3 Whole Loan documents provide for ongoing monthly escrows of $249,368 for real estate taxes. The Apple Campus 3 Whole Loan documents provide for additional reserves in the amount of 125% of any additional punchlist items received from Apple (following origination, an additional $506,100 was deposited due to additional punchlist items identified by Apple).

 

The Apple Campus 3 Whole Loan documents do not require ongoing monthly escrows for insurance premiums as long as (i) no event of default has occurred and is continuing; (ii) the borrower provides the lender with evidence that the Apple Campus 3 Property’s insurance coverage is included in a blanket policy and such policy is in full force and effect; and (iii) the borrower pays all applicable insurance premiums and provides the lender with evidence of renewals. The Apple Campus 3 Whole Loan documents do not require ongoing monthly escrows for replacement reserves as long as no “Cash Trap Event Period” (as defined in the “Lockbox and Cash Management” section) has occurred and is continuing.

 

Lockbox and Cash Management.The Apple Campus 3 Whole Loan requires a lender-controlled lockbox account, which is already in-place, and that the borrower direct the tenant to pay its rent directly into such lockbox account. The loan documents also require that all rents received by the borrower or the property manager be deposited into the lockbox account within one business day of receipt. Prior to the occurrence of a Cash Trap Event Period (as defined below), all excess funds are required to be distributed to the borrower. During a Cash Trap Event Period, all excess funds are required to be swept to a lender-controlled cash management account. During a Lease Sweep Period (as defined below), the borrower is required to make minimum monthly deposits of $1,838,869 into a leasing reserve (regardless of the amount of available excess cash flow).

 

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

(i)the occurrence of an event of default under the Apple Campus 3 Whole Loan, the Apple Campus 3 Senior Mezzanine Loan or the Apple Campus 3 Junior Mezzanine Loan (see “Subordinate and Mezzanine Indebtedness” section);

(ii)the occurrence of a Lease Sweep Period (as defined below);

(iii)the debt service coverage ratio based on the Apple Campus 3 Whole Loan falling below 1.85x (based on a hypothetical 30-year amortization period), or the debt service coverage ratio based on the Apple Campus 3 Total Debt (see “Subordinate and Mezzanine Indebtedness” section) falling below 1.10x (based on a hypothetical 30-year amortization period) at the end of any calendar quarter; or

(iv)the ARD.

 

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

 

36

 

 

APPLE CAMPUS 3

 

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

with regard to clause (i), the cure of such event of default;
with regard to clause (ii), a Lease Sweep Period Cure Event (as defined below);
with regard to clause (iii), the debt service coverage ratio based on the Apple Campus 3 Whole Loan (based on a hypothetical 30-year amortization schedule) being equal to 1.85x or greater, and the debt service coverage ratio based on the Apple Campus 3 Total Debt (based on a hypothetical 30-year amortization schedule) being equal to 1.10x or greater for two consecutive calculation dates; or
with regard to clause (iv), the Apple Campus 3 Whole Loan being repaid in full.

 

A “Lease Sweep Period” will commence upon the earlier of the following (for clauses (i), (iii), (iv) and (v) below, the term ‘Apple’ includes any replacement tenant that occupies at least 75% of the space currently occupied by Apple):

(i)Apple cancels, terminates or gives notice of its intent to cancel or terminate its lease on at least 40,000 square feet;

(ii)Apple is no longer an Investment Grade Entity (as defined below);

(iii)Apple goes dark in 20% or more of its space; provided, however, that a Lease Sweep Period will not commence as long as Apple remains an Investment Grade Entity;

(iv)Apple defaults under its lease beyond any applicable notice and cure period; or

(v)Apple becomes insolvent or files for bankruptcy.

 

A “Lease Sweep Cure Event” will occur upon the following:

with regard to clause (i), (a) a Qualified Re-Leasing Event (as defined below), or (b) total swept funds equating to $35.00 per square foot of such applicable space (or borrower delivering to the lender an acceptable letter of credit in such amount);
with regard to clauses (ii) or (iii), (a) a Qualified Re-Leasing Event, (b) Apple restoring its status as an Investment Grade Entity; (c) the applicable space being subleased to an Investment Grade Entity who has accepted delivery of the space and is paying unabated rent in an amount no less than the contract rate of the primary lease; or (d) total swept funds equating to $50.00 per square foot of (x) the Apple lease space with respect to clause (ii) and (y) the applicable space with respect to clause (iii) (or borrower delivering to the lender an acceptable letter of credit in such amount); provided, however, that once total swept funds in the leasing reserve equate to $35.00 per square foot of the applicable space, additional funds will be deposited into a debt service reserve account until such $50.00 per square foot cap is met;
with regard to clause (iv), (a) the cure of such event of default and no other default occurring for a period of three consecutive months, or (b) total swept funds equating to $35.00 per square foot (or borrower delivering to the lender an acceptable letter of credit in such amount);
with regard to clause (v), the bankruptcy or insolvency proceedings having terminated and the lease having been affirmed or assigned in a manner satisfactory to the lender.

 

An “Investment Grade Entity” means an entity that is rated ‘BBB-’, or equivalent, or higher by at least two of Fitch, Moody’s and S&P.

 

A “Qualified Re-Leasing Event” will occur upon one or more replacement tenants acceptable to lender executing leases covering at least 75% of the space currently occupied by Apple with (i) terms extending at least three years beyond the Maturity Date of the Apple Campus 3 Whole Loan; (ii) economic terms at least as favorable as those in the lease being replaced; (iii) such replacement tenants having taken possession of such space and paying full unabated rent or such abatement has been reserved; (iv) and all tenant improvements and leasing commissions having been paid or reserved.

 

Property Management.The Apple Campus 3 Property is managed by an affiliate of the borrower.

 

Assumption.The Apple Campus 3 borrower has the right to transfer the Apple Campus 3 Property, provided that certain other conditions are satisfied, including, but not limited to: (i) no event of default has occurred and is continuing; (ii) the lender’s reasonable determination that the proposed transferee and guarantor satisfy the lender’s credit review and underwriting standards, taking into consideration transferee experience, financial strength and general business standing; and (iii) if requested by the lender, rating agency confirmation from DBRS, Fitch, and Moody’s that the transfer will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2018-BNK10 Certificates and similar confirmations from each rating agency rating any securities backed by any of the Apple Campus 3 Companion Loans with respect to the ratings of such securities.

 

Rights of First Offer. Apple has a right of first offer to purchase the Apple Campus 3 Property if the borrower markets the property for sale (the “Apple ROFO”). The Apple ROFO is not extinguished by foreclosure; however, the Apple ROFO does not apply to foreclosure or deed-in-lieu thereof.

 

Partial Release.Not permitted.

 

Real Estate Substitution.Not permitted.

 

Subordinate and Mezzanine Indebtedness.Wells Fargo Bank, National Association; Deutsche Bank AG, New York Branch; and Goldman Sachs Mortgage Company (collectively, the “Mezzanine Co-Lenders”) funded a $117,500,000 senior mezzanine loan to CW Mezz LLC (the “Apple Campus 3 Senior Mezzanine Loan”) and a $117,500,000 junior mezzanine loan to Central Wolfe LLC (the “Apple Campus 3 Junior Mezzanine Loan”)(collectively, the Apple Campus 3 Whole Loan, Apple Campus 3 Senior Mezzanine Loan and Apple Campus 3 Junior Mezzanine Loan are referred to herein as the “Apple Campus 3 Total Debt”). The Apple Campus 3 Senior Mezzanine Loan and the Apple Campus 3 Junior Mezzanine Loan are coterminous with the Apple Campus 3 Whole Loan and require interest-only payments. The Apple Campus 3 Senior Mezzanine Loan accrues interest at a fixed interest rate equal to 4.620% per annum (the “Senior Mezzanine Initial Interest Rate”), and the Apple Campus 3 Junior Mezzanine Loan accrues interest at a fixed interest rate equal to 6.000% per annum (the “Junior Mezzanine Initial Interest Rate”). In the event the Apple Campus 3 Senior

 

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

 

37

 

 

APPLE CAMPUS 3

 

Mezzanine Loan and/or the Apple Campus 3 Junior Mezzanine Loan are not paid off in full on or before the ARD, the borrower will be required to make interest payments based on an interest rate equal to the greater of (i) the Senior Mezzanine Initial Interest Rate or the Junior Mezzanine Initial Interest Rate, as applicable, plus 1.500% per annum, and (ii) the swap rate plus 1.500% per annum; provided, however, that upon the occurrence and continuance of an event of default, the interest rate will be equal to (1) the greater of (i) and (ii), plus (2) 5.000%. An intercreditor agreement is in place with respect to the Apple Campus 3 Whole Loan, the Apple Campus 3 Senior Mezzanine Loan and the Apple Campus 3 Junior Mezzanine Loan.

 

Ground Lease.None.

 

Terrorism Insurance.The Apple Campus 3 Whole 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 Apple Campus 3 Property, as well as business interruption insurance covering no less than the 24-month period following the occurrence of a casualty event, together with a 12-month extended period of indemnity.

 

Earthquake Insurance.The loan documents require earthquake insurance. At the time of closing, earthquake insurance coverage is in-place for the Apple Campus 3 Property. The seismic report indicated a probable maximum loss of 10.0% for the Apple Campus 3 Property.

 

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

 

38

 

 

(THIS PAGE INTENTIONALLY LEFT BLANK)

 

39

 

 

LARP I PORTFOLIO

 

(GRAPHICS)

 

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

 

40

 

 

LARP I PORTFOLIO

 

(MAP)

 

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

 

41

 

 

LARP I PORTFOLIO

 

No. 2 – LARP I Portfolio
 
Loan Information Property Information
Mortgage Loan Seller:

Morgan Stanley Mortgage Capital

Holdings LLC

 Single Asset/Portfolio:Portfolio
Credit Assessment (DBRS/Fitch/Moody’s):NR/NR/NR Property Type(3):Multifamily
Original Principal Balance:$90,000,000 Specific Property Type:Various
Cut-off Date Balance:$90,000,000 Location:Various
% of Initial Pool Balance:7.0% Size:979 Units
Loan Purpose:Recapitalization 

Cut-off Date Balance Per Unit:

$91,931
Borrower Names:Various Year Built/Renovated:Various/Various
Borrower Sponsor:Antheus Capital Title Vesting:Fee
Mortgage Rate:5.004% Property Manager:Self-Managed
Note Date:December 22, 2017 4thMost Recent Occupancy (As of):93.3% (12/31/2013)
Anticipated Repayment Date:NAP 3rdMost Recent Occupancy (As of):93.8% (12/31/2014)
Maturity Date:January 1, 2028 2ndMost Recent Occupancy (As of):95.7% (12/31/2015)
IO Period:120 months Most Recent Occupancy (As of):95.0% (12/31/2016)
Loan Term (Original):120 months Current Occupancy (As of):93.3% (Various)
Seasoning:1 month   
Amortization Term (Original):NAP Underwriting and Financial Information:
Loan Amortization Type:Interest-only, Balloon 4thMost Recent NOI (As of):$6,147,939 (12/31/2014)
Interest Accrual Method:Actual/360 3rdMost Recent NOI (As of):$6,659,855 (12/31/2015)
Call Protection:L(25),D(88),O(7) 2ndMost Recent NOI (As of):$7,235,799 (12/31/2016)
Lockbox Type:Springing Most Recent NOI (As of):$7,658,099 (TTM 9/30/2017)
Additional Debt:Yes   
Additional Debt Type(1):Mezzanine U/W Revenues(3):$13,044,378
   U/W Expenses:$5,394,782
   U/W NOI:$7,649,597
   U/W NCF:$7,386,342
Escrows and Reserves(2):  U/W NOI DSCR(1):1.68x
     U/W NCF DSCR(1):1.62x
Type:InitialMonthly

Cap

(If Any)

 U/W NOI Debt Yield(1):8.5%
Taxes$413,520$68,920NAP U/W NCF Debt Yield(1):8.2%
Insurance$147,650SpringingNAP As-Is Appraised Value:$140,530,000
Residential Replacement Reserves$0$20,999NAP As-Is Appraisal Valuation Date:November 3, 2017
Commercial Tenant Replacement Reserves$0$403$14,508 Cut-off Date LTV Ratio(1):64.0%
Commercial Tenant TI/LC Reserves$0$940$33,840 LTV Ratio at Maturity or ARD(1):64.0%
Deferred Maintenance$47,439NAPNAP   
       
        
(1)See “Subordinate and Mezzanine Indebtedness” section. The equity interest in the borrowers has been pledged to secure mezzanine indebtedness with an original principal balance of $18,000,000 (the “LARP I Portfolio Mezzanine Loan”). All statistical information related to the balance per unit, loan-to-value ratios, debt service coverage ratios and debt yields are based solely on the LARP I Portfolio Mortgage Loan. As of the Cut-off Date, the combined U/W NOI DSCR, U/W NCF DSCR, U/W NOI Debt Yield, U/W NCF Debt Yield, Cut-off Date LTV Ratio and LTV Ratio at Maturity or ARD including the LARP I Portfolio Mezzanine Loan were 1.29x, 1.24x, 7.1%, 6.8%, 76.9% and 76.9%, respectively.
(2)See “Escrows” section.
(3)Four properties contain ground floor retail space that accounts for approximately 8.3% of the aggregate underwritten gross potential rent for the LARP I Portfolio Properties.

 

The Mortgage Loan. The mortgage loan (the “LARP I Portfolio Mortgage Loan”) is evidenced by a single promissory note secured by a first mortgage encumbering the fee interest in a portfolio of 18 multifamily properties totaling 979 units and 32,187 square feet of ground floor retail space located in Chicago, Illinois and Kansas City, Missouri (the “LARP I Portfolio Properties”). The LARP I Portfolio Mortgage Loan had an original principal balance of $90,000,000, has an outstanding principal balance as of the Cut-off Date of $90,000,000 and accrues interest at an interest rate of 5.004% per annum. The LARP I Portfolio Mortgage Loan had an initial term of 120 months, has a remaining term of 119 months as of the Cut-off Date and requires payments of interest only through the term of the LARP I Portfolio Mortgage Loan. The LARP I Portfolio Mortgage Loan matures on January 1, 2028.

 

Following the lockout period, the borrower has the right to defease the LARP I Portfolio Mortgage Loan in whole, or in part as described below under “Partial Defeasance,” on any date before July 1, 2027. In addition, the LARP I Portfolio Mortgage Loan is prepayable without penalty on or after July 1, 2027.

 

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

 

42

 

 

LARP I PORTFOLIO

 

The following table presents certain information relating to the LARP I Portfolio Properties:

 

Property NameCity / StateYear Built/RenovatedUnitsRetail SFAllocated Cut-off Date Balance(2)

% of
ALA

Appraised Value(3)% of Appraised ValueUW NOI% of UW NOI
BlackwoodChicago, IL1965/2009145NAP17,000,00018.9%26,200,00018.6% $1,419,61418.6%
5500 CornellChicago, IL1903/NAP6519,52712,333,33313.7%19,000,00013.5% $997,11213.0%
Clyde ManorKansas City, MO1920/2010115NAP8,333,3339.3%12,930,0009.2% $667,1278.7%
Woodlawn TerraceChicago, IL1926/NAP104NAP6,875,0007.6%10,600,0007.5% $601,6257.9%
Park CentralKansas City, MO1930/2011106NAP6,416,6677.1%9,880,0007.0% $615,6228.0%
Maple CourtChicago, IL1913/NAP682,5605,416,6676.0%8,760,0006.2% $443,8425.8%
Ellis StreetChicago, IL1920/201580NAP5,416,6676.0%8,350,0005.9% $468,7406.1%
Drexel GrandChicago, IL1929/200574NAP5,041,6675.6%7,800,0005.6% $476,8826.2%
Ellis CourtChicago, IL1924/2009436,0004,562,5005.1%7,040,0005.0% $383,7665.0%
Kenwood CourtChicago, IL1911/2008254,1004,541,6675.0%7,000,0005.0% $387,9985.1%
Woodlawn CourtChicago, IL1923/200530NAP4,000,0004.4%6,200,0004.4% $320,2034.2%
Harper CourtChicago, IL1910/NAP18NAP2,020,8332.2%3,380,0002.4% $163,9092.1%
925 E 46th StreetChicago, IL1930/201624NAP1,791,6672.0%2,760,0002.0% $163,4852.1%
Yankee HillKansas City, MO1913/200816NAP1,583,3331.8%2,420,0001.7% $128,6801.7%
Drexel TerraceChicago, IL1913/NAP25NAP1,416,6671.6%2,810,0002.0% $117,3151.5%
Gillham HouseKansas City, MO1910/200824NAP1,395,8331.6%2,200,0001.6% $143,1851.9%
Cornell TerraceChicago, IL1924/NAP14NAP1,229,1671.4%2,000,0001.4% $100,2691.3%
5508 CornellChicago, IL1920/20023NAP624,9990.7%1,200,0000.9%$50,2240.7%
Total/Weighted Average 97932,187  $90,000,000100.0%$140,530,000100.0%$7,649,597100.0%

 

Sources and Uses

 

Sources    Uses   
Original loan amount$90,000,000 76.0% Loan Recapitalization(1)$115,026,758 97.1%
Mezzanine loan   18,000,000 15.2    Closing costs2,800,043 2.4   
Equity10,435,410 8.8    Reserves608,609 0.5   
Total Sources$118,435,410 100.0% Total Uses$118,435,410 100.0%

(1)Ownership of the LARP I Portfolio Properties was recapitalized in conjunction with refinancing of the existing debt previously encumbering the LARP I Portfolio Properties.

The Properties. The LARP I Portfolio Properties comprise a mix of low-rise, garden, mid-rise and high-rise multifamily buildings totaling 979 multifamily units (comprising 91.7% of underwritten gross potential rent) and 32,187 square feet of ground floor retail space (comprising 8.3% of underwritten gross potential rent) located in Chicago, Illinois and Kansas City, Missouri. The multifamily units were 93.3% occupied and the retail space was 98.2% occupied as of the December 2017 rent rolls. There are 14 multifamily properties totaling 718 units located in the Hyde Park and Kenwood neighborhoods of Chicago, Illinois, ranging in size from 3 to 145 units, accounting for 78.7% of total multifamily base rent. Four of the Chicago properties contain a total of 32,187 square feet of ground-level retail space, which accounts for 8.3% of underwritten gross potential rent. There are four multifamily properties totaling 261 units located in Kansas City, Missouri, ranging in size from 16 to 115 units, accounting for 21.3% of total multifamily gross potential rent. The largest property by allocated loan balance, Blackwood, has 145 units and comprises 19.5% of total multifamily gross potential rent, with no other property accounting for more than 9.9% of total multifamily gross potential rent. Only two properties, Blackwood (18.7% of underwritten NCF) and 5500 Cornell (13.1% of underwritten NCF), individually account for more than 10% of underwritten net cash flow.

The LARP I Portfolio Properties were constructed between 1903 and 1965 and acquired by the borrower between 2003 and 2006. Approximately $63.3 million was subsequently spent on renovations and capital improvements. The majority of the properties located in Chicago were substantially renovated at an aggregate cost of $27.4 million ($38,155 per unit) and the properties located in Kansas City underwent full historic rehabilitations at an aggregate cost of $36.0 million ($137,752 per unit). The Chicago Properties are located within approximately 2 miles of the University of Chicago and the Kansas City Properties are located within approximately 2.5 miles from the University of Missouri-Kansas City. Approximately 27.9% of the Chicago units and approximately 23.8% of the Kansas City units are leased to students.

 

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

 

43

 

 

LARP I PORTFOLIO

 

The following table presents certain information relating to the multifamily unit mix of the LARP I Portfolio Properties:

 

Multifamily Unit Mix Summary(1)

 

Property NameNeighborhoodSpecific Property TypeUnitsSF(2)Average Unit Size(3)Studio1 BR2 BR3 BR4 BROccupancy 
 
BlackwoodHyde ParkHigh Rise14590,485624048970091.0% 
5500 CornellHyde ParkGarden6553,38752141297696.9% 
Clyde ManorKansas CityMid Rise11561,1115321763350090.0% 
Woodlawn TerraceKenwoodGarden10447,3224557812140097.0% 
Park CentralKansas CityMid Rise10646,708441604600088.0% 
Maple CourtKenwoodGarden6841,15156826240097.0% 
Ellis StreetKenwoodGarden8036,6664583621230095.0% 
Drexel GrandHyde ParkGarden7430,970419423020097.3% 
Ellis CourtHyde ParkGarden4327,050490231910095.0% 
Kenwood CourtHyde ParkGarden2521,58569904210088.0% 
Woodlawn CourtHyde ParkGarden3024,03080100246087.0% 
Harper CourtHyde ParkGarden1814,955831110700100.0% 
925 E 46th StreetNorth KenwoodGarden2422,918955051270100.0% 
Yankee HillKansas CityMid Rise1615,02193900160087.5% 
Drexel TerraceKenwoodGarden2517,825713012121096.0% 
Gillham HouseKansas CityMid Rise2410,056419121200092.0% 
Cornell TerraceHyde ParkGarden149,61968734511100.0% 
5508 CornellHyde ParkGarden35,7601,9200000366.7% 
Total/Weighted Average 979576,619(2) 315350282221093.3% 

 

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

(2)SF includes 32,187 square feet of retail space located at the 5500 Cornell, Maple Court, Ellis Court and Kenwood Court properties.

(3)Average Unit Size reflects average square feet per multifamily unit only.

 

The following table presents historical occupancy percentages at the LARP I Portfolio Properties:

 

Historical Occupancy

 

12/31/2013(1)

12/31/2014(1)

12/31/2015(1)

12/31/2016(1)

Various(2)

93.3%93.8%95.7%95.0%93.3%
     
(1)Information obtained from the borrower.

(2)Information obtained from the underwritten rent roll.

 

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

 

44

 

 

LARP I PORTFOLIO

 

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 LARP I Portfolio Properties:

 

Cash Flow Analysis

 

 201420152016TTM 9/30/2017U/W% of U/W Effective Gross IncomeU/W $ per Bed
Gross Potential Rent$12,000,426$12,312,956$13,046,371$13,433,958$13,656,676(1)104.7%$13,950
Discounts/Concessions(266,594)(276,269)(502,635)(351,836)(345,136)(2.6)(353)
Other Income(2)688,570717,621846,823804,026 804,0266.2821
Less Vacancy & Credit Loss

(826,638)

(710,245)

(952,861)

(1,011,726)

(1,071,187)(3)

(8.2)

(1,094)

        
Effective Gross Income$11,595,763$12,044,063$12,437,698$12,874,422$13,044,378100.0%$13,324
        
Total Operating Expenses(4)$5,447,825$5,384,208$5,201,898$5,216,323$5,394,78241.4%$5,511
 

 

 

 

 

 

 

 

Net Operating Income$6,147,939$6,659,855$7,235,799$7,658,099$7,649,59758.6%$7,814
Capital Expenditures0000251,9831.9257
Other

0

0

0

0

11,272

0.1

12 

Net Cash Flow$6,147,939$6,659,855$7,235,799$7,658,099$7,386,34256.6%$7,545
        
NOI DSCR1.35xx1.46x1.58x1.68x1.68x  
NCF DSCR1.35xx1.46x1.58x1.68x1.62x  
NOI DY6.8%7.4%8.0%8.5%8.5%  
NCF DY6.8%7.4%8.0%8.5%8.2%  

 

(1)U/W Gross Potential Rent is comprised of $12,526,188 of residential income (91.7% of U/W Base Rent) and $1,130,488 of retail income (8.3% of U/W Gross Potential Rent).

(2)Other income includes move-in and application fees, late fees, laundry income, lease termination fees, parking income and pet fees.

(3)The underwritten economic vacancy is 7.8%. The LARP I Portfolio Properties were 93.3% physically occupied as of December 2017. Underwritten Vacancy reflects an 8.1% vacancy rate on the multifamily component of Gross Potential Rent and a 5% vacancy rate on the commercial component of Gross Potential Rent.
(4)The four LARP I Portfolio Properties located in Kansas City, Missouri are subject to a tax abatement under Chapter 353 of the Missouri Urban Redevelopment Corporations law that provides for a tax abatement in connection with the redevelopment of real property that has been found to be a “blighted area” by the city in which they are located. The tax abatement is in place until 2028. Underwritten taxes for such four LARP I Portfolio Properties are based on the abatement and total $2,988. The appraiser’s estimated stabilized taxes for such LARP I Portfolio Properties assuming no abatement are $128,835.

Appraisal.As of the appraisal valuation date of November 3, 2017 the LARP I Portfolio Properties had an aggregate “as-is” appraised value of $140,530,000.

Environmental Matters.According to the Phase I environmental assessments dated November 13, 2017 and November 16th, 2017 there was no evidence of any recognized environmental conditions at the LARP I Portfolio Properties.

Market Overview and Competition.The LARP I Portfolio Properties are concentrated in the Bronzeville/Hyde Park/South Shore submarket of Chicago, Illinois and the Central Kansas City submarket of Kansas City, Missouri. There are 14 properties (718 units, 79.8% of underwritten net cash flow) located in the Chicago apartment market, which are concentrated in the Bronzeville/Hyde Park/South Shore submarket. According to the appraisals, the Chicago apartment market contained 708,408 apartment units with an occupancy rate of 95.3% as of the third quarter of 2017, a decline of 5 basis points over the previous quarter, and an average occupancy rate of 95.3% since 2012. The Bronzeville/Hyde Park/South Shore submarket contained 58,916 apartment units with an occupancy rate of 94.3% as of the third quarter of 2017, an increase of 9 basis points over the prior quarter, and an average occupancy rate of 94.3% since 2012. According to the appraisals, there are currently five multifamily properties under construction in the Bronzeville/Hyde Park/South Shore submarket expected to comprise 501 units. Four of the LARP I Portfolio Properties located in Chicago contain ground-floor retail space. The Chicago retail market had a vacancy rate of 6.7% as of the third quarter of 2017, remaining unchanged over the previous quarter. As of the third quarter of 2017, the South Chicago retail submarket had a total inventory of 45,989,385 square feet with a vacancy rate of 6.1%. The LARP I Portfolio Properties located in Chicago are generally located within approximately 2 miles of the University of Chicago. Approximately 27.9% of the units at the Chicago properties are leased to students.

There are four properties (261 units, 20.2% of underwritten net cash flow) located in the Kansas City apartment market, which are concentrated in the Central Kansas City submarket. According to the appraisals, the Kansas City apartment market contained 152,182 apartment units with an occupancy rate of 94.5% as of the third quarter of 2017, a decline of 3 basis points over the previous quarter, and an average occupancy rate of 94.4% since 2012. The Central Kansas City submarket contained 23,018 apartment units with an occupancy rate of 93.3% as of the third quarter of 2017, a decline of 4 basis points over the prior quarter, and an average occupancy rate of 94.3% since 2012. According to the appraisals, there are 26 properties that have been completed or are under construction in the submarket comprising 3,734 units, of which three properties comprised of 517 units currently under construction in the midtown Kansas City are expected to be competitive with LARP I Portfolio Properties located in Kansas City. The LARP I Portfolio Properties located in Kansas City are generally located within 2.5 miles of the University of Missouri-Kansas City. Approximately 23.8% of the units at the Kansas City properties are leased to students. 

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

 

45

 

 

LARP I PORTFOLIO

 

The following table presents certain information relating to some comparable multifamily properties for the LARP I Portfolio Properties:

 

Competitive Set(1)

 

Property NameCity/StateMarketBuilding TypeUnitsAppraised ValueAppraised Value/UnitSales Comparables Value/Unit Range (Unadjusted) 
 
BlackwoodChicago, ILChicagoHigh Rise145$26,200,000$180,690$118,145 - $197,500 
5500 CornellChicago, ILChicagoGarden65$19,000,000$292,308$174,074 - $303,960 
Clyde ManorKansas City, MOKansas CityMid Rise115$12,930,000$112,435$86,806 - $132,692 
Woodlawn TerraceChicago, ILChicagoGarden104$10,600,000$101,923$79,592 - $150,926 
Park CentralKansas City, MOKansas CityMid Rise106$9,880,000$93,208$86,806 - $132,692 
Maple CourtChicago, ILChicagoGarden68$8,760,000$128,824$116,692 - $174,074 
Ellis StreetChicago, ILChicagoGarden80$8,350,000$104,375$83,824 - $118,145 
Drexel GrandChicago, ILChicagoGarden74$7,800,000$105,405$79,592 - $118,145 
Ellis CourtChicago, ILChicagoGarden43$7,040,000$163,721$118,145 - $258,333 
Kenwood CourtChicago, ILChicagoGarden25$7,000,000$280,000$208,333 - $320,000 
Woodlawn CourtChicago, ILChicagoGarden30$6,200,000$206,667$150,926 - $281,250 
Harper CourtChicago, ILChicagoGarden18$3,380,000$187,778$118,145 - $197,500 
925 E 46th StreetChicago, ILChicagoGarden24$2,760,000$115,000$79,592 - $150,926 
Yankee HillKansas City, MOKansas CityMid Rise16$2,420,000$151,250$84,167 - $132,692 
Drexel TerraceChicago, ILChicagoGarden25$2,810,000$112,400$79,592 - $118,145 
Gillham HouseKansas City, MOKansas CityMid Rise24$2,200,000$91,667$84,167 - $132,692 
Cornell TerraceChicago, ILChicagoGarden14$2,000,000$142,857$86,667 - $197,500 
5508 CornellChicago, ILChicagoGarden3$1,200,000$400,000$330,000 - $460,000 

 

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

 

The following table presents certain information relating to the units and rent at the LARP I Portfolio Properties located in Chicago:

 

Unit Type# of UnitsAvg SF per UnitMonthly Market Rent per UnitMonthly Actual Rent per Unit(1)Underwritten Monthly Rent per Unit(1) 
 
Studio226355$861$858$858 
1 Bedroom229524$1,089$1,094$1,094 
2 Bedroom231763$1,342$1,381$1,381 
3 Bedroom22970$1,548$1,458$1,458 
4 Bedroom101,383$2,369$2,444$2,444 
Commercial(2)261,238 $16.54$35.22$35.22 
Total/Weighted Average(3)718573$1,130$1,221$1,221 

 

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

(2)Commercial Monthly Market Rent per Unit is based on square footage (SF).

(3)Total/Weighted Averages only reflect multifamily units and excludes the Commercial Units.

 

The following table presents certain information relating to the units and rent at the LARP I Portfolio Properties located in Kansas City:

 

Unit Type# of UnitsAvg SF per UnitMonthly Market Rent per UnitMonthly Actual Rent per Unit(1)Underwritten Monthly Rent per Unit(1) 
 
Studio89396$734$722$722 
1 Bedroom121489$862$850$850 
2 Bedroom51754$1,090$1,081$1,081 
Total/Weighted Average261507$863$854$854 

 

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

 

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

 

46

 

 

LARP I PORTFOLIO

 

The Borrower.The borrowers are 18 separate Delaware limited liability companies, which are single purpose entities with two independent directors each. Legal counsel to the borrower provided a non-consolidation opinion in connection with the origination of the LARP I Portfolio Mortgage Loan. LARP Holdings, LLC, a Delaware limited liability company, is 100% owner of the borrowers. David Gefsky and Eli Ungar (together, the “Individual LARP I Portfolio Guarantors”) and LARP Holdings, LLC are the guarantors of certain nonrecourse carveouts under the LARP I Portfolio Mortgage Loan; however, only LARP Holdings, LLC (and not the Individual LARP I Portfolio Guarantors) is liable under the environmental indemnity. The Individual LARP I Portfolio Guarantors are liable under the non-recourse carveout guaranty only for fraud, certain voluntary and collusive bankruptcy events, failure to comply with single purpose entity covenants (which is loss recourse only, unless substantive consolidation of the LARP I Portfolio borrowers with another entity results) and prohibited transfers of the LARP I Portfolio Properties and are not liable for other non-recourse carveouts, such as intentional misrepresentation, misappropriation of rents, casualty and condemnation proceeds and security deposits, waste, breaches of environmental provisions in the loan documents and prohibited transfers of interest in the borrowers. Further, at such time as LARP Holdings, LLC’s financial statements evidence a net worth of not less than $50,000,000 and liquidity of not less than $2,000,000 (in each case excluding the LARP I Portfolio Properties), the Individual LARP I Portfolio Guarantors will be released from all obligations and liabilities under the non-recourse carveout guaranty for events occurring after such date.

 

The Borrower Sponsors.The borrower sponsor is Antheus Capital (“Antheus”), a Delaware limited partnership, which serves as the managing member of LARP Holdings Manager, LLC, the manager of LARP Holdings, LLC. Antheus Capital is a private real estate company focused on the acquisition, development and redevelopment of apartment properties located in submarkets throughout the United States. Antheus was founded in 2002 by Eli Ungar and David Gefsky. Today the portfolio consists of approximately 7,200 multifamily units and 400,000 square feet of commercial space with 4,851 units owned/managed in Chicago, 1,481 units owned/managed in Kansas City and 867 units owned/managed in St. Louis.

 

Escrows.The loan documents provide for upfront reserves of $413,520 for taxes, $147,650 for insurance premiums and $47,439 for required repairs. The loan documents also provide for ongoing monthly reserves of 1/12 of annual real estate taxes (currently $68,920) for taxes, 1/12 of annual insurance premiums (currently $14,765) for insurance reserves (provided that such insurance reserve deposits will be waived so long as acceptable blanket insurance policies are in place), $20,999 for replacement reserves for residential units, $403 for replacement reserves for commercial units and $940 for rollover reserves for commercial units, subject to a cap (as to both replacement reserves for commercial units and rollover reserves for commercial units) of 36 times the then-current monthly deposit.

 

Lockbox and Cash Management.Upon the first occurrence of a Cash Sweep Event Period (as defined below), the borrowers are required to establish a lockbox account into which the borrowers will be required to deposit or cause to be deposited all rents and revenues received from the LARP I Portfolio Properties within one business days of receipt, and will be required to direct all commercial tenants to deposit rents directly into such lockbox account. In addition, upon the first occurrence of a Cash Sweep Event Period, the lender will have the right to establish, and the borrowers will be required to cooperate to establish, a lender controlled cash management account. During the continuance of a Cash Sweep Event Period, all funds in the lockbox account are required to be swept into such cash management account for payment (unless an event of default is continuing) of debt service, monthly escrows, operating expenses set forth in the approved annual budget or otherwise approved by the lender, extraordinary expenses approved by the lender, and debt service under the LARP I Portfolio Mezzanine Loan, with all excess cash (i) during any Cash Sweep Event Period caused solely by an event of default under the LARP I Portfolio Mezzanine Loan, to be paid to the mezzanine lender, and (ii) otherwise to be deposited to an excess cash reserve to be held as additional security for the LARP I Portfolio Mortgage Loan for so long as a Cash Sweep Period exists.

 

A “Cash Sweep Event Period” will commence upon the earliest of (i) the occurrence and continuance of an event of default; (ii) the occurrence of an event of default under the LARP I Portfolio Mezzanine Loan and (iii) the debt service coverage ratio (based on the aggregate interest only payments under the LARP I Portfolio Mortgage Loan and the LARP I Portfolio Mezzanine Loan) falling below 1.10x for six consecutive calendar months. A Cash Sweep Event Period will end, with respect to clause (i), upon the cure of such event of default; with respect to clause (ii), upon the lender receiving notice from the mezzanine lender that no event of default exists under the LARP I Portfolio Mezzanine Loan; and with respect to clause (iii), upon the date that the debt service coverage ratio (based on the aggregate interest only payments under the LARP I Portfolio Mortgage Loan and the LARP I Portfolio Mezzanine Loan) is equal to or greater than 1.15x for six consecutive calendar months.

 

Property Management.The LARP I Portfolio Properties are managed by an affiliate of the borrowers.

 

Assumption.The borrower has the right to transfer the LARP I Portfolio Properties, provided that no event of default has occurred and is continuing and certain other conditions are satisfied, including (i) the lender’s reasonable determination that the proposed transferee and guarantor satisfy the lender’s credit review and underwriting standards, taking into consideration transferee experience, financial strength and general business standing; (ii) the execution of a recourse guaranty and an environmental indemnity by an affiliate of the transferee; and (iii) if requested by the lender, a rating agency confirmation from each rating agency assigned to the Series BANK 2018-BNK10 Certificates that the transfer will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series BANK 2018-BNK10 Certificates.

 

Partial Release. Following the expiration of the lockout period, the borrowers are permitted to obtain the release of any individual LARP I Portfolio Property upon defeasance of a principal amount equal to 115% of the allocated loan amount for such individual LARP I Portfolio Property and satisfaction of certain conditions, including among others (i) the aggregate debt yield of the LARP I Portfolio Mortgage Loan and LARP I Portfolio Mezzanine Loan based on the remaining LARP I Portfolio Properties immediately following the release will be not less than the greater of (x) the aggregate debt yield immediately preceding the release and (y) 6.84%; (ii) the aggregate debt service coverage ratio of the LARP I Portfolio Mortgage Loan and LARP I Portfolio Mezzanine Loan based on the remaining LARP I Portfolio Properties immediately following the release will be not less than the greater of (x) the aggregate debt

 

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

 

47

 

 

LARP I PORTFOLIO

 

service coverage ratio immediately preceding the release and (y) 1.24x; (iii) the aggregate loan-to-value ratio of the LARP I Portfolio Mortgage Loan and LARP I Portfolio Mezzanine Loan based on the remaining LARP I Portfolio Properties immediately following the release will be not greater than the lesser of (x) the aggregate loan-to-value ratio immediately preceding the release and (y) 76.85%; and (iv) compliance with REMIC requirements.

 

Real Estate Substitution.Not permitted.

 

Subordinate and Mezzanine Indebtedness.Morgan Stanley Mortgage Capital Holdings LLC funded the $18,000,000 LARP I Portfolio Mezzanine Loan to LARP Holdings Mezzanine Borrower, LLC, a Delaware limited liability company owning 100.0% of the borrowers under the LARP I Portfolio Mortgage Loan (the “LARP I Portfolio Mezzanine Borrower”). The LARP I Portfolio Mezzanine Loan is secured by a pledge of the LARP I Portfolio Mezzanine Borrower’s interest in the borrowers under the LARP I Portfolio Mortgage Loan. The LARP I Portfolio Mezzanine Loan accrues interest at a rate of 7.50% perannumand requires interest-only payments through the maturity date of January 1, 2028. The rights of the LARP I Portfolio Mezzanine Loan lender are further described under “Description of the Mortgage Pool–Additional Indebtedness-Mezzanine Indebtedness” in the Preliminary Prospectus. The LARP I Portfolio Mezzanine Loan has been sold to a third party.

 

Ground Lease.None

 

Terrorism Insurance.The LARP I Portfolio Mortgage Loan documents require that the “all risk” insurance policy required to be maintained by the borrowers provide coverage for acts of terrorism in an amount equal to the full replacement cost of the LARP I Portfolio Properties and 18 months of business interruption insurance; provided that so long as the Terrorism Risk Insurance Act of 2002, as extended and modified by the Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA) is in effect (including any extensions thereof or if another federal governmental program is in effect relating to “acts of terrorism” which provides substantially similar protections as TRIPRA), and covers both domestic and foreign acts of terrorism, the lender will be required to accept insurance which covers against “covered acts” as defined by TRIPRA or such other program. If TRIPRA is no longer in effect, the borrowers will not be required to pay terrorism insurance premiums in excess of an annual terrorism premium cap of two times the cost of the annual premiums for property and business interruption insurance required under the LARP I Portfolio Mortgage Loan documents (excluding the cost of terrorism, flood, earthquake and windstorm components of such insurance) at the time terrorism coverage is excluded from the applicable policy.

 

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

 

48

 

 

(THIS PAGE INTENTIONALLY LEFT BLANK)

 

49

 

 

IRON GUARD STORAGE PORTFOLIO

 

 (GRAPHIC) 

 

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

 

50

 

 

IRON GUARD STORAGE PORTFOLIO

 

 (GRAPHIC)

 

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

 

51

 

 

IRON GUARD STORAGE PORTFOLIO

 

No. 3 – Iron Guard Storage Portfolio
 
Loan Information Property Information
Mortgage Loan Seller:Bank of America, N.A. Single Asset/Portfolio:Portfolio

Credit Assessment

(DBRS/Fitch/Moody’s):

NR/NR/NR Property Type:Self Storage
Original Principal Balance:$86,000,000 Specific Property Type:Self Storage
Cut-off Date Balance:$86,000,000 Location:Various
% of Initial Pool Balance:6.7% Size(4):1,352,239 SF
Loan Purpose:Refinance Cut-off Date Balance Per SF(2):$63.60
Borrower Names(1):

Various

 Year Built/Renovated:Various
Borrower Sponsor:David Ross Title Vesting:Fee
Mortgage Rate:4.5665% Property Manager:Iron Guard Storage, LLC
Note Date:January 9, 2018 4th Most Recent Occupancy (As of)(5)(6):75.3% (12/31/2013)
Anticipated Repayment Date:NAP 3rd Most Recent Occupancy (As of)(5)(6):72.9% (12/31/2014)
Maturity Date:February 1, 2028 2nd Most Recent Occupancy (As of)(5):74.4% (12/31/2015)
IO Period:120 months Most Recent Occupancy (As of)(5):80.1% (12/31/2016)
Loan Term (Original):120 months Current Occupancy (As of):82.0% (Various)
Seasoning:0 months  
Amortization Term (Original):NAP Underwriting and Financial Information:
Loan Amortization Type:Interest-only, Balloon   
Interest Accrual Method:Actual/360 4th Most Recent NOI (As of)(6):NAV
Call Protection:L(24),D(92),O(4) 3rd Most Recent NOI (As of)(6):$6,491,037 (12/31/2015)
Lockbox Type:Springing 2nd Most Recent NOI (As of):$6,613,972 (12/31/2016)
Additional Debt(2):Yes Most Recent NOI (As of):$7,181,001 (TTM 11/30/2017)
Additional Debt Type(2):Mezzanine  
   U/W Revenues:$11,565,016
   U/W Expenses:$3,874,101
     U/W NOI:$7,690,915
     U/W NCF:$7,487,915
     U/W NOI DSCR(2):1.93x
Escrows and Reserves(3):    U/W NCF DSCR(2):1.88x
     U/W NOI Debt Yield(2):8.9%
Type:InitialMonthlyCap (If Any) U/W NCF Debt Yield(2):8.7%
Taxes$170,242$96,239NAP Appraised Value(7):$137,470,000
Insurance$158,395$17,599NAP Appraisal Valuation Date(7):Various
Replacement Reserves$0$11,278$406,000 Cut-off Date LTV Ratio(2)(7):62.6%
Deferred Maintenance$212,900$0NAP LTV Ratio at Maturity(2)(7):62.6%
       
        
(1)The Borrowers are Lucky 7 Equity LLC, Lucky 7 Equity II LLC, Lucky 7 Equity IV, LLC, Lucky 7 Equity V, LLC, Troy Mini Storage, LLC, Tomball Storage, LLC, Donna Mini Storage, LLC, Del Valle Storage, LLC, Conroe Mini Storage, LLC, Canyon Lake Storage, LLC, Denton Mini Storage, LLC, Adamsville Storage, LLC, 6th Avenue Storage, LLC, LaPorte Storage, LLC, Wylds Storage, LLC, Webster Storage, LLC, Shurling Storage, LLC, Riverside Storage, LLC, Prater Way Storage, LLC, Marine Self-Storage, LLC, Key Self-Storage, LLC, Katy Self Storage, LLC, Gum Branch Storage, LLC, Center Storage, LLC, Camas Mini-Storage Annex, L.L.C. and Bertram Storage, LLC.

(2)See “Subordinate and Mezzanine Indebtedness” section. The Cut-off Date Balance Per Unit, U/W NOI DSCR, U/W NCF DSCR, U/W NOI Debt Yield, U/W NCF Debt Yield, Cut-off Date LTV Ratio and LTV Ratio at Maturity including the Iron Guard Storage Portfolio Mezzanine Loan (as defined below) are $72.58, 1.46x, 1.42x, 7.8%, 7.6%, 71.1% and 71.1%, respectively.

(3)See “Escrows” section.

(4)SF excludes parking and apartment square footage.

(5)Historical occupancy figures are based on unit count.

(6)The Iron Guard Storage Portfolio Properties were acquired by Iron Guard Storage Portfolio Borrowers (as defined below) between 2010 and 2015. 2014 and 2015 figures do not represent full year performance of the complete portfolio. In 2010, 56.4% of the portfolio (by allocated loan amount) was acquired. In 2015, 43.6% of the portfolio (by allocated loan amount) was acquired.

(7)The Appraised Value represents the “As Portfolio” bulk appraised value of the Iron Guard Storage Portfolio Properties (as defined below) as of the report date, January 19, 2018, which is inclusive of a $15,650,000 portfolio premium. The Cut-off Date LTV Ratio and LTV Ratio at Maturity are calculated based upon the Iron Guard Portfolio Mortgage Loan and the “As Portfolio” Appraised Value of $137,470,000. The Cut-off Date LTV Ratio and LTV Ratio at Maturity based on the Iron Guard Portfolio Mortgage Loan and the sum of the individual “as-is” appraised values of $121,820,000, which excludes the portfolio premium, are 70.6%. The Cut-off Date LTV Ratio and LTV Ratio at Maturity based on the combined balance of the Iron Guard Portfolio Mortgage Loan and the Iron Guard Storage Portfolio Mezzanine Loan and the sum of the individual “as-is” appraised values of $121,820,000, which excludes the portfolio premium, are 80.6%.

 

The Mortgage Loan. The mortgage loan (the “Iron Guard Storage Portfolio Mortgage Loan”) is evidenced by a promissory note secured by the fee interests in a portfolio of 22 self storage properties located across 7 states and totaling 1,352,239 square feet of traditional storage space plus parking spaces (the “Iron Guard Storage Portfolio Properties”). The Iron Guard Storage Portfolio Mortgage Loan had an original principal balance of $86,000,000, has an outstanding principal balance as of the Cut-off Date of $86,000,000 and accrues interest at an interest rate of 4.5665%per annum. The Iron Guard Storage Portfolio Mortgage Loan had

 

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

 

52

 

 

IRON GUARD STORAGE PORTFOLIO

 

an initial term of 120 months, has a remaining term of 120 months as of the Cut-off Date and requires payments of interest only through the loan term. The Iron Guard Storage Portfolio Mortgage Loan matures on February 1, 2028.

 

Following the lockout period, the borrower has the right to defease the Iron Guard Storage Portfolio Mortgage Loan in whole on any date before November 1, 2027, after which date the Iron Guard Storage Portfolio Mortgage Loan is prepayable without penalty.

 

Sources and Uses

 

Sources    Uses   
Original loan amount$86,000,000 87.6% Loan payoff $72,062,464 73.4%
Mezzanine loan amount12,150,000 12.4    Return of equity      22,565,746 23.0  
     Closing costs        2,980,253 3.0 
     Reserves          541,537 0.6
Total Sources$98,150,000 100.0% Total Uses$98,150,000 100.0%

 

The Properties. The Iron Guard Storage Portfolio Properties are comprised of 22 self storage properties containing a total of 9,976 traditional storage units (of which 2,233 (22.4%) are climate controlled) and 468 parking spaces. Each of the properties features on-site management, an on-site supply store and perimeter fencing with secured gate entry. Additionally, ten of the properties offer truck rental, the Camas and Webster properties each include one apartment unit, and the Adamsville property receives additional income via a commercial cell tower lease. The Iron Guard Storage Portfolio Properties range in size from approximately 37,830 square feet to 135,150 square feet. All 22 properties are self-managed by an affiliate.

 

The Iron Guard Storage Portfolio Properties are located across 7 states, with the largest presence in Texas (9 properties, 42.6% of SF, 41.6% of UW NCF), Alabama (3 properties, 18.3% of SF, 14.4% of UW NCF), Georgia (4 properties, 15.2% of SF, 13.2% of UW NCF), and North Carolina (3 properties, 13.1% of SF, 13.8% of UW NCF) with the remaining properties (10.8% of SF, 17.0% of UW NCF) located in Washington, Nevada and Virginia. The Iron Guard Storage Portfolio Properties were built between 1978 and 2011 with a weighted average year built of 1996. The Iron Guard Storage Portfolio sponsor acquired twelve of the properties in 2010 and ten of the properties throughout 2015 across three separate transactions. Since acquisition, the sponsor has invested approximately $1.29 million in immediate repairs, rebranded the facilities, implemented its management platform and tenant insurance protection plan programs, increased rental rates and streamlined expenses. The weighted average occupancy for the Iron Guard Storage Portfolio Properties was 82.0% by square footage, as of the most recent November 2017 borrower rent rolls.

 

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

 

53

 

 

IRON GUARD STORAGE PORTFOLIO

 

The following table presents certain information relating to the Iron Guard Storage Portfolio Properties:

 

Iron Guard Storage Portfolio Property Summary

 

Property Name, AddressCity, State

Total Units

Storage / Parking

Allocated

Loan Amount

% of

Portfolio

Cut-off

Date

Balance 

Net

Rentable

Area (SF)(1)

% of Net Rentable Area(1)

Appraised Value(2)

% of Appraised Value

Camas

2327 Northeast 3rd Loop

Camas, WA390 / 15$8,255,0009.6%51,7553.8%$11,670,0009.6%

Webster

410 Old Galveston Road

Webster, TX526 / 111$6,890,0008.0%96,0977.1%$9,740,0008.0%

Gum Branch

1230 Gum Branch Road

Jacksonville, NC606 / 0$5,447,0006.3%80,7006.0%$7,700,0006.3%

6th Avenue

320 6th Avenue Southwest

Birmingham, AL493 / 0$4,548,0005.3%57,3104.2%$6,430,0005.3%

Katy

24620 Franz Road

Katy, TX386 / 26$4,463,0005.2%56,0994.1%$6,310,0005.2%

La Porte

2915 North 23rd Street

La Porte, TX481 / 57$4,435,0005.2%61,7304.6%$6,270,0005.1%

Denton

550 Fort Worth Drive

Denton, TX373 / 32$4,244,0004.9%49,4503.7%$5,980,0004.9%

Shurling

1300 Shurling Drive

Macon, GA570 / 0$4,032,0004.7%67,6005.0%$5,880,0004.8%

Prater Way

275 East Prater Way

Sparks, NV306 / 0$4,060,0004.7%44,2143.3%$5,740,0004.7%

Adamsville

500 Foust Court

Birmingham, AL462 / 13$3,975,0004.6%55,4754.1%$5,620,0004.6%

Troy

4176 Troy Highway

Montgomery, AL945 / 1$3,961,0004.6%135,15010.0%$5,600,0004.6%

Conroe

4205 North Frazier Street

Conroe, TX425 / 14$3,947,0004.6%59,1474.4%$5,580,0004.6%

Del Valle

4405 East Highway 71

Del Valle, TX511 / 39$3,763,0004.4%67,2285.0%$5,320,0004.4%

Tomball

16920 FM 2920 Road

Tomball, TX444 / 29$3,636,0004.2%72,2615.3%$5,220,0004.3%

Canyon Lake

5622 FM 2673

Canyon Lake, TX378 / 19$3,325,0003.9%57,7654.3%$4,700,0003.9%

Riverside

2405 Riverside Drive

Danville, VA404 / 4$3,049,0003.5%49,6363.7%$4,310,0003.5%

Bertram

1045 Bertram Road

Augusta, GA352 / 21$2,653,0003.1%45,7253.4%$3,750,0003.1%

Center

135 Center Street

Jacksonville, NC450 / 18$2,617,0003.0%58,5624.3%$3,700,0003.0%

Key

915 Key Street

Macon, GA342 / 2$2,476,0002.9%40,7003.0%$3,500,0002.9%

Wylds

1805A Wylds Roads

Augusta, GA393 / 0$2,440,0002.8%51,7503.8%$3,450,0002.8%

Marine

108 North Marine Boulevard

Jacksonville, NC347 / 43$2,108,0002.5%37,8302.8%$2,980,0002.4%

Donna

1015 West Expressway 83

Donna, TX392 / 24$1,676,0001.9%56,0554.1%$2,370,0001.9%
Total9,976 / 468$86,000,000100.0%1,352,239100.0%$121,820,000100.0%
          
(1)Net Rentable Area excludes parking square footage.

(2)The Total Appraised Value of $121,820,000 represents the sum of the individual appraised values of the Iron Guard Storage Portfolio Properties. The appraiser also provided a bulk portfolio value for the Iron Guard Storage Portfolio Properties of $137,470,000, which includes a portfolio premium of $15,650,000.

 

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

 

54

 

 

IRON GUARD STORAGE PORTFOLIO

 

The Iron Guard Storage Portfolio Properties’ revenue is generated from 22 different properties, with limited concentration from any single property. Only five properties individually represent greater than 5.0% of the underwritten net cash flow, with the greatest individual percentage being 8.4%. The following table presents detailed information with respect to the individual performance of the Iron Guard Storage Portfolio Properties.

 

Iron Guard Storage Portfolio Property Performance

 

Property Name 

Total Units

Storage / Parking

Climate Controlled UnitsYear Built/ Renovated

Date

Acquired

11/2017
TTM SF Occupancy

11/2017 TTM
EGI

% of
Total
11/2017
TTM EGI

UW NCF

% of
Total

UW
NCF

Camas 390 / 151011978/1994Jun-1086.0%$785,8457.1%$631,6178.4%
Webster 526 / 1112011999/NAPMay-1096.1%$862,6297.7%$580,6207.8%
Gum Branch 606 / 01121989/NAPJun-1084.6%$738,0426.6%$566,0497.6%
6th Avenue 493 / 01432007/NAPApr-1575.7%$512,8364.6%$351,6744.7%
Katy 386 / 262012001/NAPDec-1093.0%$563,7125.1%$397,5435.3%
La Porte 481 / 572161999/NAPMar-1595.1%$650,1895.8%$420,1035.6%
Denton 373 / 321102001/NAPJun-1578.4%$501,0154.5%$298,2374.0%
Shurling 570 / 001988/NAPMay-1079.7%$524,8154.7%$376,1295.0%
Prater Way 306 / 001990/NAPFeb-1090.5%$450,9464.0%$334,3654.5%
Adamsville 462 / 131572006/NAPApr-1583.3%$490,8104.4%$362,7614.8%
Troy 945 / 101995/NAPOct-1572.6%$541,2114.9%$361,7754.8%
Conroe 425 / 142162011/NAPOct-1588.9%$518,1134.7%$361,6844.8%
Del Valle 511 / 391922005/NAPOct-1572.3%$548,3704.9%$312,8754.2%
Tomball 444 / 292072004/NAPOct-1575.6%$492,9894.4%$312,2174.2%
Canyon Lake 378 / 191712008/NAPOct-1572.8%$448,7774.0%$300,0834.0%
Riverside 404 / 401988/NAPJun-1085.6%$454,7344.1%$309,9654.1%
Bertram 352 / 2101986/NAPJun-1080.7%$342,8763.1%$217,1302.9%
Center 450 / 18731995/NAPJun-1083.6%$400,3273.6%$265,6073.5%
Key 342 / 201988/NAPMay-1085.4%$331,0953.0%$208,4102.8%
Wylds 393 / 001988/NAPJun-1077.8%$318,9302.9%$184,9452.5%
Marine 347 / 4301985/NAPJun-1080.1%$359,5953.2%$201,3432.7%
Donna 392 / 241332002/NAPOct-1573.7%$299,1782.7%$132,7831.8%
Total/Weighted Average9,976 / 4682,2331996/NAP  82.0%$11,137,034100.0%$7,487,915100.0%

 

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

 

55

 

 

IRON GUARD STORAGE PORTFOLIO

 

The following table presents historical occupancy percentages at the Iron Guard Storage Portfolio Properties:

 

Historical Occupancy(1)

 

Property Name12/31/201312/31/201412/31/201512/31/2016

11/2017

In-Place

2015- 11/2017
In Place Average
Camas89.8%92.3%93.9%92.5%86.0%90.8%
Webster88.3%91.5%87.7%87.2%92.9%89.3%
Gum Branch75.8%74.1%80.1%83.6%83.3%82.3%
6th AvenueN/AN/A86.3%84.6%78.3%83.1%
Katy76.7%82.8%78.6%81.9%93.0%84.5%
La PorteN/AN/A82.0%86.4%93.3%87.2%
DentonN/AN/A84.2%87.4%77.8%83.1%
Shurling75.5%73.6%74.4%80.5%80.0%78.3%
Prater Way84.5%80.8%87.4%92.4%88.9%89.6%
AdamsvilleN/AN/A79.3%81.7%79.2%80.1%
Troy(2)N/A66.7%69.3%70.8%70.5%70.2%
Conroe(2)68.1%71.3%79.8%80.2%90.0%83.3%
Del Valle(2)64.4%51.4%66.1%71.0%68.2%68.4%
Tomball(2)74.3%76.2%60.9%87.4%73.6%74.0%
Canyon Lake(2)48.6%61.1%62.9%78.5%76.1%72.5%
Riverside81.9%83.1%89.2%91.2%84.1%88.2%
Bertram65.3%66.7%66.4%77.9%79.4%74.6%
Center65.4%60.8%59.3%71.3%85.3%72.0%
Key77.8%77.9%81.0%80.2%86.3%82.5%
Wylds55.5%56.4%56.7%62.4%80.9%66.7%
Marine64.9%59.7%68.6%81.1%80.5%76.7%
Donna(2)54.9%56.6%45.5%62.9%72.8%60.4%
Total/Weighted Average75.3%72.9%74.4%80.1%81.6%78.7%

 

(1)Historical information obtained from the borrower and based on unit count.

(2)2013 and 2014 occupancy where available does not represent occupancy under the Iron Guard Storage Portfolio ownership.

 

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 Iron Guard Storage Portfolio Properties:

 

Cash Flow Analysis

 

  2015(1) 2016 11/30/2017 T-12 11/30/2017 T-6 11/30/2017 T-3 U/W % of U/W Effective
Gross
Income
 

U/W $ 

per SF

 
Base Rent    $9,092,047    $9,562,082 $10,364,754 $10,694,039  $10,816,014  $13,184,283 114.0% $9.75 
Less Concessions    (262,046)    (297,550)    (499,135)      (513,224)    (539,092)    (539,092) (4.7) (0.40) 
Other Income(2) 1,074,932 1,234,919 1,271,415 1,304,901 1,288,085 1,288,085 11.1 0.95 
Less Vacancy & Credit Loss 

(10,776)

 

0

 

0

0

 

0

 

(2,368,260)

 

(20.5)

 

(1.75)

 
Effective Gross Income   $9,894,157 $10,499,451  $11,137,034  $11,485,716  $11,565,007  $11,565,016 100.0% $8.55 
                  
Total Operating Expenses 

$3,403,120

 

$3,885,479 

 

$3,956,033 

 

$4,124,229 

 

$4,037,312 

 

$3,874,101 

 

33.5%

 

$2.86

 
Net Operating Income   $6,491,037   $6,613,972  $7,181,001   $7,361,487   $7,527,695 $7,690,915 66.5% $5.69 
                  
Capital Expenditures 

$0

 

$0

 

$0

 

$0

 

$0

 

$203,000

 1.8%

 

$0.15

 
Net Cash Flow  $6,491,037  $6,613,972  $7,181,001   $7,361,487   $7,527,695   $7,487,915 64.7% $5.54 
                  
NOI DSCR(3) 1.63x  1.66x  1.80x 1.85x  1.89x  1.93x     
NCF DSCR(3) 1.63x  1.66x  1.80x 1.85x 1.89x  1.88x     
NOI DY(3) 7.5% 7.7% 8.4% 8.6% 8.8% 8.9%     
NCF DY(3) 7.5% 7.7% 8.4% 8.6% 8.8% 8.7%     

 

(1)The Iron Guard Storage Portfolio Properties were acquired by Iron Guard Storage Portfolio Borrowers between 2010 and 2015. 2015 figures do not represent full year performance of the complete portfolio. In 2010, 56.4% of the portfolio (by allocated loan amount) was acquired. In 2015, 43.6% of the portfolio (by allocated loan amount) was acquired.

(2)Other Income includes administrative and late fees, insurance protection plans, truck rental/U-Haul commissions, merchandise and other miscellaneous income.

(3)The NOI DSCR, NCF DSCR, NOI DY and NCF DY as presented are calculated based on the Iron Guard Storage Portfolio Mortgage Loan, excluding the Iron Guard Storage Portfolio Mezzanine Loan. The U/W NOI DSCR, U/W NCF DSCR, U/W NOI DY and U/W NCF DY based on the combined balance of the Iron Guard Storage Portfolio Mortgage Loan and the Iron Guard Storage Portfolio Mezzanine Loan are 1.46x, 1.42x, 7.8% and 7.6%, respectively.

 

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

 

56

 

 

IRON GUARD STORAGE PORTFOLIO

 

Appraisal.As of the appraisal report date of January 19, 2018, the Iron Guard Storage Portfolio Properties had an “as-portfolio” bulk appraised value of $137,470,000, which includes a portfolio premium of $15,650,000. The sum of the individual “as-is” appraised values of the Iron Guard Storage Portfolio Properties is $121,820,000.

 

Environmental Matters. According to the Phase I environmental site assessments dated between November 13, 2017 and November 15, 2017, there are no recognized environmental conditions at the Iron Guard Storage Portfolio Properties.

 

Market Overview. The Iron Guard Storage Portfolio Properties are geographically diverse, located in 17 different cities across 7 states. The greatest concentration of Iron Guard Storage Portfolio Properties is located in Texas (9 properties, 42.6% of SF), Alabama (3 properties, 18.3% of SF), Georgia (4 properties, 15.2% of SF) and North Carolina (3 properties, 13.1% of SF), with the remaining three properties (10.8% of SF) located across three different states.

 

The following table presents detailed information for the Iron Guard Storage Portfolio Properties by market.

 

Market Summary

 

Property StateProperty Count

Net

Rentable

Area (SF)(1)

% of Net
Rentable
Area (SF)(1)

Total Units

Storage /
Parking

% Climate ControlWtd. Avg.
TTM SF
Occupancy
Wtd. Avg.
Year Built
Wtd. Avg.
Rent PSF
Total UW NCF% of Total UW
NCF
Texas9575,83242.6%3916 / 35138.6%83.6%2003$0.78$3,116,14541.6%
Alabama3247,93518.3%1900 / 1415.7%75.7%2003$0.62$1,076,21014.4%
Georgia4205,77515.2%1657 / 230.0%80.6%1988$0.69$986,61413.2%
North Carolina3177,09213.1%1403 / 6112.6%83.3%1990$0.75$1,032,99913.8%
Washington151,7553.8%390 / 1524.9%86.0%1978$1.37$631,6178.4%
Nevada144,2143.3%306 / 00.0%90.5%1990$0.97$334,3654.5%
Virginia149,6363.7%404 / 40.0%85.6%1988$0.83$309,9654.1%
Total/Weighted Average221,352,239100.0%9,976 / 46822.4%82.0%1996$0.76 $7,487,915100.0%

 

(1)Excludes square footage attributable to parking spaces.

 

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

 

57

 

 

IRON GUARD STORAGE PORTFOLIO

 

Demographic Summary(1)

 

Property Name 

Avg.
Rent PSF(2)
Appraiser’s Market Rent PSFMSA1-mile Population3-mile Population5-mile Population1-mile Median Household Income3-mile Median Household Income5-mile Median Household Income 
Camas$1.37$1.37Portland – Vancouver - Hillsboro6,05432,37184,921$66,481$74,365$70,187 
Webster$0.69$0.73Houston-The Woodlands-Sugar Land, TX8,48874,503204,357$50,598$61,042$82,028 
Gum Branch$0.83$0.84Jacksonville, NC8,44042,26875,127$45,505$46,423$45,320 
6th Avenue$0.85$0.87Birmingham-Hoover, AL10,72087,468181,280$20,474$28,392$33,683 
Katy$0.84$0.92Houston-The Woodlands-Sugar Land, TX12,57267,134186,771$80,420$79,169$84,709 
La Porte$0.86$0.92Houston-The Woodlands-Sugar Land, TX1,86629,78268,422$75,283$75,308$75,846 
Denton$0.98$1.00Dallas-Fort Worth-Arlington, TX18,08980,063139,037$25,353$37,520$51,088 
Shurling$0.71$0.68Macon, GA5,75725,12858,522$23,241$28,430$27,928 
Prater Way$0.97$0.99Reno-Sparks, NV19,40584,516204,120$43,003$44,877$39,708 
Adamsville$0.84$0.82Birmingham-Hoover, AL2,46015,52534,050$41,480$44,888$38,855 
Troy$0.43$0.37Montgomery, AL10,87054,313114,702$24,891$43,459$45,368 
Conroe$0.80$0.84Houston-The Woodlands-Sugar Land, TX2,31423,58165,641$47,049$49,250$44,253 
Del Valle$0.92$0.89Austin-Round Rock, TX1,76315,46534,067$57,280$55,905$51,198 
Tomball$0.60$0.79Houston-The Woodlands-Sugar Land, TX4898,50143,032$84,134$93,058$75,046 
Canyon Lake$0.81$0.84San Antonio–New Braunfels, TX4725,55814,835$48,928$57,954$55,094 
Riverside$0.83$0.83Danville, VA4,21534,39550,510$29,132$31,828$34,575 
Bertram$0.73$0.73Augusta-Richmond County, GA-SC8,09247,419131,077$39,183$53,917$45,350 
Center$0.64$0.67Jacksonville, NC7,25240,12078,535$36,827$39,598$42,879 
Key$0.75$0.72Macon, GA6,68758,57786,694$20,716$22,341$26,590 
Wylds$0.57$0.59Augusta-Richmond County, GA-SC8,09247,419131,077$39,183$53,917$45,350 
Marine$0.76$0.80Jacksonville, NC6,47739,40678,753$31,791$42,876$44,603 
Donna$0.58$0.59McAllen-Edinburg-Mission, TX3,20550,132126,526$33,295$31,544$31,199 
Total/Weighted Average$0.83$0.85 7,29044,948103,919$46,503$52,559$53,116 

 

(1)Source: Third Party Research Report.
 (2)Avg. Rent PSF excludes square footage attributable to parking spaces.

 

The Borrowers.The borrowers are Lucky 7 Equity LLC, Lucky 7 Equity II LLC, Lucky 7 Equity IV, LLC and Lucky 7 Equity V, LLC and 22 single purpose limited liability companies (individually and collectively, the “Iron Guard Storage Portfolio Borrowers”) each with at least two independent directors. Legal counsel to the borrowers delivered a non-consolidation opinion in connection with the origination of the Iron Guard Storage Portfolio Mortgage Loan. Equity ownership in the Iron Guard Storage Portfolio Borrowers is held by Tyrrell & Barbara Ross, Kurt Ross Prime Trust, Chad & Denise Ross, David & Brena Ross and Jim & Kim Michael. Tyrrell Ross, Kurtus Ross, Chad Ross, David Ross, Kim Michael and Kurt Ross Prime Trust are the guarantors of certain nonrecourse carveouts under the Iron Guard Storage Portfolio Mortgage Loan. The guarantors are required pursuant to the Iron Guard Storage Portfolio Mortgage Loan documents to collectively maintain a minimum net worth of not less than $50 million and a minimum liquidity of not less than $2.5 million.

 

The Borrower Sponsor.The borrower sponsor is David Ross, the owner, CEO and President of Iron Guard Storage. Iron Guard Storage is a self-storage owner and operator founded in 2010.

 

Escrows.The Iron Guard Storage Portfolio Borrowers deposited at closing (i) $212,900 for immediate repairs (125% of estimated costs), (ii) $170,242 for real estate taxes and (iii) $158,395 for insurance premiums. The Iron Guard Storage Portfolio Borrowers are also required to deposit monthly (i) $11,278 for replacement reserves, capped at $406,000, (ii) 1/12th of the estimated property taxes (currently $96,239), and (iii) 1/12th of the estimated insurance premiums due (currently $17,599) unless the Iron Guard Storage Portfolio Properties are covered by a blanket policy.

 

Lockbox and Cash Management.Upon a Cash Sweep Period (as defined below) the Iron Guard Storage Portfolio Borrowers are required to establish a lockbox account into which all rents are required to be deposited, which funds are then required to be swept on each business day to a lender-controlled cash management account for payment of among other things debt service, monthly escrows and operating expenses with all excess cash to be deposited to an excess cash reserve to be held as additional security for the Iron Guard Storage Portfolio Mortgage Loan for so long as a Cash Sweep Period exists.

 

A “Cash Sweep Period” will occur either (i) during the period when the debt service coverage ratio (inclusive of the Iron Guard Storage Portfolio Mezzanine Loan debt service) is below 1.05x for the trailing six month period, tested quarterly until the debt service coverage ratio equals or exceeds 1.05x for the trailing six month period for two consecutive quarters or (ii) upon an event of default under the mortgage loan or mezzanine loan until the cure of such event of default.

 

Property Management.The Iron Guard Storage Portfolio Properties are currently managed by Iron Guard Storage, LLC.

 

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

 

58

 

 

IRON GUARD STORAGE PORTFOLIO

 

Assumption.After July 9, 2018, the borrowers have the right to transfer the Iron Guard Storage Portfolio Properties in their entirety, provided that certain other conditions are satisfied, including, but not limited to: (i) no event of default has occurred and is continuing; (ii) the lender’s reasonable determination that the proposed transferee and guarantor satisfy the lender’s credit review and underwriting standards, taking into consideration transferee experience, financial strength and general business standing; (iii) the mezzanine borrower has complied with all terms set forth in the mezzanine loan documents with respect to the assumption or the mezzanine loan is simultaneously prepaid in full; (iv) if requested by the lender, a REMIC opinion and new non-consolidation opinion are provided; and (v) if requested by the lender, rating agency confirmation from Fitch, DBRS and Moody’s that the transfer will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the BANK 2018-BNK10 Certificates.

 

Partial Release.Not permitted.

 

Real Estate Substitution.Not permitted.

 

Subordinate and Mezzanine Indebtedness.The “Iron Guard Storage Portfolio Mezzanine Loan” refers to a loan in the original principal amount of $12,150,000 to IGM Owner LLC, a Delaware limited liability company, by Bank of America, National Association, secured by 100% of the indirect equity interests in the Iron Guard Storage Portfolio Borrowers and put in place simultaneously with the origination of the Iron Guard Storage Portfolio Mortgage Loan. The Iron Guard Storage Portfolio Mezzanine Loan is expected to be sold to a third party.

 

The Iron Guard Storage Portfolio Mortgage Loan and the Iron Guard Storage Portfolio Mezzanine Loan are subject to an intercreditor agreement. The Iron Guard Storage Portfolio Mezzanine Loan accrues interest at an interest rate of 10.50%per annum and requires payments of interest only through the loan maturity date of February 1, 2028. The Iron Guard Storage Portfolio Mezzanine Loan may not be prepaid, refinanced or defeased in whole or in part while any portion of the Iron Guard Storage Portfolio Mortgage Loan remains outstanding without a pro rata prepayment or pro rata defeasance of the Iron Guard Storage Portfolio Mortgage Loan.

 

Ground Lease.Each of the Iron Guard Storage Portfolio Properties is subject to a ground lease between one of the four fee borrowers (Lucky 7 Equity LLC, Lucky 7 Equity II LLC, Lucky 7 Equity IV, LLC and Lucky 7 Equity V, LLC) and one of 22 leasehold borrowers. The Iron Guard Storage Portfolio Mortgage Loan is secured by both the fee and leasehold interests in each of the 22 Iron Guard Storage Portfolio Properties.

 

Terrorism Insurance.The loan documents require that the “all risk” insurance policy required to be maintained by the borrowers provide coverage for terrorism and acts of terrorism in an amount equal to the full replacement cost of the Iron Guard 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 an up to six-month extended period of indemnity.

 

Earthquake Insurance.The loan documents do not require earthquake insurance. The seismic reports dated November 14, 2017 indicated a probable maximum loss of 6.0% for the Camas property and 9.0% for the Prater Way property.

 

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

 

59

 

 

WISCONSIN HOTEL PORTFOLIO

 

 (GRAPHIC)

 

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

 

60

 

 

WISCONSIN HOTEL PORTFOLIO

 

 (GRAPHIC)

 

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

 

61

 

 

WISCONSIN HOTEL PORTFOLIO

 

No. 4 – Wisconsin Hotel Portfolio
 
Loan Information Property Information
Mortgage Loan Seller:

Morgan Stanley Mortgage Capital
Holdings LLC

 Single Asset/Portfolio:Portfolio
Credit Assessment (Fitch/DBRS/Moody’s):NR/NR/NR Property Type:Hospitality
Original Principal Balance:$74,600,000 Specific Property Type:Various
Cut-off Date Balance:$74,600,000 Location:Various, WI
% of Initial Pool Balance:5.8% Size:1,255 Rooms
Loan Purpose:Refinance Cut-off Date Balance Per Room:$59,442
Borrower Name(1):Various Year Built/Renovated:Various
Borrower Sponsor:William Zanetis Title Vesting:Fee
Mortgage Rate:5.330% Property Manager:Self-managed
Note Date:January 4, 2018 4th Most Recent Occupancy (As of):63.3% (12/31/2013)
Anticipated Repayment Date:NAP 3rd Most Recent Occupancy (As of):63.8% (12/31/2014)
Maturity Date:February 1, 2028 2nd Most Recent Occupancy (As of):67.4% (12/31/2015)
IO Period:NAP Most Recent Occupancy (As of):67.1% (12/31/2016)
Loan Term (Original):120 months Current Occupancy (As of):66.3% (10/31/2017)
Seasoning:0 months   
Amortization Term (Original):300 months Underwriting and Financial Information:
Loan Amortization Type:Amortizing Balloon  
Interest Accrual Method:Actual/360 4th Most Recent NOI (As of):$8,055,897 (12/31/2014)
Call Protection:L(24),D(92),O(4) 3rd Most Recent NOI (As of):$8,895,028 (12/31/2015)
Lockbox Type:Springing 2nd Most Recent NOI (As of):$9,019,184 (12/31/2016)
Additional Debt(2):None Most Recent NOI (As of):$9,515,686 (TTM 10/31/2017)
Additional Debt Type:NAP   
   U/W Revenues:$35,445,688
   U/W Expenses:$25,842,488
   U/W NOI:$9,603,200
     U/W NCF:$8,185,373
     U/W NOI DSCR:1.78x
Escrows and Reserves(3):    U/W NCF DSCR:1.51x
Type:InitialMonthlyCap (If Any) U/W NOI Debt Yield:12.9%
Taxes$176,010(3)NAP U/W NCF Debt Yield:11.0%
Insurance$0SpringingNAP As-Is Appraised Value:$118,010,000
FF&E Reserve$0$118,152NAP As-Is Appraisal Valuation Date:Various
Deferred Maintenance$223,475$0NAP Cut-off Date LTV Ratio:63.2%
PIP Reserve$5,200,000$0NAP LTV Ratio at Maturity or ARD:47.8%
       
        
(1)The borrowers are Wisco Partners, LLC, WZ Wisco, INC., App Pro of Appleton, INC., Osh Pro Partners, LLC, Wes Pro II, LLC, Mad Pro of Madison, INC., Oak Pro Partners, LLC, Wes Pro Partners, LLC, Mil Pro, LLC, Oak Pro II, LLC, F.D.L. Pro LLC.
(2)Certain borrowers have incurred an aggregate of $531,083 of unsecured forgivable loans from one of the franchisors—see “Mezzanine and Subordinate Indebtedness” herein.
(3)See “Escrows” section.


The Mortgage Loan. The mortgage loan (the “Wisconsin Hotel Portfolio Mortgage Loan”) is evidenced by a single promissory note secured by a first mortgage encumbering the fee interests in a portfolio of 11 hospitality properties located throughout Wisconsin (the “Wisconsin Hotel Portfolio Properties”). The Wisconsin Hotel Portfolio Mortgage Loan was originated on January 4, 2018 by Morgan Stanley Bank, N.A. The Wisconsin Hotel Portfolio Mortgage Loan had an original principal balance of $74,600,000, has an outstanding principal balance as of the Cut-off Date of $74,600,000 and accrues interest at an interest rate of 5.330%per annum. The Wisconsin Hotel Portfolio Mortgage Loan had an initial term of 120 months, has a remaining term of 120 months as of the Cut-off Date and requires payments of principal and interest based on a 25-year amortization schedule. The Wisconsin Hotel Portfolio Mortgage Loan matures on February 1, 2028.

 

Following the lockout period, the borrower has the right to defease the Wisconsin Hotel Portfolio Mortgage Loan in whole, or in part as described below under “Partial Release,” on any date before November 1, 2027. In addition, the Wisconsin Hotel Portfolio Mortgage Loan is prepayable without penalty on or after November 1, 2027, in whole.

 

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

 

62

 

 

WISCONSIN HOTEL PORTFOLIO

 

Sources and Uses

 

Sources    Uses   
Original loan amount$74,600,000 94.1% Loan payoff  $71,666,381 90.4%
Borrower Equity4,662,865 5.9     Reserves5,599,485 7.1  
     Closing costs1,997,000 2.5  
Total Sources$79,262,865 100.0% Total Uses$79,262,865 100.0%  

 

The Properties.The Wisconsin Hotel Portfolio Properties are comprised of eleven hospitality properties, nine of which are limited service hotels (76.4% of rooms) and two of which are full service hotels (23.6% of rooms). Built between 1974 and 2015, the Wisconsin Hotel Portfolio Properties have undergone approximately $12.1 million in improvements since 2013. These improvements include capital expenditures to keep the hotels up to date with brand standards (which includes converting the three Holiday Inn Express branded properties to their latest blue format and converting the three Comfort Suites branded properties to their latest Move 2 Modern format). The Wisconsin Hotel Portfolio Properties are slated to undergo $10,890,000 of property improvement plans (“PIPs”) between 2018 and 2021, of which $5,200,000 was reserved upfront.

 

The following table presents certain information relating to the Wisconsin Hotel Portfolio Properties:

 

Property Schedule

 

Property NameCityYear
Built/
Renovated
Specific
Property
Type
Rooms10/31/2017
Occupancy
Allocated
Cut-off Date
Balance
% of
Allocated
Cut-off
Date
Balance
Appraised
Value
Underwritten
NOI
Franchise Expiration
Date

Holiday Inn –

Madison West

Madison2000 / 2015Full Service15762.0%$13,550,00018.2%$18,160,000$1,637,9347/21/2020

Fairfield Inn –

Oak Creek

Oak Creek2008 / 2016Limited Service11969.0%$9,436,00012.6%$13,480,000$1,149,4286/22/2029

Holiday Inn –

Fond Du Lac(1)

Fond Du Lac1974 / 2015Full Service13964.6%$8,350,00011.2%$16,200,000$1,087,3321/10/2019(1)

Holiday Inn Express –

Fond Du Lac

Fond Du Lac2015 / NAPLimited Service8660.8%$7,225,0009.7%$11,670,000$825,2136/1/2035

Baymont Inn –

Madison

Madison1988 / 2017Limited Service12958.2%$6,020,0008.1%$10,160,000$706,1511/31/2036
Comfort Inn & Suites - Appleton AirportGrand Chute1989 / 2014Limited Service13071.3%$5,900,0007.9%$8,430,000$937,5617/30/2024
Holiday Inn Express - OshkoshOshkosh1997 / NAPLimited Service6971.8%$5,876,0007.9%$8,170,000$690,12512/28/2027
Comfort Inn & Suites - Milwaukee AirportOak Creek1998 / 2013Limited Service13865.9%$5,820,0007.8%$8,490,000$715,9136/1/2019
Comfort Inn & Suites - Madison WestMadison1994 / 2014Limited Service9563.6%$5,067,0006.8%$7,240,000$822,9605/22/2025
Holiday Inn Express - Milwaukee AirportMilwaukee2005 / 2017Limited Service11566.7%$4,710,0006.3%$12,230,000$591,8736/22/2030

Comfort Inn & Suites –

Fond Du Lac(2)

Fond Du Lac1989 / 2014Limited Service7883.9%$2,646,0003.5%$3,780,000$438,71012/23/2025
Total/Weighted Average   1,25566.3%$74,600,000 $118,010,000$9,603,200 

 

(1)The Holiday Inn – Fond Du Lac Property is expected to be converted to a Radisson flag under a franchise agreement that expires 1/11/2039; however there is no assurance such conversion will be effected.

(2)“The franchisor has the right to terminate the franchise agreement without cause as of August 2020.

  

Holiday Inn - Madison West. The Holiday Inn - Madison West property is a four-story, full service hotel that was built in 2000, renovated in 2015 and contains 157 guestrooms. The Holiday Inn - Madison West property also features an on-site, 160-seat restaurant, meeting space totaling 6,800 square feet, indoor waterpark feature, fitness center and business center.

 

The Holiday Inn - Madison West property has undergone approximately $633,246 in capital expenditures since 2013 and as part of its franchise agreement is slated to undergo a $3,500,000 PIP or $22,293 per room. Of the $5,200,000 upfront PIP reserve, $1,100,000 was allocated towards the Holiday Inn - Madison West property. There are 220 surface parking spaces at the Holiday Inn - Madison West property.

 

The demand segmentation for the Holiday Inn - Madison West property is 34% commercial, 31% leisure, 25% group and 10% extended stay.

 

The Holiday Inn - Madison West property is subject to a franchise agreement with Holiday Inns Franchising, Inc. expiring July 21, 2020.

 

Fairfield Inn - Oak Creek. The Fairfield Inn - Oak Creek property is a three-story, limited service hotel that was built in 2008, renovated in 2016 and contains 119 guestrooms. The Fairfield Inn - Oak Creek property also features an indoor pool, fitness center, business center, sundries shop, and meeting room.

 

The Fairfield Inn - Oak Creek property has undergone approximately $848,840 in capital expenditures since 2013 and as part of its franchise agreement is slated to undergo a $1,500,000 PIP or $12,605 per room. Of the $5,200,000 upfront PIP reserve, $0 was allocated towards the Fairfield Inn – Oak Creek property. There are 115 surface parking spaces at the Fairfield Inn - Oak Creek property.

 

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

 

63

 

 

WISCONSIN HOTEL PORTFOLIO

 

The demand segmentation for the Fairfield Inn - Oak Creek property is 50% leisure, 37% commercial, 10% extended stay and 3% group.

 

The Fairfield Inn - Oak Creek property is subject to a franchise agreement with Marriott International, Inc. expiring June 22, 2029.

 

Holiday Inn - Fond Du Lac. The Holiday Inn - Fond Du Lac property is a two-story, full service hotel that was built in 1974, renovated in 2015 and contains 139 guestrooms. The Holiday Inn - Fond Du Lac property also features an on-site, 213-seat restaurant and bar, meeting space totaling 14,000 square feet, indoor pool, fitness center and business center.

 

The Holiday Inn - Fond Du Lac property has undergone $3,128,727 in capital expenditures since 2013. There are 427 surface parking spaces at the Holiday Inn - Fond Du Lac property.

 

The demand segmentation for the Holiday Inn - Fond Du Lac property is 36% group, 30% leisure, 29% commercial and 5% extended stay.

 

The Holiday Inn - Fond Du Lac property is currently subject to a franchise agreement with Holiday Hospitality Franchising, LLC expiring January 10, 2019. The borrower expects to then convert the hotel to a Radisson. In order to effect this change, the hotel is required to undergo renovations estimated to total $2,000,000, or $14,388 per room, including renovation of finishes, FF&E and public areas. Of the $5,200,000 upfront PIP reserve, $2,000,000 was allocated towards the Holiday Inn - Fond Du Lac property.

 

The following table presents certain information relating to the historical operating performance and the underwritten net cash flow at the Wisconsin Hotel Portfolio Properties:

 

Cash Flow Analysis

 

  2014 2015 2016 TTM
10/31/2017
 U/W % of U/W
Total Rev.
  U/W $ per
Room
 
Occupancy 63.8%(1) 67.4% 67.1% 66.3% 66.3%      
ADR $94.00(1) $102.10 $103.44 $104.60 $104.60      
RevPAR $65.22(1) $67.37 $67.42 $68.41 $68.41      
                 
Room Revenue 26,572,612 28,593,016 29,603,123 30,092,909 30,092,910 84.9% 23,978 
F&B Revenue 4,406,910 4,442,612 4,539,101 4,505,876 4,505,876 12.7  3,590 
Other Income(2) 589,098 610,402 666,805 846,903 846,902 2.4 675 
Total Revenue $31,568,620 $33,646,030 $34,809,029 $35,445,688 $35,445,688 100.0% 28,244 
                 
Total Departmental Expenses 10,158,342 10,365,816 10,797,240 10,952,869 10,986,195 31.0 8,754 
Gross Operating Profit $21,410,278 $23,280,215 $24,011,789 $24,492,819 $24,459,493 69.0% 19,490 
                 
Total Undistributed Expenses 10,853,472 11,596,320 11,998,342 12,015,501 12,015,502 33.9 9,574 
Profit Before Fixed Charges $10,556,806 $11,683,895 $12,013,447 $12,477,318 $12,443,991 35.1% 9,916 
                 
Total Fixed Charges 2,500,909 2,788,866 2,994,262 2,961,633 2,840,791 8.0 2,264 
Net Operating Income $8,055,897 $8,895,028 $9,019,184 $9,515,686 $9,603,200 27.1% 7,652 
                 
FF&E 1,262,744 1,345,842 1,392,361 1,417,826 1,417,827 4.0 1,130 
Net Cash Flow $6,793,153 $7,549,187 $7,626,823 $8,097,859 $8,185,373 23.1% 6,522 
                 
NOI DSCR 1.49x 1.650x 1.67x 1.76x 1.78x      
NCF DSCR 1.26x 1.40x 1.41x 1.50x 1.51x      
NOI DY 10.8% 11.9% 12.1% 12.8% 12.9%      
NCF DY 9.1% 10.1% 10.2% 10.9% 11.0%      

(1)2014 Occupancy, ADR and RevPAR do not include the Holiday Inn Express - Fond Du Lac property, which was built in 2015.
(2)Other Income includes revenue from other operating departments and other miscellaneous income.

 

Appraisal.As of the appraisal valuation dates ranging from November 17, 2017 to November 22, 2017, the Wisconsin Hotel Portfolio Properties had an aggregate “as-is” appraised value of $118,010,000.

 

Environmental Matters. According to Phase I environmental assessments dated November 30, 2017, there are no recognized environmental conditions at the Wisconsin Hotel Portfolio Properties. The related Phase I identified a controlled recognized environmental condition at the Fairfield Inn – Oak Creek property relating to polynuclear aromatic hydrocarbons (PAH) concentrations in shallow soil and fill materials. The Wisconsin Department of Natural Resources (WIDNR) issued “Final Case Closure with Continuing Obligations” on December 19, 2014, which continuing obligations include (1) residual soil contamination exists that must be properly managed if excavated or removed; (2) a soil cover must be maintained over contaminated soil, and the WIDNR must be notified and approve any changes to this barrier; (3) a prohibition on residential development and (4) the site is also required to be continuously registered as on the WIDNR GIS Registry.

 

Market Overview and Competition.The Wisconsin Hotel Portfolio Properties are located in five markets across Wisconsin: Madison (three properties, 30.4% of rooms), Milwaukee (three properties, 29.6% of rooms), Fond Du Lac (three properties, 24.1% of rooms), Appleton (one property, 10.4% of rooms) and Oshkosh (one property, 5.5% of rooms).

 

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

 

64

 

 

WISCONSIN HOTEL PORTFOLIO

 

The following table presents demographic information with respect to the Wisconsin Hotel Portfolio Properties:

 

Wisconsin Hotel Portfolio Demographic Summary

 

 

2017
Population

 

2017 Median HH
Income

Madison656,632 $62,903
Milwaukee1,570,482 $56,136
Fond Du Lac102,237 $56,302
Appleton235,138 $62,110
Oshkosh170,078 $53,482

 

The following table presents certain information relating to the Occupancy, ADR and RevPAR of the Wisconsin Hotel Portfolio Properties and their competitive sets:

 

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

 

 

Competitive Set

 

Holiday Inn - Madison West

 

Penetration Factor

 

Year

Occupancy

ADR

RevPAR

 

Occupancy

ADR

RevPAR

 

Occupancy

ADR

RevPAR

 

10/31/2015 TTM61.6%$122.48$75.45 70.2%$123.12$86.48 114.0%100.5%114.6% 
10/31/2016 TTM63.9%$125.62$80.30 66.6%$127.24$84.70 104.1%101.3%105.5% 
10/31/2017 TTM60.5%$128.03$77.48 62.0%$129.63$80.31 102.4%101.3%103.6% 

 

 

Competitive Set

 

Fairfield Inn - Oak Creek

 

Penetration Factor

 

Year

Occupancy

ADR

RevPAR

 

Occupancy

ADR

RevPAR

 

Occupancy

ADR

RevPAR

 

10/31/2015 TTM68.8%$81.17$55.83 64.7%$104.50$67.64 94.1%128.7%121.1% 
10/31/2016 TTM74.0%$80.06$59.21 62.8%$110.84$69.58 84.9%138.4%117.5% 
10/31/2017 TTM78.9%$80.85$63.79 68.4%$108.24$74.02 86.7%133.9%116.0% 

 

 

Competitive Set

 

Holiday Inn - Fond Du Lac

 

Penetration Factor

 

Year

Occupancy

ADR

RevPAR

 

Occupancy

ADR

RevPAR

 

Occupancy

ADR

RevPAR

 

10/31/2015 TTM45.6%$74.96$34.18 68.9%$99.56$68.59 151.1%132.8%200.7% 
10/31/2016 TTM50.1%$80.60$40.36 59.8%$98.93$59.21 119.5%122.7%146.7% 
10/31/2017 TTM51.9%$87.68$45.51 63.8%$100.68$64.26 123.0%114.8%141.2% 

 

 

Competitive Set

 

Holiday Inn Express - Fond Du Lac

 

Penetration Factor

 

Year

Occupancy

ADR

RevPAR

 

Occupancy

ADR

RevPAR

 

Occupancy

ADR

RevPAR

 

10/31/2015 TTM45.6%$74.96$34.18 56.7%$141.04$79.92 124.3%188.1%233.8% 
10/31/2016 TTM50.1%$80.60$40.36 57.1%$119.17$68.02 114.0%147.8%168.5% 
10/31/2017 TTM51.9%$87.68$45.51 60.8%$116.82$70.99 117.1%133.2%156.0% 

 

 

Competitive Set

 

Baymont Inn - Madison

 

Penetration Factor

 

Year

Occupancy

ADR

RevPAR

 

Occupancy

ADR

RevPAR

 

Occupancy

ADR

RevPAR

 

10/31/2015 TTM62.5%$86.81$54.21 64.0%$72.40$46.35 102.5%83.4%85.5% 
10/31/2016 TTM65.6%$90.34$59.22 61.1%$77.47$47.37 93.1%85.8%80.0% 
10/31/2017 TTM63.4%$97.50$61.82 59.6%$80.96$48.29 94.0%83.0%78.1% 

 

 

Competitive Set

 

Comfort Inn & Suites - Appleton
Airport

 

Penetration Factor

 

Year

Occupancy

ADR

RevPAR

 

Occupancy

ADR

RevPAR

 

Occupancy

ADR

RevPAR

 

10/31/2015 TTM51.5%$87.77$45.23 68.4%$86.77$59.33 132.8%98.9%131.2% 
10/31/2016 TTM52.4%$88.72$46.53 69.3%$89.27$61.86 132.3%100.6%133.0% 
10/31/2017 TTM53.4%$89.27$47.65 69.0%$90.06$62.18 129.2%100.9%130.5% 

 

 

Competitive Set

 

Holiday Inn Express - Oshkosh

 

Penetration Factor

 

Year

Occupancy

ADR

RevPAR

 

Occupancy

ADR

RevPAR

 

Occupancy

ADR

RevPAR

 

10/31/2015 TTM56.5%$104.35$58.92 73.2%$111.38$81.51 129.6%106.7%138.4% 
10/31/2016 TTM60.2%$107.75$64.89 71.5%$114.77$82.02 118.7%106.5%126.4% 
10/31/2017 TTM58.7%$107.05$62.83 72.9%$114.80$83.70 124.2%107.2%133.2% 

 

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

 

65

 

 

WISCONSIN HOTEL PORTFOLIO

 

 

Competitive Set

 

Comfort Inn & Suites - Milwaukee Airport

 

Penetration Factor

 

Year

Occupancy

ADR

RevPAR

 

Occupancy

ADR

RevPAR

 

Occupancy

ADR

RevPAR

 

10/31/2015 TTM62.2%$70.52$43.88 65.9%$81.15$53.45 105.9%115.1%121.8% 
10/31/2016 TTM63.0%$71.65$45.15 67.4%$82.57$55.69 107.0%115.2%123.3% 
10/31/2017 TTM56.7%$77.72$44.06 64.5%$87.35$56.32 113.8%112.4%127.8% 

 

 

Competitive Set

 

Comfort Inn & Suites - Madison West

 

Penetration Factor

 

Year

Occupancy

ADR

RevPAR

 

Occupancy

ADR

RevPAR

 

Occupancy

ADR

RevPAR

 

10/31/2015 TTM62.5%$96.19$60.11 67.7%$94.28$63.80 108.3%98.0%106.1% 
10/31/2016 TTM65.1%$100.02$65.10 66.9%$103.16$69.01 102.8%103.1%106.0% 
10/31/2017 TTM64.2%$102.87$66.04 63.1%$104.97$66.23 98.3%102.0%100.3% 

 

 

Competitive Set

 

Holiday Inn Express - Milwaukee Airport

 

Penetration Factor

 

Year

Occupancy

ADR

RevPAR

 

Occupancy

ADR

RevPAR

 

Occupancy

ADR

RevPAR

 

10/31/2015 TTM65.4%$75.38$49.30 66.9%$93.06$62.25 102.3%123.5%126.3% 
10/31/2016 TTM64.5%$76.01$49.00 63.4%$93.65$59.35 98.3%123.2%121.1% 
10/31/2017 TTM55.6%$80.91$44.95 66.7%$100.55$67.10 120.1%124.3%149.3% 

 

 

Competitive Set

 

Comfort Inn & Suites - Fond Du Lac

 

Penetration Factor

 

Year

Occupancy

ADR

RevPAR

 

Occupancy

ADR

RevPAR

 

Occupancy

ADR

RevPAR

 

10/31/2015 TTM43.6%$80.96$35.28 81.8%$65.32$53.46 187.6%80.7%151.5% 
10/31/2016 TTM47.7%$79.91$38.12 79.2%$65.46$51.88 166.0%81.9%136.1% 
10/31/2017 TTM48.2%$81.76$39.44 82.9%$65.40$54.20 172.0%80.0%137.4% 

 

(1)Information obtained from a third party hospitality research report.

 

According to the appraisal, a 112 room Towne Place Hotel by Marriott is expected to open in the first half of 2018 within two miles of the three Wisconsin Hotel Portfolio Properties located in Milwaukee, and is expected to be secondarily competitive with such hotels.

 

The Borrowers.The borrowers are Wisco Partners, LLC, a Wisconsin limited liability company, WZ Wisco, INC., a Delaware corporation, App Pro of Appleton, INC., a Delaware corporation, Osh Pro Partners, LLC, a Wisconsin limited liability company, Wes Pro II, LLC, a Wisconsin limited liability company, Mad Pro of Madison, INC., a Delaware corporation, Oak Pro Partners, LLC, a Wisconsin limited liability company, Wes Pro Partners, LLC, a Wisconsin limited liability company, Mil Pro, LLC, a Wisconsin limited liability company, Oak Pro II, LLC, a Wisconsin limited liability company, F.D.L. Pro LLC, a Wisconsin limited liability company (together, the “Wisconsin Hotel Portfolio Borrowers”), each with at least two independent directors. Legal counsel to the Wisconsin Hotel Portfolio Borrower delivered a non-consolidation opinion in connection with the origination of the Wisconsin Hotel Portfolio Mortgage Loan. William Zanetis owns 70.0% of each Wisconsin Hotel Portfolio Borrower and is the guarantor of certain nonrecourse carveouts under the Wisconsin Hotel Portfolio Mortgage Loan.

 

The Sponsor.The sponsor is William Zanetis. William Zanetis has over 40 years of experience owning and managing hotels in the midwestern United States.

 

Escrows. The Wisconsin Hotel Portfolio Borrowers deposited at loan origination $223,475 for required repairs, and $176,010 for real estate taxes and are required to deposit monthly 1/12th the estimated annual real estate taxes. Additionally, the Wisconsin Hotel Portfolio Borrowers are required to deposit monthly (i) 1/12th of the estimated annual insurance premiums (unless the policies covering each individual Wisconsin Hotel Portfolio Property are part of a blanket or umbrella policy approved by the lender in its reasonable discretion); and (ii) an FF&E reserve deposit ($118,152 through the end of 2018) adjusted annually to be the greater of (x) the amount required by the applicable franchisor under its respective franchise agreement and (y) 1/12th of (a) 2% of the gross operating income for the preceding calendar year commencing on the monthly payment date in March 2018 through and including the monthly payment date in February 2019, (b) 3% of the gross operating income for the preceding calendar year commencing on the monthly payment date in March 2019 through and including the monthly payment date in February 2020, and (c) 4% of the gross operating income for the preceding calendar year commencing on the monthly payment date in March 2020 and on each monthly payment date thereafter.

 

The Wisconsin Hotel Portfolio Borrowers (i) were required to deposit at loan origination $5,200,000 into a PIP reserve for scheduled PIPs in relation to certain identified Wisconsin Hotel Portfolio Properties, and (ii) on the date that any additional PIP is required by a franchisor pursuant to its respective franchise agreement, are required to deposit an amount equal to 125% of the sum required to pay for such additional PIP.

 

Lockbox and Cash Management. Upon the first occurrence of a Cash Sweep Event Period (as defined below), the Wisconsin Hotel Portfolio Borrowers are required to establish a lockbox account into which the Wisconsin Hotel Portfolio Borrowers will be required to direct all credit card banks and persons with whom they do business on an accounts receivable basis to make deposits of payments with respect to the Wisconsin Hotel Portfolio Properties directly into such lockbox account, and will also be required to deposit any rents received by the Wisconsin Hotel Portfolio Borrowers or the property manager into such lockbox account within three business days of receipt. In addition, upon the first occurrence of a Cash Sweep Event Period, the lenders will have the right to establish, and the Wisconsin Hotel Portfolio Borrowers will be required to cooperate to establish, a lender controlled cash management account.

 

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

 

66

 

 

WISCONSIN HOTEL PORTFOLIO

 

During the continuance of a Cash Sweep Event Period, all funds in the lockbox account are required to be swept into such cash management account for payment of debt service, monthly escrows, operating expenses set forth in the annual budget, and extraordinary expenses approved by the lender, with all excess cash to be deposited (i) during any Franchise Expiration Cash Sweep Period or FDL Termination Cash Sweep Period (each as defined below), if the amount in the FF&E reserve for the related individual Wisconsin Hotel Portfolio Property is less than $10,000 per key (the “FF&E Cap”), to the FF&E reserve until the FF&E Cap is satisfied, and (ii) otherwise to an excess cash reserve to be held as additional security for the Wisconsin Hotel Portfolio Mortgage Loan for so long as a Cash Sweep Event Period exists.

 

A “Cash Sweep Event Period” means a period commencing upon the earliest of the occurrence of (i) an event of default under the Wisconsin Hotel Portfolio Mortgage Loan agreement, (ii) a Debt Service Coverage Ratio Cash Sweep Event Period, (iii) a Franchise Default Cash Sweep Period, (iv) a Franchise Expiration Cash Sweep Period, (v) a Franchise Termination Cash Sweep Period; and (vi) an FDL Termination Cash Sweep Period (each as defined below). A Cash Sweep Event Period will terminate, (i) in the case of an event of default, the cure of such event of default, and (ii) in the case of a Cash Sweep Event Period under clauses (ii) through (vi) of the preceding sentence, when such Cash Sweep Event Period has ended in accordance with its terms.

 

A “Debt Service Coverage Ratio Cash Sweep Event Period” means a period (A) commencing upon the debt service coverage ratio being less than 1.20x for the immediately preceding 12 consecutive calendar months, and (B) expiring upon the date that the debt service coverage ratio has been greater than or equal to 1.20x for the immediately preceding twelve 12 consecutive calendar months.

 

A “Franchise Default Cash Sweep Period” means a period (A) commencing upon (x) any franchisor delivering notice that (i) the applicable Wisconsin Hotel Portfolio Borrower is in default under the applicable franchise agreement beyond applicable notice and cure periods or (ii) the hotel at any individual Wisconsin Hotel Portfolio Property is not being operated and maintained in accordance with such franchisor’s standards resulting in the related Wisconsin Hotel Portfolio Borrower no longer being in good standing with such franchisor and (y) such default not being cured within 30 days of such notice, and (B) expiring upon the lender’s receipt of evidence reasonably acceptable to the lender (which evidence may include, without limitation, a duly executed confirmation letter or estoppel certificate from the applicable franchisor in form and substance reasonably acceptable to the lender) that (a) the applicable Wisconsin Hotel Portfolio Borrower has cured all defaults under such franchise agreement, and (b) there has been no default by such Wisconsin Hotel Portfolio Borrower or by the franchisor under such franchise agreement for a period of 60 consecutive days.

 

A “Franchise Expiration Cash Sweep Period” means a period (A) commencing upon the date that is 12 months prior to the expiration of the applicable franchise agreement (unless the applicable Wisconsin Hotel Portfolio Borrower has extended or renewed the expiring franchise agreement as of such date in accordance with the terms of the Wisconsin Hotel Portfolio Mortgage Loan documents) and (B) expiring upon (i) the applicable Wisconsin Hotel Portfolio Borrower entering into an extension or renewal of the applicable franchise agreement acceptable to the lender in accordance with the terms of the Wisconsin Hotel Portfolio Mortgage Loan documents, or (ii) (x) the applicable Wisconsin Hotel Portfolio Borrower entering into a replacement franchise agreement with a Qualified Franchisor (as defined below) in accordance with the terms of the Wisconsin Hotel Portfolio Mortgage Loan documents, and (y) there having been no default by the applicable Wisconsin Hotel Portfolio Borrower or the franchisor under such replacement franchise agreement for a period of 60 consecutive days.

 

A “Franchise Termination Cash Sweep Period” means a period (A) commencing upon any expiration, termination or cancellation of any franchise agreement (including, without limitation, rejection in any bankruptcy or similar insolvency proceeding), and (B) expiring upon satisfaction of the following conditions: (i) the applicable Wisconsin Hotel Portfolio Borrower entering into a replacement franchise agreement with a Qualified Franchisor in accordance with the terms of the Wisconsin Hotel Portfolio Mortgage Loan documents, (ii) the applicable Wisconsin Hotel Portfolio Borrower being in actual physical possession of the applicable hotel under such replacement franchise agreement, and (iii) there having been no default by the applicable Wisconsin Hotel Portfolio Borrower or the franchisor under such replacement franchise agreement for a period of 60 consecutive days.

 

An “FDL Termination Cash Sweep Period” means a period (A) commencing upon WZ Wisco, Inc. or FDL franchisor giving notice that it is terminating the FDL franchise agreement and (B) expiring upon satisfaction of the following conditions: (i) WZ Wisco, Inc. entering into a replacement franchise agreement with a Qualified Franchisor in accordance with the terms of the Wisconsin Hotel Portfolio Mortgage Loan documents, (ii) WZ Wisco, Inc. being in actual physical possession of the applicable hotel under such replacement franchise agreement, and (iii) there having been no default by WZ Wisco, Inc. or the franchisor under such replacement franchise agreement for a period of 60 consecutive days.

 

A “Qualified Franchisor” means a reputable and experienced franchisor possessing experience in flagging hotel properties similar in size, scope, use and value as the applicable individual Wisconsin Hotel Portfolio Property and reasonably approved by the lender in writing (which approval may be conditioned upon receipt of a rating agency confirmation).

 

Property Management. The Wisconsin Hotel Portfolio Properties are currently managed by William Zanetis Management Co., Inc., an affiliate of the Wisconsin Hotel Portfolio Borrowers.

 

Assumption. The Wisconsin Hotel Portfolio Borrowers have the right to transfer the Wisconsin Hotel Portfolio Properties provided that certain conditions are satisfied, including (i) no event of default has occurred and is continuing; (ii) the lender reasonably determines that the proposed transferee satisfies the lender’s credit review and underwriting standards, taking into consideration transferee experience, financial strength and general business standing; (iii) a replacement guarantor acceptable to the lender assumes the obligations of the Wisconsin Hotel Portfolio guarantor under the non-recourse carveout guaranty and environmental indemnity; and (iv) if required by the lender, the lender receives confirmation from each rating agency assigned to rate the Series 2018-BNK10 Certificates that such assumption will not result in a downgrade, withdrawal or qualification of the respective ratings assigned to the Series 2018-BNK10 certificates.

 

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

 

67

 

 

WISCONSIN HOTEL PORTFOLIO

 

Partial Release. Following the expiration of the lockout period, the borrower is permitted to obtain the release of any individual Wisconsin Hotel Portfolio Property upon defeasance of a principal amount equal to 120% of the allocated loan amount for such individual Wisconsin Hotel Portfolio Property and satisfaction of certain conditions, including among others (i) the debt yield of the remaining Wisconsin Hotel Portfolio Properties immediately following the release will be not less than the greater of (x) the debt yield immediately preceding the release and (y) 11.0%, (ii) the debt service coverage ratio of the remaining Wisconsin Hotel Portfolio Properties immediately following the release will be not less than the greater of (x) the debt service coverage ratio immediately preceding the release and (y) 1.52x, and (iii) compliance with REMIC requirements. In addition, the applicable Wisconsin Hotel Portfolio Borrower is permitted to obtain the release of an unimproved parcel that is part of the land upon which the Fairfield Inn - Oak Creek property is located, without prepayment or defeasance, upon the satisfaction of certain conditions, including among others, separate tax lots, zoning, compliance with legal requirements, covenants prohibiting the use of the parcel for hotel or similar use, and compliance with REMIC requirements.

 

Real Estate Substitution. Not permitted.

 

Subordinate and Mezzanine Indebtedness. In connection with the franchise agreements executed with Choice Hotels International, Inc., the applicable Wisconsin Hotel Portfolio Borrowers have incurred unsecured indebtedness in the aggregate amount of $531,083 in the form of forgivable loans from the franchisor (each a “Franchisor Loan”). Each Franchisor Loan is required to be repaid to the franchisor only if (i) the hotel leaves the franchisor’s system prior to the full duration of the note term, (ii) the applicable Wisconsin Hotel Portfolio Borrower defaults on the franchise agreement or the note during the note term or (iii) the applicable Wisconsin Hotel Portfolio Borrower transfers the hotel during the note term.

 

Terrorism Insurance. The Wisconsin Hotel Portfolio Mortgage Loan documents require that the “all risk” insurance policy required to be maintained by the Wisconsin Hotel Portfolio Borrowers provide coverage for acts of terrorism in an amount equal to the full replacement cost of the Wisconsin Hotel Portfolio Properties, provided that so long as the Terrorism Risk Insurance Act of 2002, as extended and modified by the Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA) is in effect (including any extensions thereof or if another federal governmental program is in effect relating to “acts of terrorism” which provides substantially similar protections as TRIPRA), and covers both domestic and foreign acts of terrorism, the lender will be required to accept insurance which covers against “covered acts” as defined by TRIPRA or such other program. If TRIPRA is no longer in effect, the Wisconsin Hotel Portfolio Borrowers will not be required to pay terrorism insurance premiums in excess of an annual terrorism premium cap of two times the cost of the annual premiums for property and business interruption insurance required under the related Wisconsin Hotel Portfolio Mortgage Loan documents (excluding the cost of terrorism and earthquake components of such insurance) at the time terrorism coverage is excluded from the applicable policy.

 

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

 

68

 

 

(THIS PAGE INTENTIONALLY LEFT BLANK)

 

69

 

 

BROOKWOOD CHASE PORTFOLIO

  

 (GRAPHIC)

 

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

 

70

 

 

BROOKWOOD CHASE PORTFOLIO

 

(GRAPHIC) 

 

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

 

71

 

 

BROOKWOOD CHASE PORTFOLIO

 

No. 5 – Brookwood Chase Portfolio
 
Loan Information Property Information
Mortgage Loan Seller:

Morgan Stanley Mortgage Capital

Holdings LLC

 Single Asset/Portfolio:Portfolio

Credit Assessment

(DBRS/Fitch/Moody’s):

NR/NR/NR Property Type:Self Storage
Original Principal Balance:$65,000,000 Specific Property Type:Self Storage
Cut-off Date Balance:$65,000,000 Location:Various
% of Initial Pool Balance:5.0% Size:916,733 SF
Loan Purpose:Refinance Cut-off Date Balance Per SF:$70.90
Borrower Name:

Brookwood Capital, L.L.C.

 Year Built/Renovated:Various
Borrower Sponsors:

Robert Craig Smith

 Title Vesting(2):Various
Mortgage Rate:4.070% Property Manager:CubeSmart Asset Management, LLC
Note Date:December 13, 2017 4thMost Recent Occupancy (As of):50.0% (12/31/2013)
Anticipated Repayment Date:NAP 3rdMost Recent Occupancy (As of):55.5% (12/31/2014)
Maturity Date:January 1, 2028 2ndMost Recent Occupancy (As of):65.5% (12/31/2015)
IO Period:120 months Most Recent Occupancy (As of)(3):85.3% (12/31/2016)
Loan Term (Original):120 months Current Occupancy (As of):86.7% (Various)
Seasoning:1 month  
Amortization Term (Original):NAP Underwriting and Financial Information:
Loan Amortization Type:Interest-only, Balloon   
Interest Accrual Method:Actual/360 4thMost Recent NOI (As of):$4,192,973 (12/31/2014)
Call Protection:L(25),D(90),O(5) 3rdMost Recent NOI (As of):$4,823,041 (12/31/2015)
Lockbox Type:Springing 2ndMost Recent NOI (As of):$6,136,354 (12/31/2016)
Additional Debt:None Most Recent NOI (As of):$6,758,080 (TTM 10/31/2017)
Additional Debt Type:NAP  
   U/W Revenues:$8,798,742
   U/W Expenses:$2,357,462
     U/W NOI:$6,441,280
     U/W NCF:$6,349,780
     U/W NOI DSCR:2.40x
Escrows and Reserves(1):    U/W NCF DSCR:2.37x
Type:InitialMonthlyCap (If Any) U/W NOI Debt Yield:9.9%
Taxes$27,087$27,087NAP U/W NCF Debt Yield:9.8%
Insurance$0SpringingNAP As-Is Appraised Value:$110,330,000
Replacement Reserves$0Springing$412,530 As-Is Appraisal Valuation Date:Various
Deferred Maintenance$12,250$0NAP Cut-off Date LTV Ratio:58.9%
Ground Lease$3,000$3,000NAP LTV Ratio at Maturity:58.9%
        

 

(1)See “Escrows” section.

(2)All of the Brookwood Chase Portfolio Properties are fee, except for the Old Hammond property, which is leasehold.

(3)With respect to the six Brookwood Chase Portfolio Properties located in Baton Rouge and Lafayette, Louisiana, occupancy increase in 2016 coincided with a flood in the Baton Rouge area that led to an increased use of self-storage properties.

 

The Mortgage Loan. The mortgage loan (the “Brookwood Chase Portfolio Mortgage Loan”) is evidenced by a single promissory note that is secured by first fee and leasehold mortgages encumbering a portfolio of nine self storage properties located across three markets in Louisiana (the “Brookwood Chase Portfolio Properties”). The Brookwood Chase Portfolio Mortgage Loan was originated on December 13, 2017 by Morgan Stanley Bank, N.A. The Brookwood Chase Portfolio Mortgage Loan had an original principal balance of $65,000,000, has an outstanding principal balance as of the Cut-off Date of $65,000,000 and accrues interest at an interest rate of 4.070%per annum. The Brookwood Chase Portfolio Mortgage Loan had an initial term of 120 months, has a remaining term of 119 months as of the Cut-off Date and requires payments of interest only through the term of the Brookwood Chase Portfolio Mortgage Loan. The Brookwood Chase Portfolio Mortgage Loan matures on January 1, 2028.

 

Following the lockout period, the borrower has the right to defease the Brookwood Chase Portfolio Mortgage Loan in whole, or in part as described below under “Partial Release,” on any date after the expiration of the lockout period and before September 1, 2027. In addition, the Brookwood Chase Portfolio Mortgage Loan is prepayable without penalty on or after September 1, 2027.

 

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

 

72

 

 

BROOKWOOD CHASE PORTFOLIO

 

Sources and Uses

 

Sources    Uses   
Original loan amount$65,000,000 100.0% Loan payoff$33,390,177 51.4%
     Closing costs1,106,216 1.7
     Reserves42,337 0.1
     Return of equity30,461,270 46.9
Total Sources$65,000,000 100.0% Total Uses$65,000,000 100.0%

 

The Properties. The Brookwood Chase Portfolio Properties are comprised of self storage properties operated under the Cube Smart brand, located across three markets in Louisiana, with the largest presence in Baton Rouge (five properties, 61.7% of square feet). The Brookwood Chase Portfolio Properties total 7,024 units (916,733 square feet), of which 2,884 units are non-climate controlled units and 4,140 units are climate controlled. The Brookwood Chase Portfolio Properties were built by the sponsor between 1994 and 2007, with a weighted average year built of 2001. Since 2014, the sponsor began to transition management responsibilities of the portfolio to CubeSmart with the New Orleans properties transitioned in January 2014, the Lafayette property in October 2016, and the Baton Rouge properties in March 2017. Typical amenities across the Brookwood Chase Portfolio Properties include an electronic gate, keypad entry, video cameras, on-site managers and exterior lighting.

 

The following table presents certain information relating to the Brookwood Chase Portfolio Properties:

 

Brookwood Chase Portfolio Properties

 

Property NameCity / StateMarketYear Built

Net

Rentable

Area (SF)

UnitsAllocated Cut-off Date Balance(1)

% of ALA 

Appraised Value% of Appraised Value
Old HammondBaton Rouge, LABaton Rouge1998143,305876$12,520,00019.3%$21,250,00019.3%
CourseyBaton Rouge, LABaton Rouge1994129,475932$9,660,00014.9%$16,410,00014.9%
SiegenBaton Rouge, LABaton Rouge200190,395649$7,880,00012.1%$13,370,00012.1%
StaringBaton Rouge, LABaton Rouge1995121,763946$7,620,00011.7%$12,930,00011.7%
Capital CourtBaton Rouge, LABaton Rouge200680,710790$6,575,00010.1%$11,160,00010.1%
LapalcoHarvey, LANew Orleans - Metairie2007110,450970$6,510,00010.0%$11,050,00010.0%
WallGretna, LANew Orleans - Metairie199984,150641$5,970,0009.2%$10,130,0009.2%
WillowLafayette, LALafayette200584,185679$4,375,0006.7%$7,430,0006.7%
WestminsterMarrero, LANew Orleans - Metairie200772,300541$3,890,0006.0%$6,600,0006.0%
Total/Weighted Average   916,7337,024$65,000,000100.0%$110,330,000100.0%

 

(1)Allocated Cut-off Date Balances are based on the Appraised Values of the individual Brookwood Chase Portfolio Properties.

 

The following table presents detailed information with respect to the unit mix and net operating income of the Brookwood Chase Portfolio Properties.

 

Brookwood Chase Portfolio Properties Unit Mix and NOI Summary(1)

 

Property NameCity / StateNumber of FloorsNon-Climate Controlled UnitsClimate Controlled Units% of Climate Controlled Units

TTM

10/31/2017 NOI

% of

Total TTM

10/31/2017 

NOI

Old HammondBaton Rouge, LA149438243.6%$1,349,42320.0%
CourseyBaton Rouge, LA163030232.4%$1,035,69015.3%
SiegenBaton Rouge, LA123041964.6%$837,95812.4%
StaringBaton Rouge, LA1-368626027.5%$844,74312.5%
Capital CourtBaton Rouge, LA30790100.0%$725,88310.7%
LapalcoHarvey, LA22095097.9%$570,7258.4%
WallGretna, LA127236957.6%$625,4259.3%
WillowLafayette, LA150617325.5%$410,7666.1%
WestminsterMarrero, LA24649591.5%$357,4675.3%
Total/Weighted Average  2,8844,140 $6,758,080100.0%

 

(1)Based on information obtained from the appraisal.

 

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

 

73

 

 

BROOKWOOD CHASE PORTFOLIO

 

The following table presents historical occupancy percentages at the Brookwood Chase Portfolio Properties:

 

Historical Occupancy

 

12/31/2013 

12/31/2014 

12/31/2015 

12/31/2016 

10/31/2017 

50.0%55.5%65.5%85.3%86.7%

 

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 Brookwood Chase Portfolio Properties:

 

Cash Flow Analysis

 

  2014 2015 2016(2) 

TTM 

10/31/2017

 U/W(1) % of U/W
Effective Gross Income
 

U/W $

per SF 

Gross Potential Rent $5,239,705 $5,906,837 $7,112,059 $7,756,708 $9,973,200 113.3% $10.88 
Other Income(1) 450,851 557,759 853,289 1,050,281 933,000 10.6% 1.02 
Concessions and Credit Loss 0 0 0 0 (2,107,458) (24.0) (2.30) 
Effective Gross Income $5,690,556 $6,464,597 $7,965,348 $8,806,989 $8,798,742 100.0% $9.60 
                
Total Operating Expenses $1,497,584 $1,641,555 $1,828,994 $2,048,909 $2,357,462 26.8% $2.57 
                
Net Operating Income $4,192,973 $4,823,041 $6,136,354 $6,758,080 $6,441,280 73.2% $7.03 
Capital Expenditures 0 0 0 0 91,500 1.0 0.10 
Net Cash Flow $4,192,973 $4,823,041 $6,136,354 $6,758,080 $6,349,780 72.2% $6.93 
                
NOI DSCR 1.56x 1.80x 2.29x 2.52x 2.40x     
NCF DSCR 1.56x 1.80x 2.29x 2.52x 2.37x     
NOI DY 6.5% 7.4% 9.4% 10.4% 9.9%     
NCF DY 6.5% 7.4% 9.4% 10.4% 9.8%     

 

(1)Other Income is comprised of insurance fees, administrative fees, box sales income, lock sales income, miscellaneous income, late fees and other charges.

(2)With respect to the six Brookwood Chase Portfolio Properties located in Baton Rouge and Lafayette, Louisiana, occupancy increase in 2016 coincided with a flood in the Baton Rouge area that led to an increased use of self storage properties.

 

Appraisal.As of the appraisal valuation dates ranging from October 25, 2017 to October 30, 2017, the Brookwood Chase Portfolio Properties had an aggregate “as-is” appraised value of $110,330,000.

 

Environmental Matters. According to the Phase I environmental site assessments dated November 1, 2017, there are no recognized environmental conditions at the Brookwood Chase Portfolio Properties.

 

Market Overview and Competition. The Brookwood Chase Portfolio Properties consist of nine self storage facilities which are all part of the Southwest Sector as defined by a third party publication regarding self storage properties. The Southwest Sector has a total of 6,384 facilities which comprise a total of 331,968,000 square feet. The second quarter 2016 vacancy for the Southwest Sector was 9.1%. The second quarter 2016 average rental rate for 10 x 10 Non-Climate Controlled Units and 10 x 10 Climate Controlled Units in the Southwest Sector were $98.94 and $138.20, respectively.

 

The following table presents local demographic information with respect to the Brookwood Chase Portfolio Properties:

 

Local Demographics Summary(1)

 

Property NameCity / State

2016 Population

(Within 1-mi. / 3-mi. /5-mi. Radius)

2016 Average Household Income

(Within 1-mi. / 3-mi. /5-mi. Radius) 

Old HammondBaton Rouge, LA3,650 / 38,734 / 128,868$68,196 / $65,398 / $75,403
CourseyBaton Rouge, LA11,085 / 73,403 / 155,204$92,116 / $84,306 / $84,261
SiegenBaton Rouge, LA9,542 / 53,840 / 140,394$89,239 / $96,873 / $92,219
StaringBaton Rouge, LA7,013 / 66,008 / 179,736$69,414 / $89,867 / $79,692
Capital CourtBaton Rouge, LA7,642 / 63,829 / 145,492$84,518 / $92,112 / $89,080
LapalcoHarvey, LA13,945 / 69,172 / 207,065$46,550 / $65,687 / $70,293
WallGretna, LA15,886 / 92,980 / 206,493$71,497 / $67,508 / $67,083
WillowLafayette, LA1,555 / 48,573 / 126,572$49,202 / $54,897 / $64,909
WestminsterMarrero, LA13,945 / 69,172 / 207,065$46,550 / $65,687 / $70,293

 

(1)Based on information obtained from the appraisal.

 

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

 

74

 

 

BROOKWOOD CHASE PORTFOLIO

 

The following table presents competitive set information with respect to the Brookwood Chase Portfolio Properties:

 

Competitive Set Summary(1)

 

Property NameCompetitive Set Average Occupancy Rates
Old Hammond85.8%
Coursey87.3%
Siegen88.7%
Staring90.0%
Capital Court88.8%
Lapalco85.6%
Wall86.4%
Willow88.4%
Westminster86.6%
Total / Wtd. Avg.87.5%

 

(1)Based on information obtained from the appraisal. Competitive Set Average Occupancy Rates are as of October 2017.

 

The Borrower.The borrower is Brookwood Capital, L.L.C., a Delaware limited liability company and single purpose entity with two independent directors. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the Brookwood Chase Portfolio Mortgage Loan. Brookwood Properties, L.L.C. (“Brookwood Properties”) is the guarantor of certain nonrecourse carveouts under the Brookwood Chase Portfolio Mortgage Loan.

 

Brookwood Properties is a real estate company that was founded by Robert Craig Smith in 1986 and is currently headquartered in Baton Rouge, Louisiana. Brookwood Properties develops, acquires, and manages self storage properties in Louisiana, Mississippi, and Texas. Brookwood has developed the majority of its portfolio and maintains a long-term ownership strategy. Brookwood’s current portfolio consists of over 35 properties and 3.2 million square feet of self-storage space.

 

The Borrower Sponsor.The borrower sponsor is Robert Craig Smith. Brookwood Properties is owned 99.0% by Silverline Capital Holdings LLC (“Silverline”), with the remaining 1% being owned equally by the members of Silverline. The members of Silverline are Robert Craig Smith (4.6%), Lynne St. Clair Smith (4.6%), Leigh Ellen Smith Puckett (30.3%), Patrick Craig Smith (30.3%), and Erin Elizabeth Smith Piper (30.3%). The borrower, Brookwood Properties, and Silverline are each managed by Robert Craig Smith.

 

Escrows.On the origination date of the Brookwood Chase Portfolio Mortgage Loan, the borrower funded a reserve of (i) $27,087 for real estate taxes, (ii) $3,000 for the monthly Ground Lease (as defined below) payment, and (iii) $12,250 for immediate repairs.

 

On each monthly due date, the Brookwood Chase Portfolio Borrower is required to fund (i) an amount equal to the payment that will be payable under the Ground Lease for