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Morgan Stanley Capital I Trust 2021-L7

Filed: 23 Sep 21, 4:29pm
  FREE WRITING PROSPECTUS
  FILED PURSUANT TO RULE 433
  REGISTRATION FILE NO.: 333-227446-17
   

 

 

 

MSC 2021-L7

 

Free Writing Prospectus 

Structural and Collateral Term Sheet

 

$921,191,360 

(Approximate Total Mortgage Pool Balance)

 

$769,052,000 

(Approximate Offered Certificates)

 

Morgan Stanley Capital I Inc. 

as Depositor

 

KeyBank National Association 

Starwood Mortgage Capital LLC 

Bank of Montreal 

Argentic Real Estate Finance LLC 

Morgan Stanley Mortgage Capital Holdings LLC 

 

as Sponsors and Mortgage Loan Sellers

 

 

 

Commercial Mortgage Pass-Through Certificates

Series 2021-L7

 

September 23, 2021

 

MORGAN STANLEY
Co-Lead Bookrunning Manager
BMO Capital Markets
Co-Lead Bookrunning Manager
KeyBanc Capital Markets
Co-Lead Bookrunning Manager
   
 Mischler Financial Group, Inc.
Co-Manager
 
 

 

STATEMENT REGARDING THIS FREE WRITING PROSPECTUS

 

The depositor has filed a registration statement (including a prospectus) with the SEC (File No. 333-227446) for the offering to which this communication relates. Before you invest, you should read the prospectus in that 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 or any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling toll free 1-866-718-1649 or by email to prospectus@ms.com.

 

This is not a research report and was not prepared by any Underwriter’s research department. It was prepared by the Underwriters’ sales, trading, banking or other non-research personnel. Please see additional important information and qualifications at the end of this Term Sheet.

 

 

 

MSC 2021-L7 

 

Neither this Term Sheet nor anything contained herein shall form the basis for any contract or commitment whatsoever. The information contained herein is preliminary as of the date hereof. This Term Sheet is subject to change, completion or amendment from time to time. The information contained herein supersedes information in any other communication relating to the securities described herein; provided, that the information contained herein will be superseded by similar information delivered to you as part of the Preliminary Prospectus. The information contained herein should be reviewed only in conjunction with the entire Preliminary Prospectus. All of the information contained herein is subject to the same limitations and qualifications contained in the Preliminary Prospectus. The information contained herein does not contain all relevant information relating to the underlying mortgage loans or mortgaged properties. Such information is described in the Preliminary Prospectus. The information contained herein will be more fully described in the Preliminary Prospectus. The information contained herein should not be viewed as projections, forecasts, predictions or opinions with respect to value. Prior to making any investment decision, prospective investors are strongly urged to read the Preliminary Prospectus in its entirety. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this Term Sheet is truthful or complete. Any representation to the contrary is a criminal offense.

 

IMPORTANT NOTICE RELATING TO AUTOMATICALLY GENERATED EMAIL DISCLAIMERS

 

Any legends, disclaimers or other notices that may appear at the bottom of, or attached to, the email communication to which this Term Sheet may have been attached are not applicable to this Term Sheet and should be disregarded. Such legends, disclaimers or other notices have been automatically generated as a result of this Term Sheet having been sent via Bloomberg or another email system.

 

IMPORTANT NOTICE REGARDING THE CONDITIONS FOR THIS OFFERING OF ASSET-BACKED SECURITIES

 

THE ASSET-BACKED SECURITIES REFERRED TO IN THIS TERM SHEET ARE BEING OFFERED WHEN, AS AND IF ISSUED. IN PARTICULAR, YOU ARE ADVISED THAT THE ASSET-BACKED SECURITIES, AND THE ASSET POOL BACKING THEM, ARE SUBJECT TO MODIFICATION OR REVISION (INCLUDING, AMONG OTHER THINGS, THE POSSIBILITY THAT ONE OR MORE CLASSES OF SECURITIES MAY BE SPLIT, COMBINED OR ELIMINATED), AT ANY TIME PRIOR TO ISSUANCE OR AVAILABILITY OF A FINAL PROSPECTUS. AS A RESULT, YOU MAY COMMIT TO PURCHASE SECURITIES THAT HAVE CHARACTERISTICS THAT MAY CHANGE, AND YOU ARE ADVISED THAT ALL OR A PORTION OF THE SECURITIES MAY NOT BE ISSUED THAT HAVE THE CHARACTERISTICS DESCRIBED IN THIS TERM SHEET. OUR OBLIGATION TO SELL SECURITIES TO YOU IS CONDITIONED ON THE SECURITIES AND THE UNDERLYING TRANSACTION HAVING THE CHARACTERISTICS DESCRIBED IN THIS TERM SHEET. IF WE DETERMINE THAT THE FOREGOING CONDITION IS NOT SATISFIED IN ANY MATERIAL RESPECT, WE WILL NOTIFY YOU, AND NEITHER THE ISSUING ENTITY NOR ANY UNDERWRITER WILL HAVE ANY OBLIGATION TO YOU TO DELIVER ALL OR ANY PORTION OF THE SECURITIES WHICH YOU HAVE COMMITTED TO PURCHASE, AND THERE WILL BE NO LIABILITY BETWEEN US AS A CONSEQUENCE OF THE NON-DELIVERY.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-2

 

 

MSC 2021-L7Structural Overview

 

Offered Certificates

 

         
ClassExpected Ratings
(Fitch/KBRA/S&P)(1)
Approximate Initial
Certificate Balance or Notional Amount(2)
Approximate Initial Credit Support(3)Pass-Through
Rate
Description
Expected
Weighted
Average Life (Years)(4)
Expected
Principal

Window
(Months)(4)
Certificate Principal UW
NOI Debt
Yield(5)
Certificate
Principal
to Value
Ratio(6)
Class A-1AAAsf/AAA(sf)/AAA(sf)$18,400,00030.000%(7)2.851 – 5814.9%41.0%
Class A-2AAAsf/AAA(sf)/AAA(sf)$92,100,00030.000%(7)4.9858 – 6014.9%41.0%
Class A-3AAAsf/AAA(sf)/AAA(sf)$68,100,00030.000%(7)6.8782 – 8414.9%41.0%
Class A-SBAAAsf/AAA(sf)/AAA(sf)$34,100,00030.000%(7)7.4760 – 11714.9%41.0%
Class A-4(8)AAAsf/AAA(sf)/AAA(sf)(8)(9)30.000%(7)(8)(9)(9)14.9%41.0%
Class A-5(8)AAAsf/AAA(sf)/AAA(sf)(8)(9)30.000%(7)(8)(9)(9)14.9%41.0%
Class X-AAAAsf/AAA(sf)/AAA(sf)$625,972,000(10)N/AVariable(11)N/AN/AN/AN/A
Class X-BA-sf/AAA(sf)/A(sf)$143,080,000(10)N/AVariable(11)N/AN/AN/AN/A
Class A-S(8)AAAsf/AAA(sf)/AAA(sf)$52,537,000(8)24.125%(7)(8)9.92119 – 11913.7%44.5%
Class B(8)AA-sf/AA+(sf)/AA(sf)$43,595,000(8)19.250%(7)(8)9.94119 – 12012.9%47.3%
Class C(8)A-sf/A(sf)/A(sf)$46,948,000(8)14.000%(7)(8)10.01120 – 12012.1%50.4%

 

Privately Offered Certificates(12)

 

         
ClassExpected Ratings
(Fitch/KBRA/S&P)(1)
Approximate Initial
Certificate Balance or Notional Amount(2)
Approximate Initial Credit Support(3)Pass-Through
Rate
Description
Expected
Weighted
Average Life (Years)(4)
Expected
Principal

Window
(Months)(4)
Certificate Principal UW
NOI Debt
Yield(5)
Certificate
Principal
to Value
Ratio(6)
Class X-DBBB-sf/BBB(sf)/NR$53,654,000(10)N/AVariable(11)N/AN/AN/AN/A
Class X-FBB+sf/BBB-(sf)/NR$10,061,000(10)N/AVariable(11)N/AN/AN/AN/A
Class X-GBB-sf/BB(sf)/NR$14,531,000(10)N/AVariable(11)N/AN/AN/AN/A
Class DBBBsf/BBB+(sf)/NR$29,063,00010.750%(7)10.01120 – 12011.7%52.3%
Class EBBB-sf/BBB(sf)/NR$24,591,0008.000%(7)10.01120 – 12011.3%53.9%
Class FBB+sf/BBB-(sf)/NR$10,061,0006.875%(7)10.01120 – 12011.2%54.6%
Class GBB-sf/BB(sf)/NR$14,531,0005.250%(7)10.01120 – 12011.0%55.5%
Class H-RRB-sf/B+(sf)/NR$10,060,0004.125%(7)10.01120 – 12010.8%56.2%
Class J-RRNR/NR/NR$36,888,5120.000%(7)10.01120 – 12010.4%58.6%

 

Non-Offered Eligible Vertical Interest(12)

 

         
         
Non-Offered Eligible Vertical InterestExpected Ratings
(Fitch/KBRA/S&P)(1)
Approximate Initial
VRR Interest Balance(2)
Approximate Initial Credit Support(3)VRR Interest
Rate
Description
Expected
Weighted
Average Life (Years)(4)
Expected
Principal

Window
(Months)(4)
Certificate Principal UW
NOI Debt
Yield(5)
Certificate
Principal
to Value
Ratio(6)
Class RR(13)NR/NR/NR$21,467,837.32N/A(14)8.921 – 120N/AN/A
RR InterestNR/NR/NR$5,477,009.96N/A(14)8.921 – 120N/AN/A

 

 

 

(1)Ratings shown are those of Fitch Ratings, Inc. (“Fitch”), Kroll Bond Rating Agency, LLC (“KBRA”) and S&P Global Ratings, acting through Standard & Poor’s Financial Services LLC (“S&P”). Certain 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, or otherwise to rate the certificates. There can be no assurance as to what ratings a non-hired nationally recognized statistical rating organization would assign. 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 on or about the date hereof (the “Preliminary Prospectus”). Capitalized terms used but not defined herein have the meanings assigned to such terms in the Preliminary Prospectus.

 

(2)Approximate, subject to a permitted variance of plus or minus 5% or, in the case of the Class A-4 and Class A-5 certificates, such greater percentages as are contemplated by footnote (9) below. In addition, the notional amounts of the Class X-A, Class X-B, Class X-D, Class X-F and Class X-G certificates may vary depending upon the final pricing of the classes of principal balance certificates (as defined in footnote (8) below) or trust components whose certificate or principal balances comprise such notional amounts, and, if as a result of such pricing the pass-through rate of any class of the Class X-A, Class X-B, Class X-D, Class X-F or Class X-G certificates, as applicable, 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 initial credit support percentages set forth for the certificates are approximate and, for the Class A-1, Class A-2, Class A-3, Class A-SB, Class A-4 and Class A-5 certificates, are presented in the aggregate, taking into account the initial principal balances of the Class A-4 and Class A-5 trust components. The approximate initial credit support percentages set forth for the Class A-S, Class B and Class C certificates represent the approximate credit support for the underlying Class A-S, Class B and Class C trust components, respectively. The VRR Interest provides credit support only to the limited extent that it is allocated a portion of any losses incurred on the underlying mortgage loans, which such losses are allocated between it, on the one hand, and the certificates, on the

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-3

 

 

MSC 2021-L7Structural Overview

 

other hand, pro rata, in accordance with their respective Percentage Allocation Entitlements (as defined herein). See “Credit Risk Retention” in the Preliminary Prospectus.

 

(4)The Expected Weighted Average Life and Expected Principal Window during which distributions of principal would be received as set forth in the foregoing table with respect to each class of principal balance certificates, the Class RR certificates and the RR Interest are based on the assumptions set forth under “Yield and Maturity Considerations—Weighted Average Life” in the Preliminary Prospectus and on the assumptions that there are no prepayments, modifications or losses in respect of the mortgage loans and that there are no extensions or forbearances of maturity dates or anticipated repayment dates of the mortgage loans.

 

(5)Certificate Principal UW NOI Debt Yield for any class of principal balance certificates is calculated as the product of (a) the weighted average UW NOI Debt Yield for the mortgage pool, and (b) a fraction, the numerator of which is the sum of the total initial certificate balance of all the principal balance certificates and the initial principal balance of the VRR Interest, and the denominator of which is the sum of (x) the total initial certificate balance of the subject class of principal balance certificates (or, with respect to the Class A-4, Class A-5, Class A-S, Class B or Class C certificates, the initial principal balance of the trust component with the same alphanumeric designation) and all other classes of principal balance certificates, if any, that are senior to such class and (y) the initial principal balance of the VRR Interest, multiplied by the applicable VRR Interest Computation Percentage. The Certificate Principal UW NOI Debt Yields of the Class A-1, Class A-2, Class A-3, Class A-SB, Class A-4 and Class A-5 certificates are calculated in the aggregate for those classes as if they were a single class. With respect to any class of principal balance certificates, the “VRR Interest Computation Percentage” is equal to a fraction, expressed as a percentage, the numerator of which is the total initial certificate balance of the subject class of principal balance certificates (or, with respect to the Class A-4, Class A-5, Class A-S, Class B or Class C certificates, the initial principal balance of the trust component with the same alphanumeric designation) and all other classes of principal balance certificates, if any, that are senior to such class, and the denominator of which is the sum of the total initial certificate balance of all the principal balance certificates.

 

(6)Certificate Principal to Value Ratio for any class of principal balance certificates is calculated as the product of (a) the weighted average Cut-off Date LTV Ratio of the mortgage pool, and (b) a fraction, the numerator of which is the sum of (x) the total initial certificate balance of the subject class of principal balance certificates (or, with respect to the Class A-4, Class A-5, Class A-S, Class B or Class C certificates, the initial principal balance of the trust component with the same alphanumeric designation) and all other classes of principal balance certificates, if any, that are senior to such class and (y) the initial principal balance of the VRR Interest multiplied by the applicable VRR Interest Computation Percentage, and the denominator of which is the sum of the total initial certificate balance of all the principal balance certificates and the initial principal balance of the VRR Interest. The Certificate Principal to Value Ratios of the Class A-1, Class A-2, Class A-3, Class A-SB, Class A-4 and Class A-5 certificates are calculated in the aggregate for those classes as if they were a single class.

 

(7)The pass-through rate for each class of the Class A-1, Class A-2, Class A-3, Class A-SB, Class A-4, Class A-5, Class A-S, Class B, Class C, Class D, Class E, Class F, Class G, Class H-RR and Class J-RR certificates will be one of the following: (i) a fixed rate per annum; (ii) a variable rate per annum equal to the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date; (iii) a variable rate per annum equal to the lesser of (a) a fixed rate and (b) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date; or (iv) a variable rate per annum equal to the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date minus a specified percentage. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the net mortgage interest rates will be adjusted as necessary to a 30/360 basis.

 

(8)The Class A-4-1, Class A-4-2, Class A-4-X1, Class A-4-X2, Class A-5-1, Class A-5-2, Class A-5-X1, Class A-5-X2, Class A-S-1, Class A-S-2, Class A-S-X1, Class A-S-X2, Class B-1, Class B-2, Class B-X1, Class B-X2, Class C-1, Class C-2, Class C-X1 and Class C-X2 certificates are also offered certificates. Such classes of certificates, together with the Class A-4, Class A-5, Class A-S, Class B and Class C certificates, constitute the “Exchangeable Certificates”. Each class of Exchangeable Certificates evidences interests in one or more “trust components”. The Class A-1, Class A-2, Class A-3, Class A-SB, Class D, Class E, Class F, Class G, Class H-RR and Class J-RR certificates, together with the Exchangeable Certificates with certificate balances, are referred to as the “principal balance certificates.” The maximum certificate balances of the Class A-4, Class A-5, Class A-S, Class B and Class C certificates (subject to the constraint on the aggregate initial principal balance of the Class A-4 and Class A-5 trust components discussed under footnote (9)) will be issued on the closing date, and the certificate balance or notional amount of each other class of Exchangeable Certificates will be equal to zero on the closing date. The relative priorities, certificate balances or notional amounts and pass-through rates of the Exchangeable Certificates are described more fully below under “Exchangeable Certificates.” Each class of Class A-4, Class A-5, Class A-S, Class B and Class C Exchangeable Certificates will have the same ratings as the Class A-4, Class A-5, Class A-S, Class B and Class C certificates, respectively, shown in the table above.

 

(9)The exact initial principal balances or notional amounts of the Class A-4, Class A-4-X1, Class A-4-X2, Class A-5, Class A-5-X1 and Class A-5-X2 trust components are unknown and will be determined based on the final pricing of the certificates. However, the initial principal balances, weighted average lives and principal windows of the Class A-4 and Class A-5 trust components are expected to be within the applicable ranges reflected in the chart below. The aggregate initial principal balance of the Class A-4 and Class A-5 trust components is expected to be approximately $413,272,000, subject to a variance of plus or minus 5%. The Class A-4-X1 and Class A-4-X2 trust components will have initial notional amounts equal to the initial principal balance of the Class A-4 trust component. The Class A-5-X1 and Class A-5-X2 trust components will have initial notional amounts equal to the initial principal balance of the Class A-5 trust component.

 

The maximum certificate balances of the Class A-4 and Class A-5 certificates (subject to the constraint above) will be issued on the closing date, and the certificate balance or notional amount of each other class of Exchangeable Certificates with an “A-4” or “A-5” designation will be equal to zero on the closing date.

 

Trust Component 

Expected Range of Initial
Certificate Balance 

Expected Range
of Weighted
Average Life
(Years) 

Expected Range of
Principal Window
(Months) 

Class A-4$0 - $190,000,000N/A – 9.77N/A / 101 – 118
Class A-5$223,272,000 - $413,272,0009.88 – 9.83118 – 119 / 101 – 119

 

(10)The Class X-A, Class X-B, Class X-D, Class X-F and Class X-G certificates (collectively referred to as the “Class X certificates”) are notional amount certificates and will not be entitled to distributions of principal. The notional amount of the Class X-A certificates will be equal to the aggregate of the certificate or principal balances of the Class A-1, Class A-2, Class A-3 and Class A-SB certificates and the Class A-4 and Class A-5 trust components. The notional amount of the Class X-B certificates will be equal to the aggregate of the principal balances of the Class A-S, Class B and Class C trust components. The notional amount of the Class X-D certificates will be equal to the aggregate certificate balance of the Class D and Class E certificates. The notional amount of the Class X-F certificates will be equal to the certificate balance of the Class F certificates. The notional amount of the Class X-G certificates will be equal to the certificate balance of the Class G certificates. If the certificate balance of a class of principal balance certificates or principal balance of a trust component constitutes all or part of the notional amount of a class of Class X certificates, then such class of principal balance certificates or such trust component constitutes an “underlying class of principal balance certificates” or an “underlying trust component” for such class of Class X certificates.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

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MSC 2021-L7Structural Overview

 

(11)The pass-through rate for the Class X-A certificates for any distribution date will be a per annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the weighted average of the pass-through rates on the Class A-1, Class A-2, Class A-3 and Class A-SB certificates and the Class A-4, Class A-4-X1, Class A-4-X2, Class A-5, Class A-5-X1 and Class A-5-X2 trust components for the related distribution date, weighted on the basis of their respective certificate or principal balances or notional amounts outstanding immediately prior to that distribution date (but excluding trust components with a notional amount in the denominator of such weighted average calculation). The pass-through rate for the Class X-B certificates for any distribution date will be a per annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the weighted average of the pass-through rates on the Class A-S, Class A-S-X1, Class A-S-X2, Class B, Class B-X1, Class B-X2, Class C, Class C-X1 and Class C-X2 trust components for the related distribution date, weighted on the basis of their respective certificate or principal balances or notional amounts outstanding immediately prior to that distribution date (but excluding trust components with a notional amount in the denominator of such weighted average calculation). The pass-through rate for the Class X-D certificates for any distribution date will be a per annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the weighted average of the pass-through rates on the Class D and Class E certificates for the related distribution date, weighted on the basis of their respective certificate balances outstanding immediately prior to that distribution date. The pass-through rate for the Class X-F certificates for any distribution date will be a per annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the pass-through rate of the Class F certificates for the related distribution date. The pass-through rate for the Class X-G certificates for any distribution date will be a per annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the pass-through rate of 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 net mortgage interest rates will be adjusted as necessary to a 30/360 basis.

 

(12)Not offered pursuant to the Preliminary Prospectus or this Term Sheet. Information provided in this Term Sheet regarding the characteristics of these certificates and the VRR Interest is provided only to enhance your understanding of the offered certificates. The privately offered certificates also include the Class V and Class R certificates, which do not have a certificate balance, notional amount, pass-through rate, rating or rated final distribution date, and which are not shown in the chart. The Class V certificates represent a beneficial ownership interest held through the grantor trust in a specified percentage of certain excess interest in respect of mortgage loans having anticipated repayment dates, if any. The Class R certificates represent the beneficial ownership of the residual interest in each of the real estate mortgage investment conduits, as further described in the Preliminary Prospectus.

 

(13)The Class RR certificates will be certificated but will not be “certificates” for purposes of this Term Sheet.

 

(14)Although they do not have a specified pass-through rate (other than for tax reporting purposes), the effective pass-through rate for each of the Class RR certificates and the RR Interest will be 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 (in each case adjusted, if necessary, to accrue on the basis of a 360-day year consisting of twelve 30-day months).

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

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MSC 2021-L7Structural Overview

 

Issue Characteristics

 

Offered Certificates:$769,052,000 (approximate) monthly pay, multi-class, commercial mortgage pass-through certificates, consisting of 19 principal balance classes (Class A-1, Class A-2, Class A-3, Class A-SB, Class A-4, Class A-4-1, Class A-4-2, Class A-5, Class A-5-1, Class A-5-2, Class A-S, Class A-S-1, Class A-S-2, Class B, Class B-1, Class B-2, Class C, Class C-1 and Class C-2) and 12 interest-only classes (Class A-4-X1, Class A-4-X2, Class A-5-X1, Class A-5-X2, Class X-A, Class X-B, Class A-S-X1, Class A-S-X2, Class B-X1, Class B-X2, Class C-X1 and Class C-X2)
Co-Lead Bookrunning Managers:Morgan Stanley & Co. LLC, KeyBanc Capital Markets Inc. and BMO Capital Markets Corp.
Co-Managers:Mischler Financial Group, Inc.
Mortgage Loan Sellers:Morgan Stanley Mortgage Capital Holdings LLC, KeyBank National Association, Starwood Mortgage Capital LLC, Bank of Montreal and Argentic Real Estate Finance LLC
Rating Agencies:Fitch, KBRA and S&P
Master Servicer:KeyBank National Association
Special Servicer:KeyBank National Association
Trustee/Certificate Administrator/ Certificate Registrar/Custodian:Wells Fargo Bank, National Association
Operating Advisor:Pentalpha Surveillance LLC
Asset Representations Reviewer:Pentalpha Surveillance LLC
Initial Directing Certificateholder:LD III Holdco II, L.P.
Risk Retention Consultation Party:KeyBank National Association
Credit Risk Retention:Eligible vertical interest and eligible horizontal residual interest
Cut-off Date:The mortgage loans will be considered part of the trust fund as of their respective cut-off dates. The cut-off date with respect to each mortgage loan is the respective due date for the monthly debt service payment that is due in October 2021 (or, in the case of any mortgage loan that has its first due date after October 2021, the date that would have been its due date in October 2021 under the terms of that mortgage loan if a monthly debt service payment were scheduled to be due in that month).
Expected Pricing Date:Week of September 27, 2021
Expected Closing Date:On or about October 13, 2021
Determination Dates:The 11th day of each month or, if the 11th day is not a business day, then the business day immediately following such 11th day.
Distribution Dates:The 4th business day following each determination date. The first distribution date will be in November 2021.
Rated Final Distribution Date:The distribution date in October 2054
Interest Accrual Period:Preceding calendar month
Payment Structure:Sequential pay
Tax Treatment:REMIC, except that the Exchangeable Certificates will evidence interests in a grantor trust
Optional Termination:1.00% clean-up call
Minimum Denominations:$10,000 for each class of Offered Certificates (other than Class X-A and Class X-B certificates); $1,000,000 for the Class X-A and Class X-B certificates
Settlement Terms:DTC, Euroclear and Clearstream
Legal/Regulatory Status:Each class of Offered Certificates is expected to be eligible for exemptive relief under ERISA. No class of Offered Certificates is SMMEA eligible.
Analytics:The certificate administrator is expected to make available all distribution date statements, CREFC® reports and supplemental notices received by it to certain modeling financial services as described in the Preliminary Prospectus.
Bloomberg Ticker:MSC 2021-L7<MTGE><GO>
Risk Factors:THE OFFERED CERTIFICATES INVOLVE CERTAIN RISKS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. SEE THE “RISK FACTORS” SECTION OF THE PRELIMINARY PROSPECTUS.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

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MSC 2021-L7Structural Overview

 

Structural Overview

 

Accrual:Each class of Offered Certificates will accrue interest on a 30/360 basis.
Allocation Between the
Certificates and the VRR Interest:

 

The aggregate amount available for distributions to the holders of the certificates and the VRR Interest will be (i) net of specified expenses of the issuing entity, including fees payable to, and costs and expenses reimbursable to, the master servicer, any primary servicer, the special servicer, the certificate administrator, the trustee, the operating advisor, the asset representations reviewer and CREFC®; and (ii) allocated between amounts available for distribution to the holders of the VRR Interest, on the one hand, and to the holders of the certificates, on the other hand. The portion of such aggregate amount (a) allocable to the VRR Interest will at all times be the product of such amounts multiplied by a fraction, expressed as a percentage, the numerator of which is the initial principal balance of the VRR Interest and the denominator of which is the sum of (x) the aggregate initial certificate balance of all the classes of principal balance certificates and (y) the initial principal balance of the VRR Interest (the “Vertically Retained Percentage”), and (b) allocable to the certificates will at all times be the product of such aggregate amount multiplied by the difference between 100% and the percentage set forth in clause (a) (the “Non-Vertically Retained Percentage,” and the Non-Vertically Retained Percentage and the Vertically Retained Percentage are each a “Percentage Allocation Entitlement”).

 

The Class RR Certificates and the RR Interest will collectively constitute an “eligible vertical interest” (as such term is defined in the Credit Risk Retention Rules), which is expected to be acquired and retained by certain of the sponsors as described under “Credit Risk Retention” in the Preliminary Prospectus. The Class RR Certificates and the RR Interest collectively comprise the “VRR Interest”.

 

Amount and Order of
Distributions:

 

On each distribution date, the Non-Vertically Retained Percentage of the aggregate funds available for distribution from the mortgage loans, net of (i) any yield maintenance charges and prepayment premiums and (ii) any excess interest, will be distributed in the following amounts and order of priority:

 

First, to the Class A-1, Class A-2, Class A-3, Class A-SB, Class X-A, Class X-B, Class X-D, Class X-F and Class X-G certificates and the Class A-4, Class A-4-X1, Class A-4-X2, Class A-5, Class A-5-X1 and Class A-5-X2 trust components, in respect of interest, up to an amount equal to, and pro rata in accordance with, the interest entitlements for those classes of certificates and trust components;

 

Second, to the Class A-1, Class A-2, Class A-3 and Class A-SB certificates and the Class A-4 and Class A-5 trust components as follows, to the extent of the Non-Vertically Retained Percentage of available funds allocable to principal: either (i)(a) first, to principal on the Class A-SB certificates, until the certificate balance of the Class A-SB certificates is reduced to the planned principal balance for the related distribution date set forth in Annex E to the Preliminary Prospectus, and (b) second, to principal on the Class A-1 certificates, the Class A-2 certificates, the Class A-3 certificates, the Class A-4 trust component, the Class A-5 trust component and the Class A-SB certificates, in that order, in each case until the certificate or principal balance of such class of certificates or trust component has been reduced to zero, or (ii) if the certificate balance or principal balance of each of the Class A-S, Class B and Class C trust components and each class of the Class D, Class E, Class F, Class G, Class H-RR and Class J-RR certificates has been reduced to zero as a result of the allocation of losses on the mortgage loans to those certificates or trust components, to principal on the Class A-1, Class A-2, Class A-3 and Class A-SB certificates and the Class A-4 and Class A-5 trust components, pro rata, without regard to the distribution priorities described above or the planned principal balance of the Class A-SB certificates;

 

Third, to the Class A-1, Class A-2, Class A-3 and Class A-SB certificates and the Class A-4 and Class A-5 trust components: (a) first, up to an amount equal to, and pro rata based on, any previously unreimbursed losses on the mortgage loans allocable to principal that were previously borne by each such class or trust component, and (b) second, up to an amount equal to, and pro rata based on, interest on such unreimbursed losses previously allocated to each such class or trust component at the pass-through rate for such class or trust component from the date the related loss was allocated to such class or trust component;

 

Fourth, to the Class A-S, Class A-S-X1 and Class A-S-X2 trust components, as follows: (a) to each such trust component in respect of interest, up to an amount equal to, and pro rata in accordance with, the interest entitlements for those trust components; (b) to the extent of the Non-Vertically Retained Percentage of available funds allocable to principal remaining after distributions in respect of principal to each class of certificates or trust component with a higher priority (as set forth in prior enumerated clauses set forth above), to principal on the Class A-S trust component until its principal balance has been reduced to zero; and (c) to reimburse the Class A-S trust component, first, for any previously unreimbursed losses on the mortgage loans that were previously allocated to such trust component, and second, for interest on such unreimbursed losses at the pass-through rate for such trust component from the date the related loss was allocated to such trust component;

 

Fifth, to the Class B, Class B-X1 and Class B-X2 trust components, as follows: (a) to each such trust component in respect of interest, up to an amount equal to, and pro rata in accordance with, the interest entitlements for those trust components; (b) to the extent of the Non-Vertically Retained Percentage of available funds allocable to principal remaining after distributions in respect of principal to each class of certificates or trust component with a higher priority (as set forth in prior enumerated clauses set forth above), to principal on the Class B trust component until its principal balance has been reduced to zero; and (c) to reimburse the Class B trust component, first, for any previously unreimbursed losses on the mortgage loans that were previously allocated to such trust component, and second, for interest on such unreimbursed losses at the pass-through rate for such trust component from the date the related loss was allocated to such trust component; 

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

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MSC 2021-L7Structural Overview

 

 

Sixth, to the Class C, Class C-X1 and Class C-X2 trust components, as follows: (a) to each such trust component in respect of interest, up to an amount equal to, and pro rata in accordance with, the interest entitlements for those trust components; (b) to the extent of the Non-Vertically Retained Percentage of available funds allocable to principal remaining after distributions in respect of principal to each class of certificates or trust component with a higher priority (as set forth in prior enumerated clauses set forth above), to principal on the Class C trust component until its principal balance has been reduced to zero; and (c) to reimburse the Class C trust component, first, for any previously unreimbursed losses on the mortgage loans that were previously allocated to such trust component, and second, for interest on such unreimbursed losses at the pass-through rate for such trust component from the date the related loss was allocated to such trust component;

 

Seventh, to the Class D, Class E, Class F, Class G, Class H-RR and Class J-RR certificates in the amounts and order of priority described in “Description of the Certificates—Distributions” in the Preliminary Prospectus; and

 

Eighth, to the Class R certificates, any remaining amounts.

 

Principal and interest payable on any trust component will be distributed pro rata to the corresponding classes of Exchangeable Certificates representing interests therein in accordance with their Class Percentage Interests therein as described below under “Exchangeable Certificates.”

  
Interest and Principal
Entitlements:

 

The interest entitlement of each class of Offered Certificates on each distribution date generally will be the interest accrued during the related interest accrual period on the related certificate 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 on serviced mortgage loans during any collection period, the master servicer is required to make a limited compensating interest payment to offset those shortfalls. See “Description of the Certificates—Prepayment Interest Shortfalls” in the Preliminary Prospectus. The remaining amount of prepayment interest shortfalls will be allocated between the VRR Interest, on one hand, and the certificates, on the other hand, in accordance with their respective Percentage Allocation Entitlements. The prepayment interest shortfalls allocated to the certificates will be allocated to all classes thereof (other than the Class V and Class R Certificates) to reduce the interest entitlement on all classes of certificates (other than the Exchangeable Certificates and the Class V and Class R certificates) and trust components, pro rata, based on their respective amounts of accrued interest for the related distribution date, to reduce the interest entitlement on each such class of certificates and trust component. For any distribution date, prepayment interest shortfalls allocated to a trust component will be allocated among the related classes of Exchangeable Certificates, pro rata, in accordance with their respective Class Percentage Interests therein. If a class of certificates or trust component receives less than the entirety of its interest entitlement on any distribution date, then the shortfall (excluding any shortfall due to prepayment interest shortfalls), together with interest thereon, will be added to its interest entitlement for the next succeeding distribution date.

 

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 any workout-delayed reimbursement amounts that are reimbursed to the master servicer or the trustee during the related collection period. Non-recoverable advances and interest thereon are reimbursable from principal collections before reimbursement from other amounts. Workout-delayed reimbursement amounts will be reimbursable from principal collections. The certificates and the VRR Interest will be entitled to their respective Percentage Allocation Entitlements of the aggregate principal distribution amount.

 

Exchangeable Certificates:Certificates of each class of Exchangeable Certificates may be exchanged for certificates of the corresponding classes of Exchangeable Certificates set forth next to such class in the table below, and vice versa.  Following any exchange of certificates of one or more classes of Exchangeable Certificates (the applicable “Surrendered Classes”) for certificates of one or more classes of other Exchangeable Certificates (the applicable “Received Classes”), the Class Percentage Interests (as defined below) of the outstanding principal balances or notional amounts of the Corresponding Trust Components that are represented by the Surrendered Classes (and consequently their related certificate balances or notional amounts) will be decreased, and those of the Received Classes (and consequently their related certificate balances or notional amounts) will be increased.  The dollar denomination of the certificates of each of the Received Classes must be equal to the dollar denomination of the certificates of each of the Surrendered Classes.  No fee will be required with respect to any exchange of Exchangeable Certificates.   

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

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MSC 2021-L7Structural Overview

 

 Surrendered Classes (or Received Classes) of CertificatesReceived Classes (or Surrendered Classes) of Certificates
 Class A-4Class A-4-1, Class A-4-X1
 Class A-4Class A-4-2, Class A-4-X2
 Class A-5Class A-5-1, Class A-5-X1
 Class A-5Class A-5-2, Class A-5-X2
 Class A-SClass A-S-1, Class A-S-X1
 Class A-SClass A-S-2, Class A-S-X2
 Class BClass B-1, Class B-X1
 Class BClass B-2, Class B-X2
 Class CClass C-1, Class C-X1
 Class CClass C-2, Class C-X2

 

 On the closing date, the issuing entity will issue the following “trust components,” each with the initial principal balance (or, if such trust component has an “X” suffix, notional amount) and pass-through rate set forth next to it in the table below. Each trust component with an “X” suffix will not be entitled to distributions of principal.

 

 Trust ComponentInitial Principal Balance
or Notional Amount
Pass-Through Rate
 Class A-4See footnote (9) to the first table above under “Structural Overview”Class A-4 certificate pass-through rate minus 1.00%
 Class A-4-X1Equal to Class A-4 trust component principal balance0.50%
 Class A-4-X2Equal to Class A-4 trust component principal balance0.50%
 Class A-5See footnote (9) to the first table above under “Structural Overview”Class A-5 certificate pass-through rate minus 1.00%
 Class A-5-X1Equal to Class A-5 trust component principal balance0.50%
 Class A-5-X2Equal to Class A-5 trust component principal balance0.50%
 Class A-S$52,537,000Class A-S certificate pass-through rate minus 1.00%
 Class A-S-X1Equal to Class A-S trust component principal balance0.50%
 Class A-S-X2Equal to Class A-S trust component principal balance0.50%
 Class B$43,595,000Class B certificate pass-through rate minus 1.00%
 Class B-X1Equal to Class B trust component principal balance0.50%
 Class B-X2Equal to Class B trust component principal balance0.50%
 Class C$46,948,000Class C certificate pass-through rate minus 1.00%
 Class C-X1Equal to Class C trust component principal balance0.50%
 Class C-X2Equal to Class C trust component principal balance0.50%

 

 Each class of Exchangeable Certificates represents an undivided beneficial ownership interest in the trust components set forth next to it in the table below (the “Corresponding Trust Components”). Each class of Exchangeable Certificates has a pass-through rate equal to the sum of the pass-through rates of the Corresponding Trust Components and represents a percentage interest (the related “Class Percentage Interest”) in each Corresponding Trust Component, including principal and interest payable thereon (and reimbursements of losses allocable thereto), equal to (x) the certificate balance (or, if such class has an “X” suffix, notional amount) of such class of certificates, divided by (y) the principal balance of the Class A-4 trust component (if such class of Exchangeable Certificates has an “A-4” designation), the Class A-5 trust component (if such class of Exchangeable Certificates has an “A-5” designation), the Class A-S trust component (if such class of Exchangeable Certificates has an “A-S” designation), the Class B trust component (if such class of Exchangeable Certificates has a “B” designation) or the Class C trust component (if such class of Exchangeable Certificates has a “C” designation).

 

Group of Exchangeable CertificatesClass of Exchangeable CertificatesCorresponding Trust Components
“Class A-4 Exchangeable Certificates”Class A-4Class A-4, Class A-4-X1, Class A-4-X2
Class A-4-1Class A-4, Class A-4-X2
Class A-4-2Class A-4
Class A-4-X1Class A-4-X1
Class A-4-X2Class A-4-X1, Class A-4-X2

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-9

 

 

MSC 2021-L7Structural Overview

 

  
“Class A-5 Exchangeable Certificates”Class A-5Class A-5, Class A-5-X1, Class A-5-X2
Class A-5-1Class A-5, Class A-5-X2
Class A-5-2Class A-5
Class A-5-X1Class A-5-X1
Class A-5-X2Class A-5-X1, Class A-5-X2
“Class A-S Exchangeable Certificates”Class A-SClass A-S, Class A-S-X1, Class A-S-X2
Class A-S-1Class A-S, Class A-S-X2
Class A-S-2Class A-S
Class A-S-X1Class A-S-X1
Class A-S-X2Class A-S-X1, Class A-S-X2
“Class B Exchangeable Certificates”Class BClass B, Class B-X1, Class B-X2
Class B-1Class B, Class B-X2
Class B-2Class B
Class B-X1Class B-X1
Class B-X2Class B-X1, Class B-X2
“Class C Exchangeable Certificates”Class CClass C, Class C-X1, Class C-X2
Class C-1Class C, Class C-X2
Class C-2Class C
Class C-X1Class C-X1
Class C-X2Class C-X1, Class C-X2

 

 The maximum certificate balance or notional amount of each class of Class A-4 Exchangeable Certificates, Class A-5 Exchangeable Certificates, Class A-S Exchangeable Certificates, Class B Exchangeable Certificates or Class C Exchangeable Certificates that could be issued in an exchange is equal to the principal balance of the Class A- 4, Class A-5, Class A-S, Class B or Class C trust component, respectively. The maximum certificate balances of Class A-4, Class A-5, Class A-S, Class B and Class C certificates (subject to the constraint on the aggregate initial principal balance of the Class A-4 and Class A-5 trust components discussed in footnote (9) to the first table above under “Structural Overview”) will be issued on the closing date, and the certificate balance or notional amount of each other class of Exchangeable Certificates will be equal to zero on the Closing Date.
  
 Each class of Class A-4 Exchangeable Certificates, Class A-5 Exchangeable Certificates, Class A-S Exchangeable Certificates, Class B Exchangeable Certificates and Class C Exchangeable Certificates will have a certificate balance or notional amount equal to its Class Percentage Interest multiplied by the principal balance of the Class A-4, Class A-5, Class A-S, Class B or Class C trust component, respectively. Each class of Class A-4 Exchangeable Certificates, Class A-5 Exchangeable Certificates, Class A-S Exchangeable Certificates, Class B Exchangeable Certificates and Class C Exchangeable Certificates with a certificate balance will have the same approximate initial credit support percentage, Expected Weighted Average Life, Expected Principal Window, Certificate Principal UW NOI Debt Yield and Certificate Principal to Value Ratio as the Class A-4, Class A-5, Class A-S, Class B or Class C certificates, respectively, shown above.
  
Special Servicer Compensation:

The principal compensation to be paid to the special servicer in respect of its special servicing activities will be the special servicing fee, the workout fee and the liquidation fee.

 

The special servicing fee for each distribution date is calculated at the special servicing fee rate based on the outstanding principal balance of each mortgage loan (and any related companion loan) that is serviced under the pooling and servicing agreement for this securitization (a “serviced mortgage loan” and “serviced companion loan”, respectively) and that is being specially serviced or as to which the related mortgaged property has become an REO property. The special servicing fee rate will be a rate equal to the greater of 0.25% per annum and the per annum rate that would result in a special servicing fee of $3,500 for the related month. The special servicing fee will be payable monthly, first, from liquidation proceeds, insurance and condemnation proceeds, and other collections in respect of the related specially serviced mortgage loan or REO property and, then, from general collections on all the mortgage loans and any REO properties.

 

The special servicer will also be entitled to (i) liquidation fees generally equal to 1.0% of liquidation proceeds and certain other collections in respect of a specially serviced mortgage loan (and any related serviced companion loan) or related REO property and of amounts received in respect of mortgage loan repurchases by the related mortgage loan sellers and (ii) workout fees generally equal to 1.0% of interest (other than post-ARD excess interest on mortgage loans with anticipated repayment dates and other than default interest) and principal payments made in respect of a rehabilitated mortgage loan (and any related serviced companion loan), in the case of each of clause (i) and (ii), subject to a cap of $1,000,000 and a floor of $25,000 with respect to any mortgage loan, whole loan or related REO property and subject to certain adjustments and exceptions as described in the Preliminary Prospectus under “Pooling and Servicing Agreement—Servicing and Other Compensation and Payment of Expenses—Special Servicing Compensation”.

 

With respect to any non-serviced mortgage loan, the related special servicer under the related other pooling and servicing agreement pursuant to which such mortgage loan is being serviced will be entitled to similar compensation as that described above with respect to such non-serviced mortgage loan under such other pooling and servicing agreement as further described in the Preliminary Prospectus, although any related fees may accrue at a different rate and there may be a higher (or no) cap on liquidation and workout fees.

 

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-10

 

 

MSC 2021-L7Structural Overview

 

Prepayment Premiums/Yield
Maintenance Charges:

If any yield maintenance charge or prepayment premium is collected during any collection period with respect to any mortgage loan, then on the immediately succeeding distribution date, the certificate administrator will pay: 

(a) to the holders of each class of the Class A-1, Class A-2, Class A-3, Class A-SB, Class A-4, Class A-4-1, Class A-4-2, Class A-5, Class A-5-1, Class A-5-2, Class A-S, Class A-S-1, Class A-S-2, Class B, Class B-1, Class B-2, Class C, Class C-1, Class C-2, Class D and Class E certificates, the product of (x) the Non-Vertically Retained Percentage of such yield maintenance charge or prepayment premium (net of any liquidation fees payable therefrom), (y) the related Base Interest Fraction for such class and the applicable principal prepayment, and (z) a fraction, the numerator of which is equal to the amount of principal distributed to such class for that distribution date, and the denominator of which is the total amount of principal distributed to the Class A-1, Class A-2, Class A-3, Class A-SB, Class D and Class E certificates, the Class A-4 Exchangeable Certificates, the Class A-5 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that distribution date,

(b) to the holders of the Class A-4-X1 certificates, the product of (x) the Non-Vertically Retained Percentage of such yield maintenance charge or prepayment premium (net of any liquidation fee payable therefrom), (y) a fraction, the numerator of which is equal to the amount of principal distributed to the Class A-4-1 certificates for that distribution date, and the denominator of which is the total amount of principal distributed to the Class A-1, Class A-2, Class A-3, Class A-SB, Class D and Class E certificates, the Class A-4 Exchangeable Certificates, the Class A-5 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that distribution date, and (z) the difference between (1) the Base Interest Fraction for the Class A-4 certificates and the applicable principal prepayment and (2) the Base Interest Fraction for the Class A-4-1 certificates and the applicable principal prepayment,

(c) to the holders of the Class A-4-X2 certificates, the product of (x) the Non-Vertically Retained Percentage of such yield maintenance charge or prepayment premium (net of any liquidation fee payable therefrom), (y) a fraction, the numerator of which is equal to the amount of principal distributed to the Class A-4-2 certificates for that distribution date, and the denominator of which is the total amount of principal distributed to the Class A-1, Class A-2,  Class A-3, Class A-SB, Class D and Class E certificates, the Class A-4 Exchangeable Certificates, the Class A-5 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that distribution date, and (z) the difference between (1) the Base Interest Fraction for the Class A-4 certificates and the applicable principal prepayment and (2) the Base Interest Fraction for the Class A-4-2 certificates and the applicable principal prepayment,

(d) to the holders of the Class A-5-X1 certificates, the product of (x) the Non-Vertically Retained Percentage of such yield maintenance charge or prepayment premium (net of any liquidation fee payable therefrom), (y) a fraction, the numerator of which is equal to the amount of principal distributed to the Class A-5-1 certificates for that distribution date, and the denominator of which is the total amount of principal distributed to the Class A-1, Class A-2,  Class A-3, Class A-SB, Class D and Class E certificates, the Class A-4 Exchangeable Certificates, the Class A-5 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that distribution date, and (z) the difference between (1) the Base Interest Fraction for the Class A-5 certificates and the applicable principal prepayment and (2) the Base Interest Fraction for the Class A-5-1 certificates and the applicable principal prepayment,

(e) to the holders of the Class A-5-X2 certificates, the product of (x) the Non-Vertically Retained Percentage of such yield maintenance charge or prepayment premium (net of any liquidation fee payable therefrom), (y) a fraction, the numerator of which is equal to the amount of principal distributed to the Class A-5-2 certificates for that distribution date, and the denominator of which is the total amount of principal distributed to the Class A-1, Class A-2,  Class A-3, Class A-SB, Class D and Class E certificates, the Class A-4 Exchangeable Certificates, the Class A-5 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that distribution date, and (z) the difference between (1) the Base Interest Fraction for the Class A-5 certificates and the applicable principal prepayment and (2) the Base Interest Fraction for the Class A-5-2 certificates and the applicable principal prepayment,

(f) to the holders of the Class A-S-X1 certificates, the product of (x) the Non-Vertically Retained Percentage of such yield maintenance charge or prepayment premium (net of any liquidation fee payable therefrom), (y) a fraction, the numerator of which is equal to the amount of principal distributed to the Class A-S-1 certificates for that distribution date, and the denominator of which is the total amount of principal distributed to the Class A-1, Class A-2, Class A-3, Class A-SB, Class D and Class E certificates, the Class A-4 Exchangeable Certificates, the Class A-5 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that distribution date, and (z) the difference between (1) the Base Interest Fraction for the Class A-S certificates and the applicable principal prepayment and (2) the Base Interest Fraction for the Class A-S-1 certificates and the applicable principal prepayment,

(g) to the holders of the Class A-S-X2 certificates, the product of (x) the Non-Vertically Retained Percentage of such yield maintenance charge or prepayment premium (net of any liquidation fee payable therefrom), (y) a fraction, the numerator of which is equal to the amount of principal distributed to the Class A-S-2 certificates for that distribution date, and the denominator of which is the total amount of principal distributed to the Class A-1, Class A-2, Class A-3, Class A-SB, Class D and Class E certificates, the Class A-4 Exchangeable Certificates, the Class A-5 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that distribution date, and (z) the difference between (1) the Base Interest Fraction for the Class A-S certificates and the applicable principal prepayment and (2) the Base Interest Fraction for the Class A-S-2 certificates and the applicable principal prepayment,

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-11

 

 

MSC 2021-L7Structural Overview

 

 (h) to the holders of the Class B-X1 certificates, the product of (x) the Non-Vertically Retained Percentage of such yield maintenance charge or prepayment premium (net of any liquidation fee payable therefrom), (y) a fraction, the numerator of which is equal to the amount of principal distributed to the Class B-1 certificates for that distribution date, and the denominator of which is the total amount of principal distributed to the Class A-1, Class A-2, Class A-3, Class A-SB, Class D and Class E certificates, the Class A-4 Exchangeable Certificates, the Class A-5 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that distribution date, and (z) the difference between (1) the Base Interest Fraction for the Class B certificates and the applicable principal prepayment and (2) the Base Interest Fraction for the Class B-1 certificates and the applicable principal prepayment,

(i) to the holders of the Class B-X2 certificates, the product of (x) the Non-Vertically Retained Percentage of such yield maintenance charge or prepayment premium (net of any liquidation fee payable therefrom), (y) a fraction, the numerator of which is equal to the amount of principal distributed to the Class B-2 certificates for that distribution date, and the denominator of which is the total amount of principal distributed to the Class A-1, Class A-2, Class A-3, Class A-SB, Class D and Class E certificates, the Class A-4 Exchangeable Certificates, the Class A-5 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that distribution date, and (z) the difference between (1) the Base Interest Fraction for the Class B certificates and the applicable principal prepayment and (2) the Base Interest Fraction for the Class B-2 certificates and the applicable principal prepayment,

(j) to the holders of the Class C-X1 certificates, the product of (x) the Non-Vertically Retained Percentage of such yield maintenance charge or prepayment premium (net of any liquidation fee payable therefrom), (y) a fraction, the numerator of which is equal to the amount of principal distributed to the Class C-1 certificates for that distribution date, and the denominator of which is the total amount of principal distributed to the Class A-1, Class A-2,  Class A-3, Class A-SB, Class D and Class E certificates, the Class A-4 Exchangeable Certificates, the Class A-5 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that distribution date, and (z) the difference between (1) the Base Interest Fraction for the Class C certificates and the applicable principal prepayment and (2) the Base Interest Fraction for the Class C-1 certificates and the applicable principal prepayment,

(k) to the holders of the Class C-X2 certificates, the product of (x) the Non-Vertically Retained Percentage of such yield maintenance charge or prepayment premium (net of any liquidation fee payable therefrom), (y) a fraction, the numerator of which is equal to the amount of principal distributed to the Class C-2 certificates for that distribution date, and the denominator of which is the total amount of principal distributed to the Class A-1, Class A-2, Class A-3, Class A-SB, Class D and Class E certificates, the Class A-4 Exchangeable Certificates, the Class A-5 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that distribution date, and (z) the difference between (1) the Base Interest Fraction for the Class C certificates and the applicable principal prepayment and (2) the Base Interest Fraction for the Class C-2 certificates and the applicable principal prepayment,

(l) to the holders of the Class X-A certificates, the excess, if any, of (x) the product of (1) the Non-Vertically Retained Percentage of such yield maintenance charge or prepayment premium (net of any liquidation fee payable therefrom) and (2) a fraction, the numerator of which is equal to the amount of principal distributed to the Class A-1, Class A-2,  Class A-3 and Class A-SB certificates, the Class A-4 Exchangeable Certificates and the Class A-5 Exchangeable Certificates for that distribution date, and the denominator of which is the total amount of principal distributed to the Class A-1, Class A-2, Class A-3, Class A-SB, Class D and Class E certificates, the Class A-4 Exchangeable Certificates, the Class A-5 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that distribution date, over (y) the amount of such yield maintenance charge or prepayment premium distributed to the Class A-1, Class A-2, Class A-3 and Class A-SB certificates, the Class A-4 Exchangeable Certificates and the Class A-5 Exchangeable Certificates as described above,

(m) to the holders of the Class X-B certificates, the excess, if any, of (x) the product of (1) the Non-Vertically Retained Percentage of such yield maintenance charge or prepayment premium (net of any liquidation fee payable therefrom) and (2) a fraction, the numerator of which is equal to the amount of principal distributed to the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that distribution date, and the denominator of which is the total amount of principal distributed to the Class A-1, Class A-2, Class A-3, Class A-SB, Class D and Class E certificates, the Class A-4 Exchangeable Certificates, the Class A-5 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that distribution date, over (y) the amount of such yield maintenance charge or prepayment premium distributed to the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates as described above, and

(n) to the holders of the Class X-D certificates, any remaining portion of the Non-Vertically Retained Percentage of such yield maintenance charge or prepayment premium (net of any liquidation fee payable therefrom) not distributed as described above.

Notwithstanding any of the foregoing to the contrary, if at any time the certificate balances of the principal balance certificates (other than the Control Eligible Certificates) have been reduced to zero as a result of the allocation of principal payments on the mortgage loans, the certificate administrator will pay to the holders of each remaining class of principal balance certificates then entitled to distributions of principal on the subject distribution date the product of (a) the Non-Vertically Retained Percentage of any yield maintenance charge or prepayment premium distributable on the subject distribution date (net of any liquidation fees payable therefrom) and (b) 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 for that distribution date.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

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MSC 2021-L7Structural Overview

 

 The Vertically Retained Percentage of any yield maintenance charge or prepayment premium (net of any liquidation fees payable therefrom) will be distributed to the holders of the VRR Interest (pro rata to the Class RR Certificates and the RR Interest based on their respective percentage interests in the VRR Interest).

“Base Interest Fraction” means, with respect to any principal prepayment of any mortgage loan that provides for the payment of a yield maintenance charge or prepayment premium, and with respect to any class of principal balance certificates, a fraction (A) the numerator of which is the greater of (x) zero and (y) the difference between (i) the pass-through rate on that class, and (ii) the applicable discount rate and (B) the denominator of which is the difference between (i) the mortgage interest rate on the related mortgage loan and (ii) the applicable discount rate; provided, that: under no circumstances will the Base Interest Fraction be greater than one; if the discount rate referred to above is greater than or equal to both the mortgage interest rate on the related mortgage loan and the pass-through rate on that class, then the Base Interest Fraction will equal zero; and if the discount rate referred to above is greater than or equal to the mortgage interest rate on the related mortgage loan and is less than the pass-through rate on that class, then the Base Interest Fraction will be equal to 1.0.

Consistent with the foregoing, the Base Interest Fraction is equal to:

 

  (Pass-Through Rate – Discount Rate) 
  (Mortgage Rate – Discount Rate) 

 

Realized Losses:

On each distribution date, immediately following the distributions to be made to the certificateholders on that date, the certificate administrator is required to calculate the amount, if any, by which (i) the aggregate stated principal balance of the mortgage loans, including any successor REO loans, expected to be outstanding immediately following that distribution date is less than (ii) the sum of the then aggregate certificate balance of the principal balance certificates and the principal balance of the VRR Interest after giving effect to distributions of principal on that distribution date. The Non-Vertically Retained Percentage of the amount described in the first sentence of this paragraph will be applied to reduce the certificate balances of the Class J-RR, Class H-RR, Class G, Class F, Class E and Class D Certificates and the Class C, Class B and Class A-S trust components, in that order, in each case until the related certificate or principal balance has been reduced to zero, and then to the Class A-1, Class A-2, Class A-3 and Class A-SB certificates and the Class A-4 and Class A-5 trust components, pro rata, based upon their respective certificate or principal balances, until their respective certificate or principal balances have been reduced to zero. The Vertically Retained Percentage of the amount described in the first sentence of this paragraph will be applied to reduce the principal balance of the VRR Interest until its principal balance has been reduced to zero.

 

Any portion of such amount applied to the Class A-4, Class A-5, Class A-S, Class B or Class C trust component will reduce the certificate balance or notional amount of each class of certificates in the related group of Exchangeable Certificates by an amount equal to the product of (x) its certificate balance or notional amount, divided by the principal balance of such trust component prior to the applicable reduction, and (y) the amount applied to such trust component.

 

Serviced Whole Loans:

Each of the following mortgaged properties or portfolios of mortgaged properties secures a mortgage loan and one or more pari passu promissory notes and/or one or more generally subordinate promissory notes (each such pari passu or generally subordinate promissory note, a “serviced companion loan”) that will be serviced pursuant to the related intercreditor agreement and the pooling and servicing agreement for this transaction: Superstition Gateway and Helios Plaza (prior to the securitization of the related control note). With respect to each such mortgaged property or portfolio of mortgaged properties, the related mortgage loan, together with the related serviced companion loan(s), is referred to herein (for so long as it is serviced under the pooling and servicing agreement for this transaction) as a “serviced whole loan.” Each serviced companion loan is not part of the mortgage pool and may be contributed to one or more future securitization transactions (if not already securitized) or may be otherwise transferred at any time, subject to compliance with the related intercreditor agreement. See the tables below entitled “Mortgage Loans with Pari Passu Companion Loans” and “Mortgage Loans with Subordinate Debt” and “Description of the Mortgage Pool—The Whole Loans” in the Preliminary Prospectus, for additional information regarding each such whole loan.

 

With respect to the Helios Plaza whole loan (a “servicing shift whole loan”), the pooling and servicing agreement for this transaction will govern servicing of such whole loan until the securitization of the related lead servicing note; however, servicing of such whole loan will generally be directed by the holder of the related control note (which is not included in this securitization), and such holder will have the right to replace the special servicer with respect to the related whole loan with or without cause. After the securitization of the related lead servicing note, a servicing shift whole loan will cease to be a serviced whole loan and will be serviced pursuant to the pooling and servicing agreement for another securitization transaction (see “Non-Serviced Whole Loans” below). 

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

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MSC 2021-L7Structural Overview

 

Non-Serviced Whole Loans:Each of the following mortgaged properties or portfolios of mortgaged properties secures a mortgage loan (each, a “non-serviced mortgage loan”), one or more pari passu promissory notes and/or one or more generally subordinate promissory notes (each such pari passu or generally subordinate promissory note, a “non-serviced companion loan”) that will be serviced pursuant to the related intercreditor agreement and the pooling and servicing agreement or trust and servicing agreement (referred to herein as a related “pooling and servicing agreement”) for another securitization transaction:  One Soho Square and Helios Plaza (on and after the securitization of the related control note).  With respect to each such mortgaged property or portfolio of mortgaged properties, the related mortgage loan, together with the related non-serviced companion loan(s), is referred to herein (for so long as it is serviced under the pooling and servicing agreement for another securitization transaction) as a “non-serviced whole loan.”  Each non-serviced companion loan is not part of the mortgage pool and may be contributed to one or more future securitization transactions (if not already securitized) or may be otherwise transferred at any time, subject to compliance with the related intercreditor agreement.  Servicing of each non-serviced whole loan will generally be directed by the holder of the related control note (or, if such control note is included in a securitization, the directing certificateholder thereunder (or other party designated thereunder to exercise the rights of such control note)), and such holder will have the right to replace the special servicer with respect to the related whole loan with or without cause. See the tables below entitled “Mortgage Loans with Pari Passu Companion Loans” and “Mortgage Loans with Subordinate Debt” and “Description of the Mortgage Pool—The Whole Loans” in the Preliminary Prospectus for additional information regarding each such whole loan.
  
Directing Certificateholder/
Controlling Class:

 

The initial Directing Certificateholder is expected to be LD III Holdco II, L.P.

 

The “Directing Certificateholder” will be the Controlling Class Certificateholder (or its representative) selected by more than 50% (by certificate balance) of the Controlling Class Certificateholders; provided, that (1) absent that selection, (2) until a Directing Certificateholder is so selected or (3) upon receipt of a notice from a majority of the Controlling Class Certificateholders (by certificate balance) that a Directing Certificateholder is no longer designated, the Controlling Class Certificateholder that owns the largest aggregate certificate balance of the Controlling Class (or its representative) will be the Directing Certificateholder; provided, that (i) if such holder elects or has elected to not be the Directing Certificateholder, the holder of the next largest aggregate certificate balance of the Controlling Class will be the Directing Certificateholder, (ii) in the event no one holder owns the largest aggregate certificate balance of the Controlling Class, then there will be no Directing Certificateholder until appointed in accordance with the terms of the pooling and servicing agreement, and (iii) the certificate administrator and the other parties to the pooling and servicing agreement will be entitled to assume that the identity of the Directing Certificateholder has not changed until such parties receive written notice of a replacement of the Directing Certificateholder from a party holding the requisite interest in the Controlling Class (as confirmed by the certificate registrar) or the resignation of the then current Directing Certificateholder.

 

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 the Non-Vertically Retained Percentage of any Cumulative Appraisal Reduction Amounts (as defined below)) at least equal to 25% of the initial certificate balance thereof; provided, that if at any time the certificate balances of the principal balance certificates other than the Control Eligible Certificates have been reduced to zero as a result of principal payments on the mortgage loans, then the Controlling Class will be the most subordinate class of Control Eligible Certificates that has a certificate balance greater than zero without regard to the application of the Non-Vertically Retained Percentage of any Cumulative Appraisal Reduction Amounts. The Controlling Class as of the closing date will be the Class J-RR certificates.

 

The “Control Eligible Certificates” will be any of the Class F, Class G, Class H-RR and Class J-RR certificates.

 

Control Rights:

Prior to a Control Termination Event, the Directing Certificateholder will have certain consent and consultation rights under the pooling and servicing agreement with respect to certain major decisions and other matters. A “Control Termination Event” will occur when the most senior class of Control Eligible Certificates has a certificate balance (taking into account the application of the Non-Vertically Retained Percentage of any Cumulative Appraisal Reduction Amounts to notionally reduce the certificate balance thereof) of less than 25% of the initial certificate balance thereof; provided, that a Control Termination Event will be deemed not continuing in the event that the certificate balances of the principal balance certificates other than the Control Eligible Certificates have been reduced to zero as a result of principal payments on the mortgage loans.

 

After the occurrence of a Control Termination Event but prior to the occurrence of a Consultation Termination Event, the Directing Certificateholder will not have any consent rights, but the Directing Certificateholder will have certain non-binding consultation rights under the pooling and servicing agreement with respect to certain major decisions and other matters. A “Consultation Termination Event” will occur when there is no class of Control Eligible Certificates that has a then outstanding certificate balance at least equal to 25% of the initial certificate balance of that class, in each case, without regard to the application of the Non-Vertically Retained Percentage of any Cumulative Appraisal Reduction Amounts; provided, that a Consultation Termination Event will be deemed not continuing in the event that the certificate balances of the principal balance certificates other than the Control Eligible Certificates have been reduced to zero as a result of principal payments on the mortgage loans.

 

After the occurrence of a Consultation Termination Event, the Directing Certificateholder will not have any consent or consultation rights, except with respect to any rights expressly set forth in the pooling and servicing agreement. 

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

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MSC 2021-L7Structural Overview

 


 

If an Operating Advisor Consultation Event has occurred and is continuing, the operating advisor will have certain non-binding consultation rights under the pooling and servicing agreement with respect to certain major decisions and other matters.

 

Notwithstanding any proviso to, or other contrary provision in, the definitions of “Control Termination Event”, “Consultation Termination Event” and “Operating Advisor Consultation Event”, a Control Termination Event, a Consultation Termination Event and an Operating Advisor Consultation Event will be deemed to have occurred with respect to any Excluded DCH Loan, and neither the Directing Certificateholder nor any Controlling Class Certificateholder will have any consent or consultation rights with respect to the servicing of such Excluded DCH Loan.

 

An “Excluded DCH Loan” is a mortgage loan or whole loan with respect to which the Directing Certificateholder or the holder of the majority of the Controlling Class is a Borrower Party. It is expected that there will be no Excluded DCH Loans as of the closing date with respect to this securitization.

 

“Borrower Party” means a borrower, a manager of a mortgaged property, an Accelerated Mezzanine Loan Lender or any Borrower Party Affiliate.

 

“Borrower Party Affiliate” means, with respect to a borrower, a manager of a mortgaged property or an Accelerated Mezzanine Loan Lender, (a) any other person or entity controlling or controlled by or under common control with such borrower, manager or Accelerated Mezzanine Loan Lender, as applicable, or (b) any other person or entity owning, directly or indirectly, 25% or more of the beneficial interests in such borrower, manager or Accelerated Mezzanine Loan Lender, as applicable. For the purposes of this definition, “control” when used with respect to any specified person or entity means the power to direct the management and policies of such person or entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

“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.

 

Notwithstanding any of the foregoing to the contrary, if any mortgage loan is part of a whole loan, the Directing Certificateholder’s consent and/or consultation rights with respect thereto may be limited as described in the Preliminary Prospectus. In particular, with respect to each non-serviced whole loan and any servicing shift whole loan, the Directing Certificateholder will only have certain consultation rights with respect to certain major decisions and other matters related to such whole loan, in each case only prior to a Control Termination Event (and, in the case of any such whole loan with a subordinate companion loan, only if the holder of such subordinate companion loan is no longer the controlling noteholder), and the holder of the related control note (or, if such control note has been securitized, the directing certificateholder with respect to such securitization or other designated party under the related pooling and servicing agreement) will be entitled to similar consent and/or consultation rights with respect to such whole loan. With respect to any serviced A/B whole loan, for so long as the holder of the related subordinate companion loan is the controlling note holder, the holder of such subordinate companion loan (and not the Directing Certificateholder) will be entitled to exercise such consent and consultation rights with respect to such whole loan.

 

Risk Retention Consultation Party:

The risk retention consultation party will be the party selected by the holder or holders of more than 50% of the VRR interest (by principal balance). The initial risk retention consultation party is expected to be KeyBank National Association.

 

With respect to certain material servicing actions related to serviced mortgage loans that are not Excluded RRCP Loans, upon request of the risk retention consultation party, the party processing such servicing action will generally be required to consult on a non-binding basis with the risk retention consultation party, in each case within the same time period as such party would be required to consult with the Directing Certificateholder with respect to such servicing action (assuming the Directing Certificateholder had such right with respect to such mortgage loan); provided, that prior to the occurrence and continuance of a Consultation Termination Event, such mortgage loan must also be a specially serviced mortgage loan.

 

An “Excluded RRCP Loan” is a mortgage loan or whole loan with respect to which the Risk Retention Consultation Party, the retaining sponsor or the holder of the majority of the VRR Interest is a Borrower Party. It is expected that there will be no Excluded RRCP Loans as of the Closing Date with respect to this securitization.

 

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.

 

A mortgage loan will cease to be subject to an Appraisal Reduction Amount when it has been brought current for at least three consecutive months, no additional event of default is foreseeable in the reasonable judgment of the special servicer and no other circumstances exist that would cause such mortgage loan or any related companion loan to be a specially serviced mortgage loan; however, a “Collateral Deficiency Amount” may exist with respect to any mortgage loan that is modified into an AB loan structure (an “AB Modified Loan”) and remains a rehabilitated mortgage loan and, if so, will generally equal the excess of (i) the stated principal balance of such 

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

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MSC 2021-L7Structural Overview

 

 

AB Modified Loan (taking into account the related junior note(s) and any pari passu notes included therein, as well as any equity interests or other obligations senior thereto), 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 for the related mortgaged property or mortgaged properties plus (y) solely to the extent not reflected or taken into account in such appraised value and to the extent on deposit with, or otherwise under the control of, the lender (or otherwise on deposit with a party acceptable to the lender or expended for the benefit of the Mortgaged Property or the Mortgage Loan at the time the Mortgage Loan became subject of a workout and became (and as part of the modification related to) such AB Modified Loan) as of the date of such determination, any capital or additional collateral contributed by the related borrower at the time the mortgage loan became the subject of a workout and became (and as part of the modification related to) such AB Modified Loan for the benefit of the related mortgaged property or mortgaged properties (provided, that in the case of a non-serviced mortgage loan, the amounts set forth in this clause (y) will be taken into account solely to the extent relevant information is received by the special servicer), plus (z) any other escrows or reserves (in addition to any amounts set forth in the immediately preceding clause (y)) held by the lender in respect of such AB Modified Loan as of the date of such determination.

 

As used herein, a “Cumulative Appraisal Reduction Amount” will be, as of any date of determination, the sum of (i) with respect to any mortgage loan, any Appraisal Reduction Amount then in effect, and (ii) with respect to any AB Modified Loan, any Collateral Deficiency Amount then in effect.

 

Any Appraisal Reduction Amount in respect of any non-serviced mortgage loan generally will be calculated in accordance with the other servicing agreement pursuant to which such mortgage loan is being serviced, which calculations are expected to be generally similar to those provided for in the pooling and servicing agreement for this transaction.

 

If any mortgage loan is part of a whole loan, any Appraisal Reduction Amount or Collateral Deficiency Amount will (or effectively will) be calculated in respect of such whole loan taken as a whole and allocated, to the extent provided in the related intercreditor agreement and the related pooling and servicing agreement, first, to any related subordinate companion loan(s) until the principal balance(s) thereof has been notionally reduced to zero, and second, to the related mortgage loan and any pari passu companion loan(s) on a pro rata basis by unpaid principal balance.

 

Any Appraisal Reduction Amount and Cumulative Appraisal Reduction Amounts relating or allocated to a Mortgage Loan will be allocated between the VRR Interest on the one hand and the certificates, on the other hand, in accordance with their respective Percentage Allocation Entitlements.

 

Appraisal Reduction Amounts in respect of, or allocable to, any mortgage loan will proportionately reduce the interest portion of debt service advances required to be made in respect of such mortgage loan. Appraisal Reduction Amounts and Collateral Deficiency Amounts will be taken into account in determining the identity of the controlling class entitled to appoint the Directing Certificateholder, the existence of a Control Termination Event or an Operating Advisor Consultation Event and the allocation and/or exercise of voting rights for certain purposes (see “—Directing Certificateholder/Controlling Class” above), and the Non-Vertically Retained Percentage thereof will be allocated to the following classes of certificates and trust components, in each case to notionally reduce their certificate balances or principal balances until the certificate balance or principal balance of each such class or trust component is notionally reduced to zero: the Class J-RR, Class H-RR, Class G and Class F certificates, in that order, and then solely in the case of Appraisal Reduction Amounts, further to the Class E and Class D certificates and the Class C, Class B and Class A-S trust components, in that order, and then pro rata to the Class A-1, Class A-2, Class A-3 and Class A-SB certificates and the Class A-4 and Class A-5 trust components. Any Appraisal Reduction Amounts allocated to the Class A-4, Class A-5, Class A-S, Class B or Class C trust components will be allocated to the corresponding classes of Exchangeable Certificates with certificate balances pro rata to notionally reduce their certificate balances in accordance with their Class Percentage Interests therein.

 

Neither (i) a Payment Accommodation with respect to any mortgage loan or serviced whole loan nor (ii) any default or delinquency that would have existed but for such Payment Accommodation will constitute an appraisal reduction event, for so long as the related borrower is complying with the terms of such Payment Accommodation.

 

A “Payment Accommodation” for any mortgage loan or serviced whole loan means the entering into of any temporary forbearance agreement as a result of the COVID-19 emergency (and qualification as a COVID-19 emergency forbearance will be determined by the special servicer in its sole and absolute discretion in accordance with the servicing standard) relating to (a) payment obligations or operating covenants under the related mortgage loan documents, (b) the use of funds on deposit in any reserve account or escrow account for any purpose other than the explicit purpose described in the related mortgage loan documents, or (c) such other modification, forbearance or waiver that is related or incidental to clause (a) or clause (b), that in each case (i) defers no greater than 9 monthly debt service payments in the aggregate with any other Payment Accommodation and (ii) requires full repayment of deferred payments and escrows within 21 months of the date of the first forbearance for such mortgage loan or serviced whole loan.

 

Appraised-Out Class:An “Appraised-Out Class” is any class of Control Eligible Certificates, the certificate balance of which (taking into account the application of the Non-Vertically Retained Percentage of any Appraisal Reduction Amounts or Collateral Deficiency Amounts to notionally reduce the certificate balance of such class) has been reduced to less than 25% of its initial certificate balance.  Any Appraised-Out Class may not exercise any direction, control, consent and/or similar rights of the Controlling Class until such time, if any, as such class is reinstated as the Controlling Class, and the rights of the Controlling Class will be exercised by the most subordinate class of Control Eligible Certificates that is not an Appraised-Out Class, if any, during such period.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

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MSC 2021-L7Structural Overview

 

Appraisal Remedy:The holders of the majority (by certificate balance) of an Appraised-Out Class (such holders, the “Requesting Holders”) will have the right, at their sole expense, to require the special servicer to order (or, with respect to a non-serviced mortgage loan, require the master servicer to request from the applicable outside special servicer) a second appraisal of any mortgage loan (or serviced whole loan) for which an appraisal reduction event has occurred or as to which there exists a Collateral Deficiency Amount.  With respect to any serviced mortgage loan, the special servicer will be required to use its reasonable best efforts to ensure that such appraisal is delivered within 30 days from receipt of the Requesting Holders’ written request and will be required to ensure that such appraisal is prepared on an “as-is” basis by an MAI appraiser.  With respect to any non-serviced mortgage loan, the master servicer will be required to use commercially reasonable efforts to obtain such second appraisal from the applicable outside special servicer and to forward such second appraisal to the special servicer.  Upon receipt of such supplemental appraisal, the outside special servicer (for Appraisal Reduction Amounts on non-serviced mortgage loans, but only to the extent provided for in the applicable outside pooling and servicing agreement and applicable intercreditor agreement) and the special servicer (for Collateral Deficiency Amounts on serviced mortgage loans and non-serviced mortgage loans and for Appraisal Reduction Amounts on serviced mortgage loans) will be required to determine, in accordance with the applicable servicing standard, whether, based on its assessment of such supplemental appraisal, any recalculation of the applicable Appraisal Reduction Amount or Collateral Deficiency Amount is warranted and, if so warranted, will be required to recalculate such Appraisal Reduction Amount or Collateral Deficiency Amount, as applicable, based upon such supplemental appraisal and receipt of information requested by the special servicer from the master servicer.  If required by any such recalculation, the applicable Appraised-Out Class will be reinstated as the Controlling Class and each Appraised-Out Class will, if applicable, have its related certificate balance notionally restored to the extent required by such recalculation of the Appraisal Reduction Amount or Collateral Deficiency Amount, if applicable.
Sale of Defaulted Loans:

Under certain circumstances, the special servicer may be required to use reasonable efforts to solicit offers for a defaulted serviced mortgage loan that is a specially serviced mortgage loan (and any related pari passu companion loan (to the extent provided under the related intercreditor agreement) and/or related REO properties). If the special servicer does not receive a cash offer at least equal to the outstanding principal balance plus all accrued and unpaid interest and outstanding costs and expenses and certain other specified amounts (the “Par Purchase Price”), the special servicer may purchase the defaulted loan or REO property at the Par Purchase Price or may accept the highest cash offer received from any person that constitutes a fair price for such defaulted loan or REO property. If multiple offers are received during the period designated by the special servicer for receipt of offers, the special servicer is generally required to select the highest offer. If the highest offer is made by an Interested Person (i.e., certain specified parties under the pooling and servicing agreement for this transaction, including the parties to such agreement, the Directing Certificateholder, the risk retention consultation party, any sponsor, any Borrower Party and known affiliates of the foregoing), the trustee, rather than the special servicer, will generally be required to determine whether the offer constitutes a fair price. Absent an offer at least equal to the Par Purchase Price, no offer from an Interested Person will constitute a fair price unless (x) it is the highest offer received and (y) at least one other offer is (or, if required by a related intercreditor agreement, two other offers are) received from an independent third party. Neither the trustee nor any of its affiliates may make an offer for or purchase any specially serviced mortgage loan or REO property. See “Pooling and Servicing Agreement—Sale of Defaulted Loans and REO Properties” in the Preliminary Prospectus.

 

Notwithstanding any of the foregoing to the contrary, the special servicer will not be required to accept the highest cash offer for a defaulted loan or REO property if it determines (in consultation with the Directing Certificateholder (unless a Consultation Termination Event exists or the mortgage loan is an Excluded DCH Loan), the risk retention consultation party (upon request) and any related companion loan holders), in accordance with the Servicing Standard (and subject to the requirements of any related intercreditor agreement), that rejection of such offer would be in the best interests of the certificateholders, the VRR Interest owners and any related companion loan holders (as a collective whole as if they constituted a single lender, and, if applicable, taking into account the subordinate nature of any subordinate companion loan).  In addition, the special servicer may accept a lower offer (from any person other than itself or an affiliate) if it determines in accordance with the Servicing Standard, that acceptance of such offer would be in the best interests of the certificateholders, the VRR Interest owners and any related companion loan holders (as a collective whole as if they constituted a single lender, and, if applicable, taking into account the subordinate nature of any subordinate companion loan).

 

If title to any mortgaged property is acquired by the trust fund, the special servicer will be required to sell such mortgaged property prior to the close of the third calendar year beginning after the year of acquisition, unless (a) the IRS grants or has not denied an extension of time to sell such mortgaged property or (b) the special servicer, trustee and the certificate administrator receive an opinion of independent counsel to the effect that the holding of the property by the trust longer than the above-referenced three-year period will not result in the imposition of a tax on any REMIC of the trust fund or cause any REMIC of the trust fund to fail to qualify as a REMIC.

 

The Directing Certificateholder will not have a right of first refusal to purchase a defaulted loan.

 

The foregoing applies to mortgage loans serviced under the pooling and servicing agreement for this transaction. With respect to any non-serviced whole loan, if the special servicer under the applicable pooling and servicing agreement determines to sell the related controlling companion loan if it becomes a defaulted mortgage loan, then the applicable special servicer will be required to sell the related whole loan, including the related mortgage loan included in the MSC 2021-L7 securitization trust and the related pari passu companion loan(s) and, under certain circumstances, any subordinate companion loan(s), as a single loan. In connection with any such sale, the special servicer under the applicable pooling and servicing agreement will be required to follow procedures substantially similar to those set forth above.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-17

 

 

MSC 2021-L7Structural Overview

 

Appointment and Replacement of
Special Servicer:

 

The Directing Certificateholder will appoint the initial special servicer as of the closing date. Prior to the occurrence and continuance of a Control Termination Event, the special servicer may generally be replaced by the Directing Certificateholder with or without cause.

 

After the occurrence and during the continuance of a Control Termination Event and upon (a) the written direction of holders of ABS Interests evidencing not less than 25% of the voting rights (taking into account the application of Cumulative Appraisal Reduction Amounts to notionally reduce (i) the certificate balances of classes to which such Cumulative Appraisal Reduction Amounts are allocable and (ii) the principal balance of the VRR Interest) allocable to the principal balance certificates and the VRR Interest, as applicable, requesting a vote to replace the special servicer with a replacement special servicer, (b) payment by such requesting holders to the certificate administrator of all reasonable fees and expenses to be incurred by the certificate administrator in connection with administering such vote and (c) delivery by such holders to each applicable rating agency of a rating agency communication, the certificate administrator will be required to post such notice on its internet website and by mail and conduct the solicitation of votes of all certificates in such regard, which such vote must occur within 180 days of the posting of such notice. Upon the written direction of holders of principal balance certificates and the VRR Interest representing at least 75% of the voting rights that constitute a minimum Quorum, the trustee will be required to immediately replace the special servicer with a qualified replacement special servicer designated by such holders of certificates.

 

If the operating advisor determines, in its sole discretion exercised in good faith, that (i) the special servicer is not performing its duties as required under the pooling and servicing agreement or is otherwise not acting in accordance with the servicing standard and (ii) the replacement of the special servicer would be in the best interests of the certificateholders and the VRR Interest owners as a collective whole, then the operating advisor will have the right to recommend the replacement of the special servicer. The operating advisor’s recommendation to replace the special servicer must be confirmed within 180 days of the posting of such notice by an affirmative vote of holders of ABS Interests representing a majority of the outstanding principal balance of all ABS Interests whose holders voted on the matter, provided that the ABS Interest holders that so voted on the matter (i) hold ABS Interests representing at least 20% of the outstanding principal balance of all ABS Interests on an aggregate basis and (ii) include at least three certificateholders, certificate owners and/or VRR Interest owners that are not affiliated with each other.

 

A “Quorum” means, in connection with any solicitation of votes in connection with the replacement of the special servicer or the asset representations reviewer, the holders of ABS Interests representing at least 75% of the aggregate voting rights allocable to all principal balance certificates and the VRR Interest on an aggregate basis (taking into account, other than with respect to the termination of the asset representations reviewer, the application of any Cumulative Appraisal Reduction Amounts to notionally reduce the certificate balances of the certificates and the principal balance of the VRR Interest).

 

“ABS Interest” means any class of certificates (other than the Class R certificates) or the VRR Interest, as applicable.

 

With respect to each serviced whole loan, any holder of a related pari passu companion loan, following a servicer termination event with respect to the special servicer that affects such holder, will be entitled to direct the trustee (and the trustee will be required) to terminate the special servicer solely with respect to such serviced whole loan. A replacement special servicer will be selected by the trustee or, prior to a Control Termination Event, by the Directing Certificateholder; provided, that any successor special servicer appointed to replace the special servicer with respect to such whole loan can generally not be the entity (or its affiliate) that was terminated at the direction of the holder of the related pari passu companion loan.

 

Notwithstanding any of the foregoing to the contrary, with respect to any servicing shift whole loan and any serviced A/B whole loans as to which the subordinate companion loan holder is the related controlling note holder, the holder of the related control note will be entitled to replace the special servicer with respect to such whole loan at any time, with or without cause, and while it is a serviced whole loan, no other party may replace the special servicer for such whole loan unless there is a servicer termination event with respect thereto.

 

With respect to any non-serviced whole loan, the MSC 2021-L7 trust, as holder of the related mortgage loan, has the right to terminate the special servicer under the related pooling and servicing agreement if a servicer termination event occurs with respect to such special servicer that affects the trust in its capacity as such holder. Such rights may be exercised by the Directing Certificateholder prior to a Control Termination Event (or the special servicer, following the occurrence and during the continuance of a Control Termination Event). The successor special servicer will be selected pursuant to the applicable pooling and servicing agreement by the related directing holder prior to a control termination event under such pooling and servicing agreement.

 

Servicing Standard:Each of the master servicer and the special servicer is obligated to service and administer the mortgage loans (and, if applicable, the serviced companion loans) in accordance with the definition of the “Servicing Standard” described in the Preliminary Prospectus and the terms of the pooling and servicing agreement, provided that each non-serviced mortgage loan, if any, will be serviced by another master servicer or special servicer under the pooling and servicing agreement with respect to the securitization of the related companion loan, which entities will be obligated to service and administer such non-serviced mortgage loan pursuant to a similar standard set forth in the related pooling and servicing agreement.
Voting Rights:Voting rights for the ABS Interests will be allocated as follows: (1) 2% in the case of the Class X Certificates, allocated pro rata among the respective classes thereof based upon their respective notional amounts as of the date of determination; and (2) in the case of any class of principal balance certificates or the VRR Interest, a percentage equal to the product of 98% and a fraction, the numerator of which is equal to the related certificate balance of the class of certificates or the principal balance of the VRR Interest, as applicable, in each case, determined as of the prior determination date, and the denominator of which is equal to the aggregate of the

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-18

 

 

MSC 2021-L7Structural Overview

 

 certificate balances of all classes of the principal balance certificates and the principal balance of the VRR Interest, in each case determined as of the prior determination date (and solely in connection with certain votes relating to the replacement of the special servicer and the operating advisor as described in the Preliminary Prospectus, such numerator and denominator will take into account any notional reduction in such certificate balances and/or VRR Interest principal balance for Cumulative Appraisal Reduction Amounts allocated to the principal balance certificates or VRR Interest, as applicable). The voting rights of any class of certificates or the VRR Interest will be allocated among certificateholders of such class or the VRR Interest owners, as applicable, in proportion to their respective percentage interests. The Class A-4-X1, Class A-4-X2, Class A-5-X1, Class A-5-X2, Class A-S-X1, Class A-S-X2, Class B-X1, Class B-X2, Class C-X1, Class C-X2, Class V and Class R certificates will not be entitled to any voting rights.
Excluded Special Servicer:If the special servicer obtains knowledge that it has become a Borrower Party with respect to any serviced mortgage loan or serviced whole loan (an “Excluded Special Servicer Loan”), the special servicer will be required to resign as special servicer of that Excluded Special Servicer Loan.  Prior to the occurrence and continuance of a Control Termination Event, the Directing Certificateholder will be entitled to select (and may remove and replace with or without cause) a successor special servicer that is not a Borrower Party (an “Excluded Special Servicer”) with respect to any Excluded Special Servicer Loan, unless such Excluded Special Servicer Loan is also an Excluded DCH Loan. After the occurrence and during the continuance of a Control Termination Event, if at any time the applicable Excluded Special Servicer Loan is also an Excluded DCH Loan or if the Directing Certificateholder is entitled to appoint the Excluded Special Servicer but does not so appoint within 30 days of notice of such resignation, the resigning special servicer will be required to use reasonable efforts to select the related Excluded Special Servicer.  Any Excluded Special Servicer will be required to perform all of the obligations of the special servicer and will be entitled to all special servicing compensation with respect to such Excluded Special Servicer Loan earned while the related mortgage loan is an Excluded Special Servicer Loan.
Liquidated
Loan Waterfall:

 

On liquidation of any mortgage loan, all net liquidation proceeds related to the mortgage loan (but not any related companion loan) will be applied so that amounts allocated as a recovery of accrued and unpaid interest will not, in the first instance, include any delinquent interest that was not advanced (or would not have been advanced in the absence of a non-recoverability determination) as a result of Appraisal Reduction Amounts or accrued on the portion of the stated principal balance thereof equal to any related Collateral Deficiency Amount in effect from time to time and as to which no advance was made (collectively, the “Subordinated Interest Amount”). After the adjusted interest amount is so allocated, any remaining liquidation proceeds will be allocated to offset certain advances and to pay principal on the mortgage loan until the unpaid principal amount of the mortgage loan has been reduced to zero. Any remaining liquidation proceeds will then be allocated to pay the Subordinated Interest Amount.

 

Operating Advisor:

The operating advisor will have access to any final asset status report and information available with respect to the transaction on the certificate administrator’s website and will have certain monitoring responsibilities on behalf of the entire issuing entity. After the occurrence and during the continuance of an Operating Advisor Consultation Event, the operating advisor will be entitled to consult with the special servicer with respect to certain major decisions on behalf of the issuing entity and in the best interest of, and for the benefit of, the certificateholders and the VRR Interest owners, as a collective whole, as if those certificateholders and VRR Interest owners constituted a single lender.

 

After the occurrence and during the continuance of a Consultation Termination Event, the operating advisor will be subject to termination without cause if the holders of ABS Interests representing at least 15% of the voting rights allocable to the Non-Reduced Interests vote to terminate and replace the operating advisor and such vote is approved by the holders of ABS Interests representing more than 50% of the voting rights allocable to the Non-Reduced Interests that exercise their right to vote, provided that the holders of ABS Interests representing at least 50% of the voting rights allocable to the Non-Reduced Interests have exercised their right to vote. The holders initiating such vote will be responsible for the fees and expenses in connection with the vote and replacement.

 

An “Operating Advisor Consultation Event” will occur when either (i) the aggregate certificate balance of the classes that constitute the HRR Certificates (i.e., the Class H-RR and Class J-RR Certificates) (taking into account the application of the Non-Vertically Retained Percentage of any Cumulative Appraisal Reduction Amounts to notionally reduce the certificate balances of such classes) is 25% or less of the initial aggregate certificate balance of such classes or (ii) a Control Termination Event has occurred and is continuing.

 

“Non-Reduced Interest” means any ABS Interest (other than the Class X and Class V certificates) then outstanding for which (a)(1) the initial certificate balance of such class of certificates or initial principal balance of the VRR Interest, as applicable, minus (2) the sum (without duplication) of (x) any payments of principal (whether as principal prepayments or otherwise) distributed to the certificateholders of such class of certificates or the VRR Interest owners, as applicable, (y) any Cumulative Appraisal Reduction Amounts allocated to such class of certificates or VRR Interest, as applicable, and (z) any realized losses previously allocated to such class of certificates or VRR Interest, as applicable, is equal to or greater than (b) 25% of the difference between (1) the initial certificate balance of such class of certificates or initial principal balance of the VRR Interest, as applicable, and (2) any payments of principal (whether as principal prepayments or otherwise) distributed to the certificateholders of such class of certificates or the VRR Interest owners, as applicable. 

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-19

 

 

MSC 2021-L7Structural Overview

 

Operating Advisor Expenses:In addition to the Operating Advisor Fee and the Operating Advisor Consulting Fee, the operating advisor will be entitled to reimbursement of Operating Advisor Expenses in accordance with the terms of the pooling and servicing agreement for this transaction. “Operating Advisor Expenses” for each distribution date will equal any unreimbursed indemnification amounts or additional trust fund expenses payable to the operating advisor pursuant to the pooling and servicing agreement for this transaction (other than the Operating Advisor Fee and the Operating Advisor Consulting Fee).
Asset Representations Reviewer:

The asset representations reviewer will be required to review certain delinquent mortgage loans (excluding a mortgage loan for which a Payment Accommodation has been made and the related borrower is complying with the terms of such Payment Accommodation) after a specified delinquency threshold has been met and the required percentage of certificateholders vote to direct a review as described below. The asset representations reviewer will be entitled to the Asset Representations Reviewer Fee with respect to such review. See “Pooling and Servicing Agreement—The Asset Representations Reviewer” in the Preliminary Prospectus.

 

The certificate administrator will be required to notify certificateholders if the specified delinquency threshold has been met as described in the Preliminary Prospectus under “Pooling and Servicing Agreement—The Asset Representations Reviewer”.

 

If holders of ABS Interests representing not less than 5.0% of the voting rights request a vote to commence an asset review, and if subsequently, (i) a majority of the voting rights allocable to those holders of ABS Interests who cast votes and (ii) a majority of the voting rights that constitute a minimum Asset Review Quorum authorizes an asset review within 150 days of the request for a vote, the asset representations reviewer will be required to conduct an asset review of delinquent loans.

 

An “Asset Review Quorum” is, in connection with any solicitation of votes to authorize an asset review as described above, the holders of ABS Interests representing at least 5.0% of the aggregate voting rights.

 

The asset representations reviewer may be terminated and replaced without cause. Upon (i) the written direction of holders of ABS Interests representing not less than 25% of the voting rights (without regard to the application of any Cumulative Appraisal Reduction Amounts) requesting a vote to terminate and replace the asset representations reviewer with a proposed successor asset representations reviewer that is an eligible asset representations reviewer, and (ii) payment by such holders to the certificate administrator of the reasonable fees and expenses to be incurred by the certificate administrator in connection with administering such vote, the certificate administrator will be required to promptly provide notice to all certificateholders, VRR Interest owners and the asset representations reviewer of such request by posting such notice on its internet website, and by mailing such notice to all certificateholders, VRR Interest owners and the asset representations reviewer. Upon the written direction of holders of ABS Interests representing at least 75% of the voting rights that constitute a minimum Quorum (without regard to the application of any Cumulative Appraisal Reduction Amounts), the trustee will be required to terminate all of the rights and obligations of the asset representations reviewer under the pooling and servicing agreement (other than any rights or obligations that accrued prior to the date of such termination and other than indemnification rights arising out of events occurring prior to such termination) 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 pooling and servicing agreement for this transaction 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 is not “Resolved” 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 first certificateholder (or beneficial owner) or VRR Interest owner to deliver a repurchase request with respect to the mortgage loan (the “Initial Requesting Holder”) (if any) and to the certificate administrator (which will be required to make such notice available to certificateholders and the VRR Interest owners via the certificate administrator’s website) 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 Holder, if any, or any other certificateholder, certificate owner or VRR Interest owner wishes to exercise its right to refer the matter to mediation (including nonbinding 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 Holder, if any, or any other certificateholder, certificate owner or VRR Interest owner does not agree with the dispute resolution method selected by the enforcing servicer, then the Initial Requesting Holder, if any, or such other certificateholder, certificate owner or VRR Interest owner may deliver a written notice to the special servicer indicating its intent to exercise its right to refer the matter to either mediation or arbitration.

 

Notwithstanding any of the foregoing to the contrary, the depositor, the mortgage loan sellers and any of their respective affiliates (other than any Controlling Class certificateholder and any holder of the VRR Interest (or any portion thereof)) will not be entitled to be an Initial Requesting Holder. 

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-20

 

 

MSC 2021-L7Structural Overview

 

 “Resolved” means, with respect to a Repurchase Request, (i) that the related material defect or breach 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, (v) a contractually binding agreement has been 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 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 pooling and servicing agreement for this transaction. Any certificateholder wishing to communicate with other certificateholders regarding the exercise of its rights under the terms of the pooling and servicing agreement for this transaction will be able to deliver a written request signed by an authorized representative of the requesting investor to the certificate administrator.
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 a special servicer, (b) inspection reports, (c) appraisals, (d) various “special notices” described in the Preliminary Prospectus, (e) the “Investor Q&A Forum” and (f) a voluntary “Investor Registry”. Investors may access the deal website following execution of a certification and confidentiality agreement.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-21

 

 

 

MSC 2021-L7Collateral Overview

 

Mortgage Loan Sellers

 No. of
Mortgage
Loans

No. of
Mortgaged
Properties
Aggregate
Cut-off Date
Balance
% of
Pool(1)
KeyBank National Association1840$274,695,49429.8%
Starwood Mortgage Capital LLC1428$239,364,81226.0%
Bank of Montreal912$187,248,20420.3%
Argentic Real Estate Finance LLC1111$116,986,38512.7%
Morgan Stanley Mortgage Capital Holdings LLC811$102,896,46511.2%
Total:60102$921,191,360100.0%

 

Pool Statistics 
Aggregate Cut-off Date Balance:$921,191,360
Number of Mortgage Loans:60
Average Cut-off Date Balance per Mortgage Loan:$15,353,189
Number of Mortgaged Properties:102
Average Cut-off Date Balance per Mortgaged Property:$9,031,288
Weighted Average Mortgage Rate:3.4430%
% of Pool Secured by 5 Largest Mortgage Loans:28.9%
% of Pool Secured by 10 Largest Mortgage Loans:46.6%
% of Pool Secured by ARD Loans:4.3%
Weighted Average Original Term to Maturity (months)(2):111
Weighted Average Remaining Term to Maturity (months)(2):110
Weighted Average Seasoning (months):1
% of Pool Secured by Single Tenant Mortgaged Properties:13.3%
% of Pool Secured by Refinance Loans:65.1%
% of Pool Secured by Acquisition Loans:33.8%
% of Pool Secured by Recapitalization Loans:1.1%

 

Additional Debt 
% of Pool with Pari Passu Mortgage Debt:15.1%
% of Pool with Subordinate Mortgage Debt:5.6%
% of Pool with Mezzanine Debt:5.6%

 

Credit Statistics(3) 
Weighted Average UW NOI DSCR:2.67x
Weighted Average UW NOI Debt Yield(4):10.4%
Weighted Average UW NCF DSCR:2.55x
Weighted Average UW NCF Debt Yield(4):9.8%
Weighted Average Cut-off Date LTV Ratio(4)(5):58.6%
Weighted Average Maturity Date LTV Ratio(2)(4)(5):54.8%

 

 

Footnotes are set forth on the following page.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-22

 

 

MSC 2021-L7Collateral Overview

 

Amortization 

Weighted Average Original Amortization Term (months)(6):381
Weighted Average Remaining Amortization Term (months)(6):380
% of Pool Interest Only through Maturity:54.3%
% of Pool Interest Only followed by Amortizing Balloon:22.5%
% of Pool Amortizing Balloon:18.9%
% of Pool Interest Only, ARD:4.3%

 

Lockboxes 
% of Pool with Springing Lockboxes:49.3%
% of Pool with Hard Lockboxes:39.2%
% of Pool with No Lockboxes:9.7%
% of Pool with Soft (Residential) / Hard (Nonresidential) Lockboxes:1.1%
% of Pool with Soft Lockboxes:0.7%

 

Reserves 
% of Pool Requiring Tax Reserves:77.5%
% of Pool Requiring Insurance Reserves:60.8%
% of Pool Requiring Replacement Reserves:82.6%
% of Pool Requiring TI/LC Reserves(7):76.1%

 

Call Protection 
% of Pool with lockout period, followed by defeasance until open period:76.8%
% of Pool with lockout period, followed by the greater of a prepayment premium and yield maintenance until open period:9.8%
% of Pool without a lockout period, followed by yield maintenance, followed be defeasance or yield maintenance until open period:5.6%
% of Pool with lockout period, followed by defeasance or the greater of a prepayment premium and yield maintenance until open period:5.0%
% of Pool with lockout period, followed by defeasance, followed by defeasance or the greater of a prepayment premium and yield maintenance until open period:2.8%
   

 

(1)Unless otherwise indicated, all references to “% of Pool” in this Term Sheet reflect a percentage of the aggregate principal balance of the mortgage pool as of the Cut-off Date, after application of all payments of principal due during or prior to October 2021.

(2)With respect to any ARD Loan, unless otherwise indicated, references in this Term Sheet to the applicable “maturity date” or “maturity” refer to the applicable anticipated repayment date with respect to such ARD Loan, and such applicable anticipated repayment date is treated as its maturity date for all purposes hereof.

(3)With respect to any mortgage loan that is part of a whole loan, unless otherwise indicated, all LTV, DSCR and Debt Yield calculations in this Term Sheet include any related pari passu companion loans and exclude any subordinate companion loans, as applicable. Additionally, LTV, DSCR and Debt Yield figures in this Term Sheet are calculated for mortgage loans without regard to any additional indebtedness that may be incurred at a future date.

(4)With respect to certain mortgage loans, debt yields and LTVs (such as, for example, UW NOI Debt Yield, UW NCF Debt Yield, Cut-off Date LTV Ratio or Maturity Date LTV Ratio) have been calculated based on a principal balance that is net of a holdback or earnout reserve. Such mortgage loans are identified under the definitions of “Underwritten NOI Debt Yield”, “Underwritten NCF Debt Yield”, “Cut-off Date LTV Ratio” and “Maturity Date LTV Ratio” set forth under “Description of the Mortgage PoolCertain Calculations and Definitions” in the Preliminary Prospectus.

(5)The LTV ratios set forth in this Term Sheet are generally based on the “as-is” values of the related mortgaged properties; provided that the “as-is” value for a portfolio of mortgaged properties may include a premium relating to the valuation of the mortgaged properties as a whole rather than as the sum of the appraised values of the individually valued mortgaged properties; provided, further, that such LTV ratios may be based on “as-stabilized”, “as complete” or other contingent values in certain cases in which reserves have been established at origination for the applicable condition or circumstance that is expected to result in stabilization; provided, further, that such LTV ratios may have been calculated based on a principal balance that is net of a holdback or earnout reserve. See the definition of “Appraised Value” under “Description of the Mortgage Pool—Certain Calculations and Definitions” in the Preliminary Prospectus.

(6)Excludes mortgage loans that provide for payments of interest only through the related maturity date or anticipated repayment date, as applicable.

(7)Excludes hospitality, multifamily, self storage, school and manufactured housing properties.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-23

 

 

MSC 2021-L7Characteristics of the Mortgage Loans

 

Top 10 Mortgage Loans or Groups of Cross-Collateralized Mortgage Loans(1)
              
Loan
No.
Mortgage
Loan
Seller
Property NameCityStateProperty TypeCut-off Date
Balance
% of
Pool
SF/UnitsCut-off Date Balance per SF/UnitUW
NCF
DSCR
UW NOI
Debt
Yield
Cut-off
Date LTV
Maturity Date LTV
1SMCSignature Office Portfolio IIVariousNJOffice$71,500,0007.8%448,372$159.471.75x10.5%63.3%54.4%
2BMOOne SoHo SquareNew YorkNYOffice$51,823,2045.6%786,891$597.294.88x13.6%34.8%34.8%
3KeyBankInland Wentworth Self Storage PortfolioVariousVariousSelf Storage$51,050,0005.5%798,975$63.893.01x9.3%48.3%48.3%
4KeyBankSuperstition GatewayMesaAZRetail$47,125,0005.1%495,204$155.741.72x10.3%68.5%61.9%
5SMCHavenwood Office ParkSpringTXOffice$44,936,5864.9%239,629$187.531.93x9.0%64.5%58.1%
6BMOHelios PlazaHoustonTXOffice$40,000,0004.3%377,185$314.173.10x9.1%64.1%64.1%
7SMC12-24 Ford StreetBrooklynNYMultifamily$32,500,0003.5%98$331,632.652.00x7.2%64.6%64.6%
8MSMCHBardin Place Shopping CenterArlingtonTXRetail$32,300,0003.5%294,323$109.742.67x10.3%57.4%57.4%
9AREF384-390 Fulton StreetBrooklynNYMixed Use$32,000,0003.5%29,904$1,070.091.86x7.6%62.9%62.9%
10BMOABX Industrial PortfolioVariousVariousIndustrial$26,000,0002.8%972,499$26.743.28x10.6%64.9%64.9%
  Total/Wtd. Avg.   $429,234,79046.6%  2.61x9.9%58.6%55.7%

 

 

(1)With respect to any mortgage loan that is part of a whole loan, unless otherwise indicated, all LTV, DSCR, Debt Yield and Cut-off Date Balance per SF/Unit calculations in this Term Sheet include any related pari passu companion loans and exclude any subordinate companion loans, as applicable. Additionally, LTV, DSCR, Debt Yield and Cut-off Date Balance per SF/Unit figures in this Term Sheet are calculated for mortgage loans without regard to any additional indebtedness that may be incurred at a future date. With respect to any leased fee loans, the SF/Units and Cut-off Date Balance per SF/Unit figures in this Term Sheet are based on the size of the non-collateral improvements.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-24

 

 

MSC 2021-L7Characteristics of the Mortgage Loans

 

Mortgage Loans with Pari Passu Companion Loans
Loan
No.
Mortgage
Loan Seller
Property Name
Mortgage Loan Cut-off Date
Balance
Aggregate Pari Passu Companion Loan Cut-off Date Balance
Combined
Cut-off Date Balance
Lead Servicing AgreementMaster ServicerSpecial ServicerControl RightsCombined
UW NCF
DSCR(1)
Combined
UW NOI
Debt Yield(1)
Combined
Cut-off
Date LTV(1)
2BMOOne SoHo Square$51,823,204$418,176,796$470,000,000SOHO 2021-SOHOKeyBankMidlandSOHO 2021-SOHO4.88x13.6%34.8%
4KeyBankSuperstition Gateway$47,125,000$30,000,000$77,125,000MSC 2021-L7KeyBankKeyBankMSC 2021-L71.72x10.3%68.5%
6BMOHelios Plaza$40,000,000$78,500,000$118,500,000(2)KeyBankKeyBank(2)3.10x9.1%64.1%

 

 

(1)DSCR, Debt Yield and LTV calculations include any related pari passu companion loans and exclude any subordinate companion loans, as applicable.

(2)The Helios Plaza controlling companion loan is currently held by BMO. The Helios Plaza whole loan will be serviced pursuant to the MSC 2021-L7 pooling and servicing agreement until the securitization of the related controlling pari passu companion loan.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-25

 

 

MSC 2021-L7Characteristics of the Mortgage Loans

 

Prior Securitization History(1)
Loan
No.
Mortgage
Loan
Seller
Property NameCityStateProperty
Type
Cut-off
Date
Balance
% of
Pool
SF/
Units

Cut-off
Date
Balance
per SF/

Unit

UW
NCF
DSCR
UW
NOI
Debt
Yield
Cut-off
Date
LTV
Maturity Date
LTV
Prior Securitization
2BMOOne SoHo SquareNew YorkNYOffice$51,823,2045.6%786,891$597.294.88x13.6%34.8%34.8%GSMS 2019-SOHO
4KeyBankSuperstition GatewayMesaAZRetail$47,125,0005.1%495,204$155.741.72x10.3%68.5%61.9%CARB 2019-FL2
9AREF384-390 Fulton StreetBrooklynNYMixed Use$32,000,0003.5%29,904$1,070.091.86x7.6%62.9%62.9%WFCM 2012-LC5
11KeyBankLos Arcos ApartmentsHoustonTXMultifamily$24,950,0002.7%516$48,352.712.92x10.1%59.0%59.0%DBJPM 2016-C1
12BMOLower East Side Multifamily PortfolioNew YorkNYMultifamily$23,500,0002.6%66$356,060.611.64x6.5%69.1%69.1%ARCLO 2020-FL1
14SMCFairway Retail CenterPasadenaTXRetail$17,033,1511.8%49,600$343.411.74x9.7%69.1%54.1%UBSBB 2012-C2
15MSMCHVictory Winn-Dixie PortfolioVariousVariousRetail$16,166,4651.8%236,430$68.381.66x10.3%71.0%56.5%WFRBS 2011-C3
17.01SMC178 Suydam StreetBrooklynNYMultifamily$3,145,9460.3%8$393,243.241.83x7.3%64.9%64.9%FRESB 2018-SB51
17.03SMC239 Stanhope StreetBrooklynNYMultifamily$2,562,1620.3%5$512,432.431.83x7.3%64.9%64.9%FRESB 2018-SB51
17.05SMC18-67 Madison StreetRidgewoodNYMultifamily$2,335,1350.3%6$389,189.191.83x7.3%64.9%64.9%FRESB 2016-SB15
29SMCSouthland PlazaSan DiegoCARetail$10,700,0001.2%80,486$132.946.33x16.3%32.6%32.6%WFRBS 2012-C6
41KeyBankRego ParkRego ParkNYRetail$7,000,0000.8%34,099$205.283.61x20.8%20.1%16.6%MSC 2012-C4
43.01KeyBank930 Providence RoadChesapeakeVAMultifamily$2,030,8730.2%32$63,464.791.61x9.0%56.8%44.2%FNA 2012-M2
43.02KeyBank710-722 East 29th StreetNorfolkVAMultifamily$1,373,8260.1%28$49,065.201.61x9.0%56.8%44.2%FNA 2012-M2
43.03KeyBank2011 Chesapeake DriveChesapeakeVAMultifamily$1,194,6320.1%24$49,776.341.61x9.0%56.8%44.2%FNA 2012-M2
43.05KeyBank811-819 East 29th StreetNorfolkVAMultifamily$1,194,6310.1%24$49,776.301.61x9.0%56.8%44.2%FNA 2012-M2
48KeyBankMetro Self StorageTaylorMISelf Storage$5,489,9830.6%89,661$61.233.14x15.5%35.8%27.1%WFRBS 2011-C5, CGCMT 2015-GC31
  Total   $249,625,00827.1%       

 

 

(1)Includes mortgage loans for which all or a portion of the previously existing debt was most recently securitized within the last 10 years, based on information provided by the related borrower or obtained through searches of a third-party database. The information has not otherwise been confirmed by the mortgage loan sellers. With respect to any mortgage loan that is part of a whole loan, unless otherwise indicated, all LTV, DSCR, Debt Yield and Cut-off Date Balance per SF/ Unit calculations include any related pari passu companion loans and exclude any related subordinate companion loans, as applicable.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-26

 

 

MSC 2021-L7Characteristics of the Mortgage Loans

 

Mortgage Loans with Subordinate Debt
Loan
No.
Mortgage
Loan Seller
Property Name
Mortgage Loan Cut-off Date
Balance
Cut-off
Date
Balance
per Unit/SF

Subordinate Debt
Cut-off Date Balance
UW NCF DSCRUW NOI
Debt Yield
Cut-off Date LTVWhole Loan
UW NCF
DSCR(1)
Whole Loan
UW NOI
Debt Yield(1)
Whole Loan
Cut-off Date LTV(1)
2BMOOne SoHo Square$51,823,204$597.29$315,000,0004.88x13.6%34.8%2.92x8.1%58.1%

 

 

(1)Whole Loan UW NCF DSCR, Whole Loan UW NOI Debt Yield and Whole Loan Cut-off Date LTV figures shown above are calculated based on any related pari passu notes and any related subordinate note(s).

 

Mortgage Loans with Mezzanine Debt
Loan
No.
Mortgage
Loan Seller
Property Name
Mortgage Loan Cut-off Date
Balance
Cut-off
Date
Balance
per Unit

Mezzanine Debt
Cut-off Date Balance
UW NCF DSCRUW NOI
Debt Yield
Cut-off Date LTVTotal Debt
UW NCF
DSCR(1)
Total Debt
UW NOI
Debt Yield(1)
Total Debt
Cut-off Date LTV(1)
2BMOOne SoHo Square$51,823,204$597.29$120,000,0004.88x13.6%34.8%2.28x7.1%67.0%

 

 

(1)Total Debt UW NCF DSCR, Total Debt UW NOI Debt Yield and Total Debt Cut-off Date LTV figures shown above are calculated based on any related pari passu notes, any related subordinate note(s) and the mezzanine debt.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-27

 

 

MSC 2021-L7Characteristics of the Mortgage Loans

 

Mortgage Loans with Scheduled Balloon Payments and Related Classes(1)

Class A-2 ($92,100,000)
Loan
No.
Mortgage
Loan
Seller
Property NameStateProperty TypeCut-off
Date
Balance
% of
Pool
Maturity Date Balance% of
Class A-2
Certificate
Principal
Balance
SFCut-off
Date
Balance per
SF
UW
NCF
DSCR
UW
NOI
Debt
Yield
Cut-off
Date
LTV
Maturity Date LTVRem. IO Period
(mos.)
Rem.
Term to
Maturity
(mos.)
6BMOHelios PlazaTXOffice$40,000,0004.3%$40,000,00043.4%377,185$314.173.10x9.1%64.1%64.1%6060
9AREF384-390 Fulton StreetNYMixed Use$32,000,0003.5%$32,000,00034.7%29,904$1,070.091.86x7.6%62.9%62.9%6060
23KeyBankColumbus & Indy IndustrialVariousIndustrial$13,476,6341.5%$12,046,56613.1%326,664$41.261.97x11.6%59.9%53.5%059
33KeyBankHale Office PortfolioVariousOffice$9,800,0001.1%$9,800,00010.6%62,391$157.072.93x10.9%52.6%52.6%5858
  Total/Wtd. Avg.  $95,276,63410.3%$93,846,566101.9%  2.51x9.1%61.9%61.0%5160

 

 

(1)The table above reflects the mortgage loans whose balloon payments will be applied to pay down the Class A-2 certificates, assuming (i) that none of the mortgage loans experience prepayments, defaults or losses; (ii) there are no extensions of maturity dates; and (iii) each mortgage loan is paid in full on its stated maturity date or, in the case of any mortgage loan with an anticipated repayment date, on such anticipated repayment date. The table above is otherwise based on the Structuring Assumptions set forth under “Yield and Maturity Considerations—Weighted Average Life” in the Preliminary Prospectus.

 

Mortgage Loans with Scheduled Balloon Payments and Related Classes(1)

Class A-3 ($68,100,000)
Loan
No.
Mortgage
Loan
Seller
Property NameStateProperty TypeCut-off
Date
Balance
% of
Pool
Maturity Date Balance% of
Class A-3
Certificate
Principal
Balance
SFCut-off
Date
Balance per
SF
UW
NCF
DSCR
UW
NOI
Debt
Yield
Cut-off
Date
LTV
Maturity Date LTVRem. IO Period
(mos.)
Rem.
Term to
Maturity
(mos.)
2BMOOne SoHo SquareNYOffice$51,823,2045.6%$51,823,20476.1%786,891$597.294.88x13.6%34.8%34.8%8282
24MSMCHWest Park PromenadeMTRetail$13,000,0001.4%$13,000,00019.1%145,673$89.243.35x13.0%55.6%55.6%8383
49MSMCHShoppes at Lake MaryFLRetail$5,400,0000.6%$5,400,0007.9%37,685$143.292.12x10.8%64.0%64.0%8484
  Total/Wtd. Avg.  $70,223,2047.6%$70,223,204103.1%  4.38x13.3%40.9%40.9%8282

 

 

(1)The table above reflects the mortgage loans whose balloon payments will be applied to pay down the Class A-3 certificates, assuming (i) that none of the mortgage loans experience prepayments, defaults or losses; (ii) there are no extensions of maturity dates; and (iii) each mortgage loan is paid in full on its stated maturity date or, in the case of any mortgage loan with an anticipated repayment date, on such anticipated repayment date. The table above is otherwise based on the Structuring Assumptions set forth under “Yield and Maturity Considerations—Weighted Average Life” in the Preliminary Prospectus.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-28

 

 

MSC 2021-L7Characteristics of the Mortgage Loans

 

(GRAPHIC) 

 

Property Type Distribution(1)
Property TypeNumber of
Mortgaged
Properties
Aggregate
Cut-off Date
Balance
% of
Pool
Wtd. Avg.
Mortgage
Rate
Wtd. Avg.
UW NCF
DSCR
Wtd. Avg.
UW NOI
Debt Yield
Wtd. Avg.
Cut-off

Date LTV
Wtd. Avg.
Maturity

Date LTV
Retail23$274,847,50529.8%3.5079%2.55x11.4%58.9%53.3%
Anchored12$172,754,35418.8%3.5204%2.36x11.1%62.5%56.4%
Single Tenant4$48,784,9995.3%3.4972%2.58x10.5%51.8%49.1%
Shadow Anchored4$39,133,1514.2%3.2555%3.29x12.0%58.1%49.8%
Unanchored3$14,175,0001.5%4.0885%2.77x15.7%42.8%39.7%
Office12$251,575,30527.3%3.3402%2.75x10.5%57.7%53.5%
Suburban7$164,917,36917.9%3.4478%2.18x9.8%63.3%57.7%
CBD3$73,399,5898.0%3.0301%4.13x12.6%43.7%41.9%
Medical1$9,839,1301.1%3.7600%1.97x7.6%69.8%69.8%
Single Tenant1$3,419,2160.4%3.6000%2.93x10.9%52.6%52.6%
Multifamily19$145,488,59315.8%3.5312%2.09x7.9%62.6%61.4%
Mid Rise7$94,355,01510.2%3.5523%2.00x7.3%63.5%63.5%
Garden7$38,838,5934.2%3.3706%2.40x9.5%59.8%55.2%
Low Rise5$12,294,9851.3%3.8765%1.84x7.3%64.9%64.9%
Self Storage22$102,664,98311.1%3.1870%2.92x10.0%51.5%50.2%
Self Storage22$102,664,98311.1%3.1870%2.92x10.0%51.5%50.2%
Mixed Use6$62,815,0756.8%3.8760%1.84x8.7%62.2%59.0%
Office/Retail3$42,165,0754.6%3.9012%1.81x8.1%61.7%59.4%
Multifamily/Retail1$9,750,0001.1%3.4000%1.47x7.9%70.1%63.1%
Parking/Retail1$5,600,0000.6%4.9000%1.56x10.6%56.6%50.0%
Industrial/Self Storage/Retail1$5,300,0000.6%3.4700%3.04x12.7%57.6%57.6%
Industrial8$47,256,6345.1%3.1395%2.82x10.9%62.4%60.5%
Flex4$21,256,6342.3%3.2245%2.26x11.3%59.3%55.2%
Warehouse2$18,900,0002.1%3.0700%3.28x10.6%64.9%64.9%
Manufacturing2$7,100,0000.8%3.0700%3.28x10.6%64.9%64.9%
Manufactured Housing9$17,050,0001.9%3.5291%1.91x10.5%51.2%43.7%
Manufactured Housing9$17,050,0001.9%3.5291%1.91x10.5%51.2%43.7%
Hospitality2$15,493,2651.7%4.0041%2.90x18.7%63.8%51.6%
Limited Service2$15,493,2651.7%4.0041%2.90x18.7%63.8%51.6%
Other1$4,000,0000.4%3.0500%5.68x17.8%33.9%33.9%
School1$4,000,0000.4%3.0500%5.68x17.8%33.9%33.9%
Total/Wtd. Avg.102$921,191,360100.0%3.4430%2.55x10.4%58.6%54.8%

 

 

(1)All numerical information concerning the mortgage loans is approximate and, in the case of mortgage loans secured by multiple properties, is based on allocated loan amounts with respect to such properties. All weighted average information regarding the mortgage loans reflects the weighting of the mortgage loans based on their outstanding principal balances as of the Cut-off Date or, in the case of mortgage loans secured by multiple properties, allocated loan amounts. The sum of numbers and percentages in columns may not match the “Total” due to rounding. With respect to any mortgage loan that is part of a whole loan, unless otherwise indicated, all LTV, DSCR and Debt Yield calculations include any related pari passu companion loans and exclude any related subordinate companion loans, as applicable.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-29

 

 

MSC 2021-L7Characteristics of the Mortgage Loans

 

(GRAPHIC) 

 

Geographic Distribution(1)
State or Other JurisdictionNumber of
Mortgaged
Properties
Aggregate
Cut-off Date
Balance
% of
Pool
Wtd. Avg.
Mortgage
Rate
Wtd. Avg.
UW NCF
DSCR
Wtd. Avg.
UW NOI
Debt Yield

Wtd. Avg.

Cut-off
Date LTV

Wtd. Avg.
Maturity

Date LTV
New York20$243,802,40826.5%3.3779%2.83x9.8%55.4%54.7%
Texas20$228,328,67524.8%3.2993%2.65x10.0%58.8%55.8%
Arizona7$82,079,5498.9%3.3250%2.39x10.2%59.8%56.0%
Florida10$77,863,1718.5%3.6859%2.54x11.3%60.0%56.3%
New Jersey3$71,500,0007.8%3.6500%1.75x10.5%63.3%54.4%
California4$24,500,0002.7%3.1226%4.74x15.9%43.2%39.1%
California – Southern(2)3$20,500,0002.2%3.1758%4.52x15.6%45.7%40.8%
California – Northern(2)1$4,000,0000.4%2.8500%5.85x17.3%30.1%30.1%
Georgia5$20,359,3042.2%3.4913%2.03x10.1%67.2%55.6%
Oregon2$16,560,9631.8%3.2491%2.92x9.8%55.5%55.5%
Kansas1$15,675,0001.7%3.8500%1.90x10.8%54.1%49.0%
North Carolina3$15,650,0001.7%3.7906%2.19x9.7%61.1%58.3%
Louisiana2$15,450,0001.7%3.6794%2.05x9.3%67.2%61.9%
Minnesota1$13,930,0001.5%3.4700%1.56x9.4%68.6%58.7%
Montana1$13,000,0001.4%3.4250%3.35x13.0%55.6%55.6%
Alabama3$12,192,2501.3%3.9500%1.66x10.3%71.0%56.5%
Virginia6$11,988,5931.3%3.5085%1.65x9.8%57.6%46.3%
Indiana2$10,168,8881.1%3.2643%1.75x10.2%61.3%52.4%
Nevada1$9,076,3851.0%4.3400%1.58x10.3%75.0%60.6%
Michigan2$7,864,9830.9%3.0486%2.65x13.4%45.5%35.7%
Ohio2$7,067,7460.8%2.9500%1.97x11.6%59.9%53.5%
Tennessee1$5,600,0000.6%4.9000%1.56x10.6%56.6%50.0%
Connecticut1$5,300,0000.6%3.4700%3.04x12.7%57.6%57.6%
Mississippi1$3,575,0000.4%3.9500%1.76x10.4%65.0%59.0%
Virgin Islands1$3,419,2160.4%3.6000%2.93x10.9%52.6%52.6%
Wisconsin1$2,350,0000.3%3.0700%3.28x10.6%64.9%64.9%
Washington1$2,114,2280.2%2.9540%3.01x9.3%48.3%48.3%
Illinois1$1,775,0000.2%5.4900%1.40x10.7%67.7%56.7%
Total/Wtd. Avg.102$921,191,360100.0%3.4430%2.55x10.4%58.6%54.8%

 

 

(1)All numerical information concerning the mortgage loans is approximate and, in the case of mortgage loans secured by multiple properties, is based on allocated loan amounts with respect to such properties. All weighted average information regarding the mortgage loans reflects the weighting of the mortgage loans based on their outstanding principal balances as of the Cut-off Date or, in the case of mortgage loans secured by multiple properties, allocated loan amounts. The sum of numbers and percentages in columns may not match the “Total” due to rounding. With respect to any mortgage loan that is part of a whole loan, unless otherwise indicated, all LTV, DSCR and Debt Yield calculations include any related pari passu companion loans and exclude any related subordinate companion loans, as applicable.

(2)“California – Northern” includes zip codes above 93600, and “California – Southern” includes zip codes at or below 93600.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-30

 

 

 

MSC 2021-L7Collateral Statistics

 

Collateral Statistics(1)

 

Cut-off Date Balance ($)

 

  No. of
Mortgage
Loans
 Aggregate
Cut-off Date
Balance ($)
 % of
Pool
 
1,775,000 - 10,000,000 29 178,967,432 19.4 
10,000,001 - 20,000,000 18 241,139,139 26.2 
20,000,001 - 30,000,000 4 97,850,000 10.6 
30,000,001 - 40,000,000 4 136,800,000 14.9 
40,000,001 - 50,000,000 2 92,061,586 10.0 
50,000,001 - 60,000,000 2 102,873,204 11.2 
60,000,001 - 71,500,000 1 71,500,000 7.8 
Total: 60 $921,191,360 100.0%
Min: $1,775,000      Max: $71,500,000 Avg: $15,353,189

 

State or Other Jurisdiction(2)

 

  No. of
Mortgaged
Properties
 Aggregate
Cut-off Date
Balance ($)
 

% of 

Pool 

 
New York 20 243,802,408 26.5 
Texas 20 228,328,675 24.8 
Arizona 7 82,079,549 8.9 
Florida 10 77,863,171 8.5 
New Jersey 3 71,500,000 7.8 
California 4 24,500,000 2.7 
California – Southern(3) 3 20,500,000 2.2 
California – Northern(3) 1 4,000,000 0.4 
Georgia 5 20,359,304 2.2 
Oregon 2 16,560,963 1.8 
Kansas 1 15,675,000 1.7 
North Carolina 3 15,650,000 1.7 
Louisiana 2 15,450,000 1.7 
Minnesota 1 13,930,000 1.5 
Montana 1 13,000,000 1.4 
Alabama 3 12,192,250 1.3 
Virginia 6 11,988,593 1.3 
Indiana 2 10,168,888 1.1 
Nevada 1 9,076,385 1.0 
Michigan 2 7,864,983 0.9 
Ohio 2 7,067,746 0.8 
Tennessee 1 5,600,000 0.6 
Connecticut 1 5,300,000 0.6 
Mississippi 1 3,575,000 0.4 
Virgin Islands 1 3,419,216 0.4 
Wisconsin 1 2,350,000 0.3 
Washington 1 2,114,228 0.2 
Illinois 1 1,775,000 0.2 
Total: 102 $921,191,360 100.0%

 

Property Type(2)

 

  No. of
Mortgaged
Properties
 Aggregate
Cut-off Date
Balance ($)
 % of
Pool
 
Retail 23 274,847,505 29.8 
Anchored 12 172,754,354 18.8 
Single Tenant 4 48,784,999 5.3 
Shadow Anchored 4 39,133,151 4.2 
Unanchored 3 14,175,000 1.5 
Office 12 251,575,305 27.3 
Suburban 7 164,917,369 17.9 
CBD 3 73,399,589 8.0 
Medical 1 9,839,130 1.1 
Single Tenant 1 3,419,216 0.4 
Multifamily 19 145,488,593 15.8 
Mid Rise 7 94,355,015 10.2 
Garden 7 38,838,593 4.2 
Low Rise 5 12,294,985 1.3 
Self Storage 22 102,664,983 11.1 
Self Storage 22 102,664,983 11.1 
Mixed Use 6 62,815,075 6.8 
Office/Retail 3 42,165,075 4.6 
Multifamily/Retail 1 9,750,000 1.1 
Parking/Retail 1 5,600,000 0.6 
Industrial/Self Storage/Retail 1 5,300,000 0.6 
Industrial 8 47,256,634 5.1 
Flex 4 21,256,634 2.3 
Warehouse 2 18,900,000 2.1 
Manufacturing 2 7,100,000 0.8 
Manufactured Housing 9 17,050,000 1.9 
Manufactured Housing 9 17,050,000 1.9 
Hospitality 2 15,493,265 1.7 
Limited Service 2 15,493,265 1.7 
Other 1 4,000,000 0.4 
School 1 4,000,000 0.4 
Total/Wtd. Avg. 102 $921,191,360 100.0%
     

Mortgage Rate (%)

 

  No. of
Mortgage
Loans
 Aggregate
Cut-off Date
Balance ($)
 % of
Pool
 
2.5430 - 3.2490 13 278,389,820 30.2 
3.2500 - 3.4990 14 168,301,483 18.3 
3.5000 - 3.9990 25 431,455,407 46.8 
4.0000 - 5.4900 8 43,044,650 4.7 
Total: 60 $921,191,360 100.0%
Min:  2.5430% Max: 5.4900%Wtd Avg: 3.4430%

 

Original Term to Maturity or ARD (mos.)

 

  No. of
Mortgage
Loans
 Aggregate
Cut-off Date
Balance ($)
 % of
Pool
 
60 4 95,276,634 10.3 
84 3 70,223,204 7.6 
120 53 755,691,522 82.0 
Total: 60 $921,191,360 100.0%
Min: 60 mos.    Max: 120 mos. Wtd Avg: 111 mos.

 

Remaining Term to Maturity or ARD (mos.)

 

  No. of
Mortgage
Loans
 Aggregate
Cut-off Date
Balance ($)
 % of
Pool
 
58 – 119 44 717,831,360 77.9 
120 16 203,360,000 22.1 
 Total: 60 $921,191,360 100.0%
Min: 58 mos.  Max: 120 mos. Wtd Avg: 110 mos.

 

Original Amortization Term (mos.)

 

  No. of
Mortgage
Loans
 Aggregate
Cut-off Date
Balance ($)
 % of
Pool
 
Interest Only 31 540,367,333 58.7 
360 28 335,887,441 36.5 
540 1 44,936,586 4.9 
Total: 60 $921,191,360 100.0%
Min: 360 mos.     Max: 540 mos.       Wtd Avg: 381 mos.

 

Remaining Amortization Term (mos.)

 

  No. of
Mortgage
Loans
 Aggregate
Cut-off Date
Balance ($)
 % of
Pool
 
Interest Only 31 540,367,333 58.7 
341 - 360 28 335,887,441 36.5 
538 1 44,936,586 4.9 
Total: 60 $921,191,360 100.0%
Min: 341 mos. Max: 538 mos.Wtd Avg: 380 mos.

 

Mortgage Loan Sellers

 

  No. of
Mortgage
Loans
 Aggregate
Cut-off Date
Balance ($)
 % of
Pool
 
KeyBank 18 274,695,494 29.8 
SMC 14 239,364,812 26.0 
BMO 9 187,248,204 20.3 
AREF 11 116,986,385 12.7 
MSMCH 8 102,896,465 11.2 
Total: 60 $921,191,360 100.0%

 

     

Amortization Type

 

  No. of
Mortgage
Loans
 Aggregate
Cut-off Date
Balance ($)
 % of
Pool
 
Interest Only 30 500,367,333 54.3 
Interest Only, Amortizing Balloon 13 206,905,000 22.5 
Amortizing Balloon 16 173,919,027 18.9 
Interest Only - ARD 1 40,000,000 4.3 
Total: 60 $921,191,360 100.0%

 

Cut-off Date LTV Ratio (%)

 

  No. of
Mortgage
Loans
 Aggregate
Cut-off Date
Balance ($)
 % of
Pool
 
20.1 - 45.0 7 97,513,186 10.6 
45.1 - 50.0 5 108,200,000 11.7 
50.1 - 55.0 4 34,165,075 3.7 
55.1 - 60.0 13 150,520,227 16.3 
60.1 - 75.0 31 530,792,872 57.6 
Total: 60 $921,191,360 100.0%
Min: 20.1%  Max: 75.0%  Wtd Avg: 58.6%

 

Maturity Date or ARD LTV Ratio (%)

 

  No. of
Mortgage
Loans
 Aggregate
Cut-off Date
Balance ($)
 % of
Pool
 
16.6 - 30.0 2 12,489,983 1.4 
30.1 - 40.0 6 94,773,203 10.3 
40.1 - 45.0 2 13,578,668 1.5 
45.1 - 50.0 10 147,832,890 16.0 
50.1 - 55.0 9 143,713,051 15.6 
55.1 - 69.8 31 508,803,565 55.2 
Total: 60 $921,191,360 100.0%
Min: 16.6%  Max: 69.8%    Wtd Avg: 54.8%

 

UW NCF DSCR (x)

 

  No. of
Mortgage
Loans
 Aggregate
Cut-off Date
Balance ($)
 % of
Pool
 
1.30 - 1.60 10 70,456,460 7.6 
1.61 - 1.80 10 206,638,209 22.4 
1.81 - 2.00 11 195,485,240 21.2 
2.01 - 2.20 2 7,500,000 0.8 
2.21 - 2.40 4 51,025,000 5.5 
2.41 - 6.33 23 390,086,451 42.3 
Total: 60 $921,191,360 100.0%
Min: 1.30x  Max: 6.33x    Wtd Avg: 2.55x

 

UW NOI Debt Yield (%)

 

  No. of
Mortgage
Loans
 Aggregate
Cut-off Date
Balance ($)
 % of
Pool
 
6.5 - 9.0 17 256,324,309 27.8 
9.1.0-10 8 158,053,226 17.2 
10.1 - 12.0 23 352,107,374 38.2 
12.1 - 13.0 3 32,799,999 3.6 
13.1 - 15.0 2 75,223,204 8.2 
15.1 - 21.1 7 46,683,248 5.1 
Total: 60 $921,191,360 100.0%
Min: 6.5%  Max: 21.1%   Wtd Avg: 10.4%

 

 
(1)All numerical information concerning the mortgage loans is approximate. All weighted average information regarding the mortgage loans reflects the weighting of the mortgage loans based on their outstanding principal balances as of the Cut-off Date. The sum of numbers and percentages in columns may not match the “Total” due to rounding. With respect to any mortgage loan that is part of a whole loan, unless otherwise indicated, all LTV, DSCR and Debt Yield calculations include any related pari passu companion loans and exclude any related subordinate companion loans, as applicable.
(2)In the case of mortgage loans secured by multiple properties, Cut-off Date Balance information is based on allocated loan amounts with respect to such properties.
(3)“California – Northern” includes zip codes above 93600, and “California – Southern” includes zip codes at or below 93600.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-31

 

 

Office – SuburbanLoan #1Cut-off Date Balance: $71,500,000
VariousSignature Office Portfolio IICut-off Date LTV: 63.3%
Various U/W NCF DSCR: 1.75x
  U/W NOI Debt Yield: 10.5%

 

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This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-32

 

 

Office – SuburbanLoan #1Cut-off Date Balance: $71,500,000
VariousSignature Office Portfolio IICut-off Date LTV: 63.3%
Various U/W NCF DSCR: 1.75x
  U/W NOI Debt Yield: 10.5%

 

img 

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-33

 

   

Mortgage Loan No. 1 – Signature Office Portfolio II

 

Mortgage Loan Information Mortgaged Property Information
Mortgage Loan Seller:SMC Single Asset/Portfolio:Portfolio
Credit Assessment (Fitch/KBRA/S&P):NR/NR/NR Location:Various
Original Balance:$71,500,000 General Property Type:Office
Cut-off Date Balance:$71,500,000 Detailed Property Type:Suburban
% of Initial Pool Balance:7.8% Title Vesting:Fee
Loan Purpose:Refinance Year Built/Renovated:Various/NAP
Borrower Sponsor:Abraham Brach Size:448,372 SF
Guarantor:Abraham Brach Cut-off Date Balance per SF:$159
Mortgage Rate:3.6500% Maturity Date Balance per SF:$137
Note Date:8/19/2021 Property Manager:Diversified Management Plus, LLC
First Payment Date:10/6/2021  (borrower-related)
Maturity Date:9/6/2031   
Original Term to Maturity:120 months   
Original Amortization Term:360 months Underwriting and Financial Information(2)
IO Period:36 months UW NOI:$7,506,780
Seasoning:1 month UW NOI Debt Yield:10.5%
Prepayment Provisions:L(25),D(91),O(4) UW NOI Debt Yield at Maturity:12.2%
Lockbox/Cash Mgmt Status:Hard/Springing UW NCF DSCR:2.60x (IO)       1.75x (P&I)
Additional Debt Type:NAP Most Recent NOI:$7,352,703 (4/30/2021 TTM)
Additional Debt Balance:NAP 2nd Most Recent NOI:$7,268,198 (12/31/2020)
Future Debt Permitted (Type):Yes (Mezzanine) 3rd Most Recent NOI:$6,693,770 (12/31/2019)
Reserves(1) Most Recent Occupancy(3):91.9% (8/13/2021)
TypeInitialMonthlyCap 2nd Most Recent Occupancy:93.0% (12/31/2020)
RE Tax:$283,201$94,400N/A 3rd Most Recent Occupancy:86.9% (12/31/2019)
Insurance:$69,012$9,433N/A Appraised Value (as of):$113,000,000 (6/21/2021)
Recurring Replacements:$0$8,444N/A Appraised Value per SF:$252
TI/LC:$1,500,000$44,837N/A Cut-off Date LTV Ratio:63.3%
Deferred Maintenance:$85,148$0N/A Maturity Date LTV Ratio:54.4%
Unfunded Obligations Reserve:$524,475$0N/A   
Major Tenant Reserve:$0Springing$1,950,000   
        
Sources and Uses
SourcesProceeds% of Total UsesProceeds% of Total
Loan Amount:$71,500,000100.0% Loan Payoff:$67,453,71094.3%
    Reserves:$2,461,8353.4%
    Closing Costs:$1,017,8171.4%
    Return of Equity:$566,6380.8%
Total Sources:$71,500,000100.0% Total Uses:$71,500,000100.0%

 

 

(1)See “Escrows and Reserves” below for further discussion of reserve requirements.

(2)The novel coronavirus pandemic is an evolving situation and could impact the Signature Office Portfolio II Mortgage Loan (as defined below) more severely than assumed in the underwriting of the Signature Office Portfolio II Mortgage Loan and could adversely affect the NOI, NCF and occupancy information, as well as the appraised value and the DSCR, LTV and debt yield metrics presented above and herein. See “Risk FactorsRisks Related to Market Conditions and Other External FactorsThe Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the prospectus.

(3)The borrower sponsor intends to relocate Pulte Homes of NJ, Inc. (21,793 SF; 4.9% NRA; 5.3% of UW Base Rent) from a non-collateral property to the 110 Allen Road property. The borrower sponsor expects Pulte Homes of NJ, Inc. to execute a lease for its new space in September 2021 and to take possession of its space at the 110 Allen Road property in October 2021. The borrower sponsor has entered into a 15-year master lease at the rent underwritten for Pulte Homes of NJ, Inc. for the related space between the borrower, as landlord, and the borrower sponsor as tenant, which lease is expected to be replaced by an acceptable lease with Pulte Homes of NJ, Inc. In addition, the Signature Office Portfolio II Mortgage Loan (as defined below) will be partial recourse to the borrower sponsor in an amount equal to 25% of the original principal balance until, on or after April 2023, (i) Pulte Homes of NJ, Inc. has taken occupancy of, and is paying rent for, its leased space, (ii) the debt yield (as calculated by the lender as described in the loan documents) under the Signature Office Portfolio II Mortgage Loan is equal to or greater than 10.5% and (iii) a satisfactory site visit has been conducted by the lender.

 

The Mortgage Loan. The largest mortgage loan (the “Signature Office Portfolio II Mortgage Loan”) is evidenced by three promissory notes in the aggregate original principal amount of $71,500,000 and secured by first priority fee mortgages encumbering three office buildings located in Basking Ridge and New Providence, New Jersey (the “Signature Office Portfolio II Properties”). Proceeds from the Signature Office Portfolio II Mortgage Loan were used to refinance the previous loans secured by the Signature Office Portfolio II Properties, return equity to the borrower, pay closing costs and fund upfront reserves.

 

The Borrowers and the Borrower Sponsor. The borrowers are SIG 106 LLC, SIG 110 LLC and 121 Chanlon LLC, each a New Jersey limited liability company and each structured to be bankruptcy-remote with one independent director at the managing member level. The borrower sponsor and non-recourse carveout guarantor of the Signature Office Portfolio II Mortgage Loan is Abraham Brach of Signature Acquisitions, which is a private real estate investment firm based in New York that develops, owns and manages office, retail, and multifamily properties throughout the tristate area.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-34

 

 

Office – SuburbanLoan #1Cut-off Date Balance: $71,500,000
VariousSignature Office Portfolio IICut-off Date LTV: 63.3%
Various U/W NCF DSCR: 1.75x
  U/W NOI Debt Yield: 10.5%

 

Their holdings total over four million square feet across 31 commercial assets and several multifamily properties in Brooklyn, New York. Mr. Brach is the founder and President of Signature Acquisitions as well as numerous other business ventures.

 

In addition, Mr. Brach owns and manages non-real estate related companies including Northside Packaging Corp., Healthy Food Brands, LLC, and Simply Natural Foods. Mr. Brach’s partner, Eric Zabarkus, is responsible for the day-to-day asset management of Signature Acquisitions’ holdings. Mr. Zabarkus has over 20 years of experience in the industry and has transactional experiences across 14.0 million square feet.

 

Mr. Brach acquired the Signature Office Portfolio II Properties in two transactions between May 2016 and February 2018 for a combined purchase price of approximately $64.1 million.

 

The Properties. The Signature Office Portfolio II Properties are comprised of three office properties located in New Jersey.

 

The 106 Allen Road property is located on the south side of Allen Road, between Liberty Corner Road to the east and Somerville Road to the west in Basking Ridge, Somerset County, New Jersey. The 106 Allen Road property is located less than one mile from I-78 and less than 4.5 miles from I-287, the two major east/west and north/south arteries serving northern New Jersey. On-site amenities include an atrium lobby, bathrooms and elevators and a grab-and-go café. The site includes 440 parking spaces which equates to a parking ratio of approximately 3.3 parking spaces per 1,000 square feet of net rentable area.

 

The 106 Allen Road property was originally constructed in 2000 and was 73.0% occupied as of August 13, 2021. The 106 Allen Road property has averaged 84.7% occupancy since 2018. The largest tenant is Arla Foods, Inc. (16,922 square feet; 12.7% NRA), which has been at the 106 Allen Road property since 2014. The next largest tenant is Viking Termite & Pest Control, LLC (16,775 square feet; 12.5% NRA). Other notable tenants include IPSEN Biopharmaceuticals, Inc., Torrent Pharma, Inc. and Hess Corporation.

 

The 110 Allen Road property is located adjacent to the 106 Allen Road property in the same business park. On-site amenities also include an atrium lobby, bathrooms and elevators, and a grab-and-go café. The site includes 729 parking spaces which equates to a parking ratio of approximately 3.6 parking spaces per 1,000 square feet of net rentable area.

 

The 110 Allen Road property was originally constructed in 1989 and was 100.0% occupied as of August 13, 2021. The 110 Allen Road property has averaged 94.5% occupancy since 2018. The largest tenant is Regeneron Pharmaceuticals, Inc. (“Regeneron”) (65,079 square feet; 32.1% NRA), which uses the space for clinical operations and biostatistics, and has been at the 110 Allen Road property since 2011. Regeneron has expanded its footprint three times, once in 2015, once in 2017 and again in 2019. The next largest tenant is Lexicon Pharmaceuticals (New Jersey), Inc. (“Lexicon”) (24,841 square feet; 12.3% NRA). Other notable tenants include The Prudential Insurance Company of America, pSividia Corp. and Timber Pharmaceuticals Inc.

 

The 121 Chanlon Road property is located on the northwest corner of Chanlon Road and Floral Avenue in New Providence, Union County, New Jersey. The 121 Chanlon Road property is located less than 2.5 miles from I-78, the major east/west thoroughfare connecting New York City with northern New Jersey. On-site amenities include an atrium lobby, bathrooms and elevators, and a cafeteria.

 

The 121 Chanlon Road property was originally constructed in 1990 and was 100.0% occupied as of August 13, 2021. The 121 Chanlon Road property has averaged 88.8% occupancy since 2018. The largest tenant is Martindale, LLC (“Martindale”) (35,000 square feet; 31.3% NRA), which is an information services company serving the legal profession. Martindale has been at the 121 Chanlon Road property since 2014. Other notable tenants include Summit Health Management, LLC (“Summit Health Management”), Stafford Communications Group, Inc. and Phoenix Group Holdings, LLC (“Phoenix Group”).

 

The following table presents detailed information with respect to each of the Signature Office Portfolio II Properties:

 

Signature Office Portfolio II Properties Summary
Property Name / LocationYear Built/
Renovated
SFAllocated Loan
Amount (“ALA”)(1)
% of
ALA
Appraised Value% of
Appraised
Value
UW NOI% of UW NOI

110 Allen Road
110 Allen Road

Basking Ridge, NJ

1989 / NAP202,740$36,000,00050.3%$56,500,00050.0%$3,885,47451.8%

121 Chanlon Road
121 Chanlon Road

New Providence, NJ

1990 / NAP111,948$18,150,88925.4%$26,000,00023.0%$1,946,38425.9%

106 Allen Road
106 Allen Road

Basking Ridge, NJ

2000 / NAP133,684$17,349,11124.3%$30,500,00027.0%$1,674,92222.3%
Total 448,372$71,500,000100.0%$113,000,000100.0%$7,506,780100.0%
(1)The Signature Office Portfolio II Mortgage Loan documents do not permit the release of any of the Signature Office Portfolio II Properties.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-35

 

 

Office – SuburbanLoan #1Cut-off Date Balance: $71,500,000
VariousSignature Office Portfolio IICut-off Date LTV: 63.3%
Various U/W NCF DSCR: 1.75x
  U/W NOI Debt Yield: 10.5%

 

Major Tenants.

 

Regeneron (65,079 SF, 14.5% of portfolio NRA, 15.5% of portfolio underwritten base rent). Regeneron leases 65,079 SF at the 110 Allen Road property under a lease through August 2025. Regeneron is a biotechnology company and uses its space for clinical operations and biostatistics. Regeneron has occupied its space since 2011 and has expanded its footprint at the 110 Allen Road property three times since its initial lease. Regeneron has no termination options. Regeneron has two five-year lease renewal options remaining.

 

Martindale (35,000 SF, 7.8% of portfolio NRA, 8.3% of portfolio underwritten base rent). Martindale is an information services company for the legal profession. It is owned by Internet Brands and is part of the Martindale-Avvo Legal Marketing Network, creating the largest online legal network. Martindale publishes the Martindale Law Directory, which provides background information on lawyers and law firms in the United States and other countries. The 121 Chanlon Road property serves as Martindale’s headquarters. Martindale has been a tenant at the 121 Chanlon Road property since 2014. Martindale’s lease runs through December 2024. Martindale has no termination options. Martindale has one five-year lease renewal option remaining.

 

Summit Health Management (26,723 SF, 6.0% of portfolio NRA, 6.4% of portfolio underwritten base rent). Summit Health Management is a subsidiary of Summit Health that offers consulting and management services to physician practices in the United States. Summit Medical Group and CityMD merged in August 2019 to form Summit Health, a physician-owned, for-profit, multispecialty medical practice headquartered in Berkeley Heights, New Jersey. Summit Health Management uses its space as a business office. Summit Health Management has been at the 121 Chanlon Road property since 2015 and has a lease that runs through March 2026. Summit Health Management has no termination options. Summit Health Management has two five-year lease renewal options remaining.

 

Lexicon (24,841 SF, 5.5% of portfolio NRA, 6.2% of portfolio underwritten base rent). Lexicon is a biopharmaceutical company developing treatments for human disease. Over the years, Lexicon evolved from a genomics company into a drug discovery and development company focused on developing treatments for human disease. Lexicon has been a tenant at the 110 Allen Road property since 2015 under a lease through December 2022. Lexicon has no termination options. Lexicon has one five-year lease renewal option remaining.

 

Phoenix Group (22,886 SF, 5.1% of portfolio NRA, 5.9% of portfolio underwritten base rent). Phoenix Group is doing business as eNOVA, a medical communications company that is headquartered at the 121 Chanlon Road property. Phoenix Group has been a tenant at the 121 Chanlon Road property since 2014 and has a current lease expiration date in November 2023. Phoenix Group has no termination options. Phoenix Group has two five-year lease renewal options remaining.

 

The following table presents certain information relating to the tenants at the Signature Office Portfolio II Properties:

 

Tenant Summary(1)
Tenant Name

Credit Rating
(Fitch/Moody’s/ S&P)(2)
 

Tenant SFApprox.
% of
Total SF
Annual
UW Rent
% of Total Annual
UW Rent
Annual UW Rent PSFLease ExpirationRenewal OptionsTermination
Options
(Y/N)
RegeneronNR/Baa3/BBB+65,07914.5%$1,612,11915.5%$24.778/31/20252 x 5 yrsN
MartindaleNR/NR/NR35,0007.8%$857,5008.3%$24.5012/31/20241 x 5 yrsN
Summit Health ManagementNR/NR/NR26,7236.0%$660,4586.4%$24.713/31/20262 x 5 yrsN
LexiconNR/NR/NR24,8415.5%$643,9226.2%$25.9212/31/20221 x 5 yrsN
Phoenix GroupA/NR/NR22,8865.1%$610,0555.9%$26.6611/30/20232 x 5 yrsN
Subtotal/Wtd. Avg. 174,52938.9%$4,384,05442.3%$25.12   
          
Other Tenants 237,73753.0%$5,988,16557.7%$25.19   
Vacant Space 

36,106

8.1%

$0

0.0%

$0.00

   
Total/Wtd. Avg. 448,372100.0%$10,372,219100.0%$25.16   
           

 

(1)Information is based on the underwritten rent roll dated August 13, 2021 with rent steps totaling $117,339 through August 2022. Straight-line rent has been underwritten for investment grade tenants totaling $52,946.

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

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-36

 

 

Office – SuburbanLoan #1Cut-off Date Balance: $71,500,000
VariousSignature Office Portfolio IICut-off Date LTV: 63.3%
Various U/W NCF DSCR: 1.75x
  U/W NOI Debt Yield: 10.5%

 

The following table presents certain information relating to the lease rollover schedule at the Signature Office Portfolio II Properties:

 

Lease Rollover Schedule(1)(2)
Year# of Leases RollingSF RollingUW Rent PSF RollingApprox.
% of Total SF
Rolling
Approx.
Cumulative %
of SF Rolling
Total UW
Rent Rolling
Approx. % of
Total Rent
Rolling
Approx.
Cumulative %
of Total Rent
Rolling
MTM(3)11,534$0.000.3%0.3%$00.0%0.0%
202113,000$25.000.7%1.0%$75,0000.7%0.7%
2022553,613$26.3112.0%13.0%$1,410,57613.6%14.3%
2023540,446$24.749.0%22.0%$1,000,5469.6%24.0%
2024453,990$25.2312.0%34.0%$1,362,06713.1%37.1%
20257113,150$24.9625.2%59.3%$2,824,63727.2%64.3%
2026767,017$26.0514.9%74.2%$1,745,65616.8%81.2%
2027324,445$26.345.5%79.7%$643,7806.2%87.4%
2028244,638$23.9710.0%89.6%$1,069,99710.3%97.7%
2029110,433$23.002.3%91.9%$239,9592.3%100.0%
203000$0.000.0%91.9%$00.0%100.0%
203100$0.000.0%91.9%$00.0%100.0%
2032 & Beyond00$0.000.0%91.9%$00.0%100.0%
Vacant036,106$0.008.1%100.0%$00.0%100.0%
Total/Wtd. Avg.36448,372$25.16100.0% $10,372,219100.0% 

 

 

(1)Information is based on the underwritten rent roll dated August 13, 2021 with rent steps totaling $117,339 through August 2022. Straight-line rent has been underwritten for investment grade tenants totaling $52,946.

(2)Certain tenants may have lease termination options that are exercisable prior to the stated expiration date of the subject lease or leases which are not considered in the lease rollover schedule.

(3)Includes café space.

 

COVID-19 Update. As of September 1, 2021, the Signature Office Portfolio II Properties are open and operating with most tenants working remotely. According to the borrower sponsor, 100.0% of tenants by underwritten base rent and 100.0% of tenants by occupied NRA paid their full July 2021 and August 2021 rent payments. No tenants requested or were granted rent relief. As of September 6, 2021, the Signature Office Portfolio II Mortgage Loan is not subject to any modification or forbearance requests, and its first payment date is October 6, 2021.

 

The Market. The Signature Office Portfolio II Properties are located in the Northern New Jersey office market. The Northern New Jersey office market contains approximately 153.6 million square feet of office inventory with a vacancy rate of 13.9% as of the first quarter of 2021. According to the appraisal, the average asking rent in the first quarter of 2021 was $26.24 PSF, compared to the prior quarter’s average asking rent of $26.19 PSF. Vacancy rates in the market have increased by 0.7% over the previous quarter, from 13.2% to 13.9%.

 

The Signature Office Portfolio II Properties are located in the Route 78 East office submarket. The Route 78 East office submarket contains approximately 18.8 million square feet of office inventory with a vacancy rate of 17.4% in the first quarter of 2021. According to the appraisal, the average asking rent in the first quarter of 2021 was $26.93 PSF, a $0.06 increase from the previous quarter’s average asking rent. Vacancy rates in the Route 78 East office submarket have increased by 2.5% over the previous quarter, from 14.9% to 17.4%.

 

According to the appraisal, the estimated 2021 population within the 121 Chanlon Road property zip code and county was 232,568 and 558,241, respectively. The 2021 estimated average household income within the same parameters was $211,869 and $129,237, respectively.

 

According to the appraisal, the estimated 2021 population within the 106 Allen Road and 110 Allen Road properties zip code and county was 9,442 and 328,529, respectively. The 2021 estimated average household income within the same parameters was $235,481 and $177,970, respectively.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-37

 

 

Office – SuburbanLoan #1Cut-off Date Balance: $71,500,000
VariousSignature Office Portfolio IICut-off Date LTV: 63.3%
Various U/W NCF DSCR: 1.75x
  U/W NOI Debt Yield: 10.5%

 

The following table presents the appraisal’s market rent conclusions:

 

Market Rent Summary
 106 Allen Road and 110 Allen Road121 Chanlon Road
Property SF336,424111,948
Market Rent (PSF)$26.00$26.00
Lease Term (Years)75
Lease Type (Reimbursements)Base Year + ElectricBase Year + Electric
Rent Increase Projection3.0% per annum3.0% per annum
Tenant Improvements (New Tenant) (PSF)$25.00$15.00
Tenant Improvements (Renewal) (PSF)$0.00$0.00

   
Source: Appraisals  

  

The following table presents certain information relating to comparable office leases for the 106 Allen Road and 110 Allen Road properties:

 

Comparable Leases Summary
Property Name/LocationYear Built/ RenovatedTotal
GLA (SF)
Occ. %Distance from SubjectTenant NameLease Date/Term (Mos.)Lease Area (SF)Annual Base Rent PSFLease Type

110 Allen Road

110 Allen Road

Basking Ridge, NJ

1989 / NAP202,740(1)100.0%(1)------

106 Allen Road

106 Allen Road

Basking Ridge, NJ

2000 / NAP133,684(1)73.0%(1)------

10 Independence Boulevard

10 Independence Boulevard

Warren, NJ

1988 / NAP120,528100.0%1.0 milesT-MobileMay-21 / 6031,125$27.00Base Year + Electric

CenterPointe at Bridgewater

1130-1160 U.S. 22

Bridgewater Township, NJ

2001 / NAP331,35476.3%7.9 milesR&J Strategic CommunicationsJun-20 / 604,018$25.33Base Year + Electric

Liberty Corner Executive Center

645 Martinsville Road

Basking Ridge, NJ

1985 / NAP88,00062.7%0.9 milesConfidentialJun-20 / 6010,350$23.50Base Year + Electric

Building 3

1430 U.S. 206

Bedminster, NJ

2000 / NAP32,22068.7%6.3 milesConfidentialApr-20 / 601,951$27.50Base Year + Electric

Mount Airy Corners

180 Mount Airy Road

Basking Ridge, NJ

1980 / NAP50,72961.0%4.6 milesPavonia Life Insurance Company of New YorkJun-21 / 605,032$23.00Base Year + Electric

222 Mount Airy Road

222 Mount Airy Road

Basking Ridge, NJ

1978 / NAP49,00084.7%4.3 milesConfidentialJan-21 / 607,500$24.00Base Year + Electric

 

 

Source: Appraisals, unless otherwise indicated. 

(1)Information is based on the underwritten rent roll dated August 13, 2021.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-38

 

 

Office – SuburbanLoan #1Cut-off Date Balance: $71,500,000
VariousSignature Office Portfolio IICut-off Date LTV: 63.3%
Various U/W NCF DSCR: 1.75x
  U/W NOI Debt Yield: 10.5%

 

The following table presents certain information relating to comparable office leases for the 121 Chanlon Road property:

 

Comparable Leases Summary
Property Name/LocationYear Built/ RenovatedTotal
GLA (SF)
Occ. %Distance from SubjectTenant NameLease Date/Term (Mos.)Lease Area (SF)Annual Base Rent PSFLease Type

121 Chanlon Road

121 Chanlon Road

New Providence, NJ

1990 / NAP111,948(1)100.0%(1)------

Mount Kemble Corporate Center

350 Mount Kemble Avenue

Morristown, NJ

2001 / NAP234,00080.8%11.0 milesWSPJan-21 / 6016,716$28.50Base Year

Florham Park Corporate Center

25 Vreeland Road

Florham Park, NJ

1983 / NAP230,00090.8%8.5 milesConfidentialMay-21 / 6039,060$24.00Base Year

Echo Executive Office Building

899 Mountain Avenue

Springfield, NJ

1989 / 200940,880100.0%7.1 milesConfidentialDec-20 / 601,959$23.00Base Year

Cranford Business Park

11 Commerce Drive

Cranford, NJ

1980 / NAP90,00048.4%10.9 milesConfidentialOct-20 / 6015,311$24.50Base Year

890 Mountain Avenue

890 Mountain Avenue

New Providence, NJ

1977 / NAP81,07590.4%1.9 milesConfidentialSep-20 / 367,748$25.00Base Year

 

 

Source: Appraisal, unless otherwise indicated. 

(1)Information is based on the underwritten rent roll dated August 13, 2021.

 

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 Signature Office Portfolio II Properties:

 

Cash Flow Analysis
 2018(1)201920204/30/2021 TTMUWUW PSF
Base Rent(2)$9,351,454$9,416,393$9,582,870$9,667,563$10,201,934$22.75
Contractual Rent Steps(3)$0$0$0$0$170,285$0.38
Vacant Income$0$0$0$0$927,132$2.07
Reimbursements$685,983$1,096,438$1,231,893$1,187,940$872,989$1.95
Other Income$2,001$3,599$3,346$6,400$6,400$0.01
Vacancy and Concessions

$0 

$0 

$0 

$0 

($927,132) 

($2.07)

Effective Gross Income$10,039,437$10,516,430$10,818,109$10,861,904$11,251,608$25.09
       
Taxes$1,102,174$1,164,219$1,127,102$1,127,685$1,165,969$2.60
Insurance$73,386$80,534$90,819$93,070$113,196$0.25
Other Operating Expenses

$2,540,272

$2,577,907

$2,331,990

$2,288,446

$2,465,662

$5.50

Total Operating Expenses$3,715,832$3,822,660$3,549,911$3,509,200$3,744,828$8.35
       
Net Operating Income$6,323,605$6,693,770$7,268,198$7,352,703$7,506,780$16.74
TI/LC$0$0$0$0$538,046$1.20
Capital Expenditures

$0

$0

$0

$0

$101,319

$0.23

Net Cash Flow$6,323,605$6,693,770$7,268,198$7,352,703$6,867,415$15.32
       
       
Occupancy %(4)89.7%86.9%93.0%91.9%92.4% 
NOI DSCR  (IO)2.39x2.53x2.75x2.78x2.84x 
NOI DSCR  (P&I)1.61x1.71x1.85x1.87x1.91x 
NCF DSCR (IO)2.39x2.53x2.75x2.78x2.60x 
NCF DSCR (P&I)1.61x1.71x1.85x1.87x1.75x 
NOI Debt Yield8.8%9.4%10.2%10.3%10.5% 
NCF Debt Yield8.8%9.4%10.2%10.3%9.6% 

 

 

(1)The borrower sponsor acquired the 106 Allen Road and 110 Allen Road properties in February 2018. January and February 2018 figures were not available and as such, the 10-month 2018 operating statements for the 106 Allen Road and 110 Allen Road properties were annualized for presentation purposes.

(2)UW Base Rent is based on the August 13, 2021 rent roll.

(3)Contractual Rent Steps includes rent steps totaling $117,339 through August 2022 and straight-line rent for investment grade tenants totaling $52,946.

(4)Occupancy % is shown as of December 31 of the corresponding year, unless otherwise indicated. 4/30/2021 TTM Occupancy % represents occupancy as of August 13, 2021. UW Occupancy % represents underwritten economic occupancy.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-39

 

 

Office – SuburbanLoan #1Cut-off Date Balance: $71,500,000
VariousSignature Office Portfolio IICut-off Date LTV: 63.3%
Various U/W NCF DSCR: 1.75x
  U/W NOI Debt Yield: 10.5%

 

Escrows and Reserves.

 

The borrowers deposited at origination approximately (i) $283,201 for property taxes, (ii) $69,012 for insurance, (iii) $1,500,000 for future tenant improvements and leasing commissions, (iv) $524,475 for unfunded obligations and (v) $85,148 for deferred maintenance.

 

Real Estate Taxes and Insurance - The borrowers are required to reserve monthly 1/12 of the estimated annual property taxes (currently approximately $94,400) and 1/12 of the estimated annual insurance premiums (currently approximately $9,433).

 

Recurring Replacements Reserve - The borrowers are required to reserve $8,444 monthly for replacements.

 

TI/LC Reserve - Ongoing deposits into the TI/LC Reserve are required in the amount of $44,837 per month.

 

Major Tenant Reserve - Upon the occurrence of a Major Tenant Trigger Event (as defined below), the borrowers will be required to deposit on each monthly payment date until such Major Tenant Trigger Event is cured $162,700 subject to a cap of $1,950,000. Such amounts will be held for tenant improvements and leasing commissions that may be incurred in connection with re-leasing the Major Tenant (as defined below) space.

 

A “Major Tenant Trigger Event” commences if Regeneron or an approved replacement tenant (a “Major Tenant”) (i) fails to extend its lease by five years or more on or before the date that is 12 months prior to its lease expiration, (ii) defaults under its lease, (iii) goes dark or otherwise ceases operations in its leased space (if such Major Tenant’s credit rating falls below BBB- by S&P or Fitch, and Baa3 by Moody’s), (iv) sublets any or all of its leased space (if such Major Tenant’s credit rating falls below BBB- by S&P or Fitch, and Baa3 by Moody’s), (v) vacates or gives notice to vacate its leased space, (vi) terminates or gives notice to terminate its lease or (vii) becomes a debtor in any bankruptcy or other insolvency proceeding.

 

A Major Tenant Trigger Event will terminate: with regard to clause (ii), upon the Major Tenant curing such default, with regard to clause (iii), (x) upon the Major Tenant resuming ordinary business operations in the entirety of the leased space or (y) if such Major Tenant’s credit rating is upgraded to BBB- or better by Fitch and S&P, and Baa3 or better by Moody’s, with regard to clause (iv), (x) upon the Major Tenant ceasing to sublet any portion of its leased space or (y) if such Major Tenant’s credit rating is upgraded to BBB- or better by Fitch and S&P, and Baa3 or better by Moody’s, with regard to clauses (v) and (vi), upon the written rescission of such Major Tenant’s notice to vacate or terminate, with regard to clause (vii), if the lease for the Major Tenant is assumed or affirmed in such proceeding and the Major Tenant, among other things, is discharged from bankruptcy such that no proceedings are ongoing, and with regard to clauses (i) through (vii) above, upon (x) the full execution and delivery to the lender of an approved lease extension (solely with regard to clause (i) above) or one or more approved replacement leases with respect to the entirety of the Major Tenant’s leased space, (y) delivery of satisfactory estoppels from the Major Tenant or approved replacement tenant(s) and (z) delivery of evidence satisfactory to the lender that all tenant improvements and leasing commissions related to the re-leasing of the Major Tenant space for which the borrowers are responsible have been paid.

 

Lockbox and Cash Management. The Signature Office Portfolio II Mortgage Loan is structured with a hard lockbox and springing cash management. All rents are required to be deposited into an account designated by the borrowers. The Signature Office Portfolio II Mortgage Loan requires that the borrowers deliver tenant direction letters to the tenants directing tenants to pay all rents into the lockbox account. Upon the occurrence and during the continuance of a Trigger Event (as defined below), all funds in the lockbox account are required to be swept daily to a cash management account under the control of the lender to be applied and disbursed in accordance with the Signature Office Portfolio II Mortgage Loan documents and all excess cash flow funds remaining in the cash management account after the application of such funds in accordance with the Signature Office Portfolio II Mortgage Loan documents are required to be held by the lender in an excess cash flow reserve account as additional collateral for the Signature Office Portfolio II Mortgage Loan. To the extent that no Trigger Event is continuing, all excess cash flow funds are required to be disbursed to the borrowers.

 

A “Trigger Event” will commence upon the earliest of the following: (i) the occurrence and continuance of an event of default and (ii) the date on which the debt yield based on the trailing 12-month period is less than 7.25%.

 

A Trigger Event will end: with regard to clause (i), upon the cure of such event of default; and with regard to clause (ii), when the debt yield based on the trailing 12-month period is at least 7.75% for one calendar quarter.

 

Additional Secured Indebtedness (not including trade debts). None.

 

Mezzanine Loan and Preferred Equity. A member of the borrowers is permitted to incur future mezzanine debt (secured by a pledge of direct or indirect equity interests in the borrowers), provided that among other conditions: (i) no event of default is continuing under the Signature Office Portfolio II Mortgage Loan documents; (ii) after giving effect to the mezzanine loan, (a) the debt service coverage ratio is equal to or greater than 1.75x, (b) the debt yield is equal to or greater than 10.6%, and (c) the loan-to-value ratio is equal to or less than 63.6%, in each case with respect to the Signature Office Portfolio II Mortgage Loan and the mezzanine loan together, (iii) the mezzanine loan is co-terminous with the Signature Office Portfolio II Mortgage Loan, (iv) an intercreditor agreement is executed that is acceptable to the rating agencies and reasonably acceptable to the lender; and (v) at the lender’s option, a rating agency confirmation is delivered.

 

Release of Property. Not permitted.

 

Ground Lease. None.

 

Letter of Credit. None.

 

Right of First Offer/Right of First Refusal. None.

 

Terrorism Insurance. The borrowers are required to obtain and maintain property insurance that covers perils of terrorism and acts of terrorism in an amount equal to the full replacement cost of the Signature Office Portfolio II Properties and business interruption insurance for (i) 18 months with a 180-day extended period of indemnity for the 110 Allen Road and 106 Allen Road properties and (ii) 12 months with a 180-day extended period of indemnity for the 121 Chanlon Road property. See “Risk Factors—Risks Relating to the Mortgage Loans—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the prospectus.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-40

 

 

(THIS PAGE INTENTIONALLY LEFT BLANK) 

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-41

 

 

Office – CBDLoan #2Cut-off Date Balance: $51,823,204
161 Avenue of the AmericasOne SoHo SquareCut-off Date LTV: 34.8%
and 233 Spring Street U/W NCF DSCR: 4.88x
New York, NY 10013 U/W NOI Debt Yield: 13.6%

 

 

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-42

 

 

Office – CBDLoan #2Cut-off Date Balance: $51,823,204
161 Avenue of the AmericasOne SoHo SquareCut-off Date LTV: 34.8%
and 233 Spring Street U/W NCF DSCR: 4.88x
New York, NY 10013 U/W NOI Debt Yield: 13.6%

 

 

 

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-43

 

 

 

Mortgage Loan No. 2 – One SoHo Square
 
Mortgage Loan Information Property Information
Mortgage Loan Seller:BMO Single Asset/Portfolio:Single Asset
Credit Assessment (Fitch/KBRA/S&P):BBB-sf/A/NR Location:New York, NY 10013
Original Balance(1):$51,823,204 General Property Type:Office
Cut-off Date Balance(1):$51,823,204 Detailed Property Type:CBD
% of Initial Pool Balance:5.6% Title Vesting:Fee
Loan Purpose:Refinance Year Built/Renovated:1904-1926/2016
Borrower Sponsor:The Gluck Family Trust Size:786,891 SF
Guarantor:The Gluck Family Trust Cut-off Date Balance Per SF(1):$597
Mortgage Rate:2.72466879% Maturity Date Balance Per SF(1):$597
Note Date:7/9/2021 Property Manager:MEL Management Corp. (d/b/a
First Payment Date:9/6/2021  Stellar Management)
Maturity Date:8/6/2028   
Original Term to Maturity:84 months Underwriting and Financial Information(5)
Original Amortization Term:0 months UW NOI:$63,911,313
IO Period:84 months UW NOI Debt Yield(1):13.6%
Seasoning:2 months UW NOI Debt Yield at Maturity(1):13.6%
Prepayment Provisions(2):YM(26),DorYM(52),O(6) UW NCF DSCR(1):4.88x
Lockbox/Cash Mgmt Status:Hard/Springing Most Recent NOI:$51,408,293 (4/30/2021 TTM)
Additional Debt Type(1)(3):Pari Passu/Subordinate/Mezzanine 2nd Most Recent NOI:$46,957,475 (12/31/2020)
Additional Debt Balance(1)(3):$418,176,796/$315,000,000/$120,000,000 3rd Most Recent NOI:$24,995,700 (12/31/2019)
Future Debt Permitted (Type):Yes (Mezzanine) Most Recent Occupancy:92.5% (6/1/2021)
Reserves(4) 2nd Most Recent Occupancy(6):NAP
TypeInitialMonthlyCap 3rd Most Recent Occupancy(6):NAP
RE Tax:$0SpringingN/A Appraised Value (as of):$1,350,000,000 (6/10/2021)
Insurance:$0SpringingN/A Appraised Value Per SF:$1,716
Replacement Reserve:$0Springing$150,000 Cut-off Date LTV Ratio(1):34.8%
TI/LC Reserve:$0Springing$1,500,000 Maturity Date LTV Ratio(1):34.8%

 

Sources and Uses
SourcesProceeds% of Total UsesProceeds% of Total
Senior Notes(1):$470,000,00051.8% Loan Payoff:$900,036,15099.2%
Subordinate Notes(1):$315,000,00034.7% Closing Costs:$7,272,9520.8%
Mezzanine Loan(1):$120,000,00013.2%    
Borrower Sponsor Equity:$2,309,1020.3%    
Total Sources:$907,309,102100.0% Total Uses:$907,309,102100.0%

 

 

(1)The One SoHo Square Mortgage Loan is part of the One SoHo Square Whole Loan (as defined below), which is comprised of 20 pari passu senior promissory notes with an aggregate original principal balance of $470,000,000 (collectively, the “One SoHo Square Senior Notes”) and three pari passu promissory notes that are subordinate to the One SoHo Square Senior Notes with an aggregate original principal balance of $315,000,000 (collectively, the “One SoHo Square Subordinate Notes”, and together with the One SoHo Square Senior Notes, the “One SoHo Square Whole Loan”). The Cut-off Date Balance Per SF, Maturity Date Balance Per SF, UW NOI Debt Yield, UW NOI Debt Yield at Maturity, UW NCF DSCR, Cut-off Date LTV Ratio and Maturity Date LTV Ratio numbers presented above are based on the aggregate Cut-off Date principal balance of the One SoHo Square Senior Notes, without regard to the One SoHo Square Subordinate Notes or the One SoHo Square Mezzanine Loan (as defined below). The Cut-off Date Balance Per SF, Maturity Date Balance Per SF, UW NOI Debt Yield, UW NOI Debt Yield at Maturity, UW NCF DSCR, Cut-off Date LTV Ratio and Maturity Date LTV Ratio numbers based on the entire One SoHo Square Whole Loan are $998, $998, 8.1%, 8.1%, 2.92x, 58.1% and 58.1%, respectively. The Cut-off Date Balance Per SF, Maturity Date Balance Per SF, UW NOI Debt Yield, UW NOI Debt Yield at Maturity, UW NCF DSCR, Cut-off Date LTV Ratio and Maturity Date LTV Ratio numbers based on the combined balance of the One SoHo Square Whole Loan and the One SoHo Square Mezzanine Loan (the “One SoHo Square Total Debt”) are $1,150, $1,150, 7.1%, 7.1%, 2.28x, 67.0% and 67.0%, respectively.

(2)Defeasance of the One Soho Square Mortgage Loan (as defined below) is permitted at any time after the first payment date following the earlier to occur of (a) the end of the two-year period commencing on the closing date of the securitization of the last portion of the One Soho Square Mortgage Loan to be securitized and (b) the end of the three-year period commencing on July 9, 2021. The assumed prepayment lockout period of 26 payments is based on the closing date of this transaction in October 2021.

(3)See “The Mortgage Loan”, “Additional Secured Indebtedness (not including trade debts)” and “Mezzanine Loan and Preferred Equity” below, for a discussion of additional debt.

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

(5)The novel coronavirus pandemic is an evolving situation and could impact the One SoHo Square Whole Loan more severely than assumed in the underwriting of the One SoHo Square Whole Loan and could adversely affect the NOI, NCF and occupancy information, as well as the appraised value and the DSCR, LTV and Debt Yield metrics presented above and herein. See “Risk Factors—Risks Related to Market Conditions and Other External Factors—The Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the prospectus.

(6)Historical occupancies are not presented as the One SoHo Square Property was undergoing lease up.

 

The Mortgage Loan. The second largest mortgage loan (the “One SoHo Square Mortgage Loan”) is part of a fixed rate whole loan secured by the borrowers’ fee interests in a 786,891 SF office property located in New York, New York (the “One SoHo Square Property”). The One SoHo Square Whole Loan was co-originated by Goldman Sachs Bank USA (“GSBI”), DBR Investments Co. Limited (“DBRI”) and Bank of Montreal (“BMO”). The One SoHo Square Mortgage Loan is part of the One SoHo Square Whole Loan with an aggregate outstanding principal balance as of the Cut-off Date of $785.0 million consisting of the 20 senior pari passu One SoHo Square Senior Notes with an aggregate outstanding principal balance as of the Cut-off Date of $470.0 million and the three One SoHo Square Subordinate Notes, which are subordinate to the One SoHo Square Senior Notes and pari passu with each other,

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-44

 

 

Office – CBDLoan #2Cut-off Date Balance: $51,823,204
161 Avenue of the AmericasOne SoHo SquareCut-off Date LTV: 34.8%
and 233 Spring Street U/W NCF DSCR: 4.88x
New York, NY 10013 U/W NOI Debt Yield: 13.5%

   

with an aggregate outstanding principal balance as of the Cut-off Date of $315.0 million. The One SoHo Square Mortgage Loan is evidenced by the non-controlling Notes A-3-C-1, A-3-C-2 and A-3-C-3, with an aggregate outstanding principal balance as of the Cut-off Date of approximately $51.8 million. The One SoHo Square Senior Notes that are not to be included in the MSC 2021-L7 securitization are referred to as the “One SoHo Square Non-Serviced Pari Passu Companion Loans.” The One SoHo Square Whole Loan is serviced pursuant to the trust and servicing agreement for the SOHO 2021-SOHO transaction. See “Description of the Mortgage Pool—The Whole Loans—The Non-Serviced Pari Passu-A/B Whole Loan— The One SoHo Square Whole Loan” and “Pooling and Servicing Agreement—Servicing of the Non-Serviced Mortgage Loans” in the prospectus.

 

Note Summary
NotesOriginal Principal BalanceCut-off Date BalanceNote HolderControlling Interest
A-1-S$685,083$685,083SOHO 2021-SOHOYes
A-1-C-1$53,950,000$53,950,000Benchmark 2021-B28No
A-1-C-2$75,000,000$75,000,000GSBI(1)No
A-1-C-3$50,000,000$50,000,000Benchmark 2021-B28No
A-1-C-4$50,000,000$50,000,000GSBI(1)No
A-1-C-5$50,000,000$50,000,000BCREI(2)No
A-1-C-6$20,000,000$20,000,000BCREI(2)No
A-1-C-7$20,000,000$20,000,000GSBI(1)No
A-1-C-8$2,353,868$2,353,868GSBI(1)No
A-2-S$204,420$204,420SOHO 2021-SOHONo
A-2-C-1$21,050,000$21,050,000Benchmark 2021-B28No
A-2-C-2$20,000,000$20,000,000DBRI(3)No
A-2-C-3$20,000,000$20,000,000DBRI(3)No
A-2-C-4$16,000,000$16,000,000DBRI(3)No
A-2-C-5$10,000,000$10,000,000Benchmark 2021-B28No
A-2-C-6$8,822,928$8,822,928DBRI(3)No
A-3-S$110,497$110,497SOHO 2021-SOHONo
A-3-C-1$24,000,000$24,000,000MSC 2021-L7(4)No
A-3-C-2$16,000,000$16,000,000MSC 2021-L7(4)No
A-3-C-3$11,823,204$11,823,204MSC 2021-L7(4)No
Total Senior Notes$470,000,000$470,000,000  
B-1$215,801,105$215,801,105SOHO 2021-SOHONo
B-2$64,392,265$64,392,265SOHO 2021-SOHONo
B-3$34,806,630$34,806,630SOHO 2021-SOHONo
Whole Loan$785,000,000$785,000,000  

  

 

(1)Held by GSBI and expected to be contributed to one or more future securitization transactions.
(2)Held by Barclays Capital Real Estate Inc. (“BCREI”) and expected to be contributed to one or more future securitization transactions.

(3)Held by DBRI and expected to be contributed to one or more future securitization transactions.

(4)To be contributed by BMO.

 

The Borrower and the Borrower Sponsor. The borrowers are SOHO AOA Owner, LLC, OSS 2016 LLC and 2016 SOHO LLC, as tenants-in-common, each a recycled, singled-purpose Delaware limited liability company with at least two independent directors. The borrower sponsor is comprised of entities controlled by Laurence Gluck or trustees of the Amended and Restated 2013 LG Revocable Trust (d/b/a Stellar Management) and the non-recourse carveout guarantor is The Gluck Family Trust. At origination, in lieu of funding an unfunded obligations reserve, the guarantor also provided a guaranty of certain unfunded obligations including tenant improvements and leasing commissions in an amount equal to $3,142,373.13. Stellar Management (“Stellar”) was founded in 1985 by Laurence Gluck, formerly a partner at New York real estate law firm Dreyer & Traub and a current member of the executive committee of the Real Estate Board of New York. Stellar owns and manages over 12,000 apartments, over two million SF of office space and 1.2 million SF of retail space. Notable New York City projects, past and present, include 14 Wall Street, The Milk Building, 522 Fifth Avenue, 220 Fifth Avenue, Otto Greenpoint, The Windermere, Embassy House, Columbus Square and Independence Plaza. Since its inception, Stellar has partnered with a number of institutions and has been a fiduciary to investors on over 150 transactions. Stellar employs over 700 people.

 

The Property. The One SoHo Square Property is a 786,891 SF, Class A, office property located in New York, New York that was designed by the architecture firm Gensler. The One SoHo Square Property is situated in the Hudson Square / Meatpacking District submarket on the northwest corner of 6th Avenue and Spring Street. The One SoHo Square Property features multiple amenities, including roof decks with panoramic views, building management systems, destination dispatch elevators, 24/7 attended lobby with exclusive key card access, a bike room, a message center, and an online tenant service request system. The One SoHo Square Property serves as the corporate headquarters for Flatiron Health, MAC, Warby Parker, Glossier and Double Verify (through November 2023, at which time Flatiron Health is expected take the Double Verify space through February 2031 as further described below), which together constitute 59.2% of the NRA. As of June 1, 2021, the One SoHo Square Property was 92.5% leased to 14 tenants.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-45

 

 

Office – CBDLoan #2Cut-off Date Balance: $51,823,204
161 Avenue of the AmericasOne SoHo SquareCut-off Date LTV: 34.8%
and 233 Spring Street U/W NCF DSCR: 4.88x
New York, NY 10013 U/W NOI Debt Yield: 13.6%

   

Major Tenants.

 

Flatiron Health (223,402 SF, 28.4% of the net rentable area, 29.0% of underwritten rent). Flatiron Health is an oncology-focused electronic health records company that seeks to accelerate cancer research and improve the quality of care for cancer patients. Founded in 2012, Flatiron Health partners with hundreds of cancer centers and developers of oncology therapeutics to facilitate the collection of patient data for research and development purposes to accelerate and impact treatment worldwide. Flatiron Health’s lease at the One SoHo Square Property commenced in June 2018 and expires in February 2031. Flatiron Health’s lease has two, five-year extension options.

 

Aetna (106,350 SF, 13.5% of the net rentable area, 14.9% of underwritten rent). Aetna provides health insurance, as well as dental, vision and other plans to individuals, families and employers. Founded in 1853 in Hartford, Connecticut, Aetna offers: (i) a range of insurance and employee benefits products, (ii) programs and services that help control rising costs while striving to improve the quality of healthcare and (iii) tools and information to help people make better-informed decisions about their healthcare and financial well-being. Aetna’s lease at the One SoHo Square Property commenced in August 2018 and expires in July 2029. Aetna’s lease has two, one-year or five-year extension options.

 

MAC (88,699 SF, 11.3% of the net rentable area, 13.1% of underwritten rent). MAC, which stands for Make-Up Art Cosmetics (“MAC”), is a makeup and cosmetic supplier. Founded in 1984 in Toronto, Canada by photographer Frank Toskan and salon owner Frank Angelo, MAC is now sold in more than 120 countries around the globe and offers more than 50 collections each year. MAC’s lease at the One SoHo Square Property commenced in November 2017 and expires in March 2034. MAC’s lease has two, five-year extension options.

 

The following table presents a summary regarding the major tenants at the One SoHo Square Property:

 

Tenant Summary
Tenant Name

Credit Rating (Fitch/Moody’s/ 

S&P)(1) 

Tenant SFApprox.% of SFAnnual UW Rent(2)Annual UW Rent PSF(2)App. % of Total Annual UW Rent(2)Lease ExpirationRenewal OptionsTerm. Option
Flatiron Health(3)(4)AA/Aa3/AA223,40228.4%$19,473,782$87.1729.0%2/28/20312 x 5 YrsN
AetnaBBB/Baa2/BBB106,35013.5%9,972,297$93.7714.9%7/31/2029Various(5)N
MACNR/A1/A+88,69911.3%8,784,122$99.0313.1%3/31/20342 x 5 YrsN
Juul Labs(6)NR/NR/NR54,0686.9%6,927,707$128.1310.3%5/31/20322 x 5 YrsN
Warby ParkerNR/NR/NR83,28610.6%6,302,878$75.689.4%1/31/20251 x 5 YrsN
GlossierNR/NR/NR39,6375.0%3,493,168$88.135.2%4/30/20281 x 5 YrsN
Double Verify(7)NR/NR/NR30,6683.9%2,680,371$87.404.0%2/28/2031NAPN
Trader Joe’sNR/NR/NR26,1263.3%2,500,000$95.693.7%5/31/20333 x 5 YrsN
Managed By Q(8)NR/NR/NR27,3343.5%2,365,080$86.533.5%6/30/2028NAPN
AvedaNR/A1/A+20,1942.6%1,827,980$90.522.7%5/31/20251 x 5 YrsN
Subtotal/Wtd. Avg. 699,76488.9%$64,327,385$91.9395.8%   
          
Other Tenants 28,2083.6%$2,812,852$99.724.2%   
Vacant Space 58,9197.5%$0$00.0%   
Total/Wtd. Avg. 786,891100.0%$67,140,237$92.23100.0%   

 

 

(1)Certain ratings are those of the parent entity whether or not the parent entity guarantees the lease.

(2)Annual UW Rent, and Annual UW Rent PSF are based on the underwritten rent roll dated June 1, 2021 with rent steps through August 31, 2022.

(3)Flatiron Health receives a rent abatement of 87.71% for the months of March 2027 through March 2028. Does not include space that has been pre-leased to Flatiron Health (35,523 SF), which is currently occupied by Double Verify (see footnote (7) below) and another tenant.

(4)Flatiron Health originally put up approximately 111,000 SF (approximately 49%) of its leased space for sublease during the COVID-19 pandemic. The tenant currently has approximately 40,890 SF (approximately 17.9%) of its leased space up for sublease, of which 30,668 SF has been subleased to Petal for three years at approximately 35% of Flatiron Health’s contractual rent. We cannot assure you that Flatiron Health will be able to sublease its remaining space or continue paying rent.

(5)Aetna has (i) one, one-year renewal option at 120% of the fixed rent payable immediately preceding the renewal with 12 months’ notice or (ii) one, five-year renewal option at fair-market rent with 15 months’ notice. If Aetna exercises the five-year renewal option, Aetna will subsequently have either (i) one, one-year renewal option at 120% of the fixed rent payable immediately preceding the renewal with 12 months’ notice or (ii) one, five-year renewal option at fair-market rent with 15 months’ notice.

(6)Juul Labs has yet to take occupancy of its space but continues to pay its current rent. This space is presently on the market for sublease. We cannot assure you that this space will be subleased or that Juul Labs will continue to pay rent.

(7)Suite 4 is presently leased to Double Verify through November 30, 2023. Flatiron Health has executed a lease for this space commencing on March 1, 2024. Annual UW Rent depicts Double Verify’s base rent through November 2023 and Flatiron Health’s rent thereafter. Flatiron Health receives a rent abatement on this suite of 91.28% for the months of March 2027 through September 2027 and 58.1% for the month of October 2027.

(8)Additional credit enhancement in the form of a parent company guaranty from WeWork, a letter of credit in the amount of one year of rent and a prohibition on using the space for coworking.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-46

 

 

Office – CBDLoan #2Cut-off Date Balance: $51,823,204
161 Avenue of the AmericasOne SoHo SquareCut-off Date LTV: 34.8%
and 233 Spring Street U/W NCF DSCR: 4.88x
New York, NY 10013 U/W NOI Debt Yield: 13.6%

   

The following table presents certain information relating to the lease rollover at the One SoHo Square Property:) 

 

Lease Rollover Schedule(1)(2)
Year# of Leases
Rolling
SF RollingApprox. %
of Total SF
Rolling
Approx.
Cumulative %
of SF Rolling
Total UW Rent
Rolling(3)
Annual UW
Rent PSF
Rolling(3)
Approx. %
of Total Rent Rolling(3)
Approx.
Cumulative % of
Total Rent
Rolling
MTM000.0%0.0%$0$0.000.0%0.0%
2021000.0%0.0%$0$0.000.0%0.0%
2022000.0%0.0%$0$0.000.0%0.0%
2023(4)000.0%0.0%$0$0.000.0%0.0%
2024000.0%0.0%$0$0.000.0%0.0%
20252103,48013.2%13.2%$8,130,858$78.5712.1%12.1%
202614,8550.6%13.8%$89,652$18.470.1%12.2%
2027000.0%13.8%$0$0.000.0%12.2%
2028266,9718.5%22.3%$5,858,247$87.478.7%21.0%
20291106,35013.5%35.8%$9,972,297$93.7714.9%35.8%
2030000.0%35.8%$0$0.000.0%35.8%
20313254,86232.4%68.2%$22,332,354$87.6333.3%69.1%
2032 & Thereafter5191,45424.3%92.5%$20,756,829$108.4230.9%100.0%
Vacant058,9197.5%100.0%$0$0.000.0%100.0%
Total/Wtd. Avg.14786,891100.0% $67,140,237$92.23100.0% 

 

 

(1)Calculated based on the approximate square footage occupied by each tenant.

(2)Certain tenants may have termination or contraction options (which may become exercisable prior to the originally stated expiration date of the tenant lease) that are not considered in the above Lease Expiration Schedule.

(3)Total UW Rent Rolling and Annual UW Rent PSF Rolling are based on the underwritten rent roll dated June 1, 2021, with rent steps through August 31, 2022.

(4)Double Verify’s lease expires in November 2023. Flatiron Health has pre-leased the space subsequent to the expiration of Double Verify’s lease. Flatiron Health is anticipated to take occupancy of the space in March 2024 until its lease expiration in February 2031 coterminous with the other Flatiron Health spaces. Annual UW Rent represents the terms of the Double Verify Lease. The lease expiration information reflects Flatiron Health’s successor lease.

 

COVID-19 Update. As of September 6, 2021, the One SoHo Square Whole Loan is not subject to any forbearance, modification or debt service relief request. As of September 6, 2021, the borrowers have reported that the One SoHo Square Property is open and operating, with 99.9% of tenants by occupied net rentable area and 99.9% of tenants by underwritten base rent having made their full September 2021 rent payments. No tenants have been granted any rent relief.

 

Market Overview. The One SoHo Square Property is located within the New York City-Jersey City-White Plains metropolitan area and is part of the Hudson Square/Meatpacking Office submarket. The One SoHo Square Property benefits from the area’s mass transit infrastructure that connects Manhattan to the outer boroughs and the surrounding suburbs in the tri-state area. Air transportation is available via JFK International Airport, Newark Liberty International Airport and LaGuardia Airport, all of which are in close proximity to the One SoHo Square Property. Further, Penn Station and Grand Central are located in New York City, offering railroad access to Long Island, New York State, Connecticut and New Jersey. The New York City metropolitan area has a diverse economy, with major employers including JP Morgan Chase & Co., Bank of America, New York-Presbyterian Healthcare System, Macy’s, Verizon Communications, Price Waterhouse Coopers, Delta Air Lines Inc. and Time Warner Inc.

 

As of the first quarter of 2021, the Midtown South Office Market had approximately 3.4 million SF under construction with an overall vacancy rate of 17.5% and average asking rents of $76.60 per SF. As of the first quarter of 2021, the Hudson Square/Meatpacking Office submarket had approximately 988,866 SF under construction with an overall vacancy rate of 6.4% and average asking rents of $79.55 per SF.

 

The appraisal identified seven directly competitive comparable office buildings. The comparable buildings were built between 1910 and 1987 and range in size from 236,512 SF to 2,921,914 SF. Average asking rents ranged from $85.00 to $90.00 per SF.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-47

 

 

Office – CBDLoan #2Cut-off Date Balance: $51,823,204
161 Avenue of the AmericasOne SoHo SquareCut-off Date LTV: 34.8%
and 233 Spring Street U/W NCF DSCR: 4.88x
New York, NY 10013 U/W NOI Debt Yield: 13.6%

   

The following table presents certain information relating to the appraisal’s market rent conclusion for the One SoHo Square Property:

 

Market Rent Summary
 Market Rent (PSF)Lease Term
(Years)
Lease Type
(Reimbursements)
Contract Rent Increase Projection
Office (2-7) West$92.0015Modified Gross2.5% a Year and $7.00/SF every 60 months
Office (8-9) West$105.0015Modified Gross2.5% a Year and $7.00/SF every 60 months
Office (10-13) West$115.0015Modified Gross2.5% a Year and $7.00/SF every 60 months
Office (Mezz-7) East$92.0015Modified Gross2.5% a Year and $7.00/SF every 60 months
Office (8-13) East$97.0015Modified Gross2.5% a Year and $7.00/SF every 60 months
Office (14-15) East$115.0015Modified Gross2.5% a Year and $7.00/SF every 60 months
Retail (Grade) East$150.0010Modified Gross3.0% a Year
Retail (Corner) East$350.0010Modified Gross3.0% a Year
Retail (Grade) West$200.0010Modified Gross3.0% a Year
Retail (Supermarket)$100.0015Modified Gross10.0% every 5 Year
Retail (Large) Spring Street$175.0015Modified Gross10.0% every 5 Year
Lower Level (Storage) East$30.0010Modified Gross3.0% a Year
Lower Level (Storage) West$30.0010Modified Gross3.0% a Year
Sub-Bsmt (Storage) East$20.0010Gross3.0% a Year

Source: Appraisal.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-48

 

 

Office – CBDLoan #2Cut-off Date Balance: $51,823,204
161 Avenue of the AmericasOne SoHo SquareCut-off Date LTV: 34.8%
and 233 Spring Street U/W NCF DSCR: 4.88x
New York, NY 10013 U/W NOI Debt Yield: 13.6%

  

The following table presents comparable office leases with respect to the One SoHo Square Property:

 

Comparable Office Rent Summary
Property/LocationTenant NameTerm (Years)Size (SF)Lease DateRent PSFLease Type

75 Varick Street 

Hudson Square / 

Meatpacking, Midtown South 

Confidential Lease Out

 

16.3

 

161,315

 

June 2021

 

$72.95

 

Modified Gross

 

40 Tenth Avenue 

Hudson Square / 

Meatpacking, Midtown South 

Confidential Lease Out

 

10.6

 

14,300

 

June 2021

 

$133.23

 

Modified Gross

 

40 Tenth Avenue 

Hudson Square / 

Meatpacking, Midtown South 

Confidential Lease Out

 

11.1

 

14,300

 

June 2021

 

$133.08

 

Modified Gross

 

60 Charlton Street 

Hudson Square / 

Meatpacking, Midtown South 

Confidential Lease Out

 

7.8

 

9,200

 

June 2021

 

$99.05

 

Modified Gross

 

60 Charlton Street 

Hudson Square / 

Meatpacking, Midtown South 

Confidential Lease Out

 

10.9

 

9,480

 

June 2021

 

$77.31

 

Modified Gross

 

40 Tenth Avenue 

Hudson Square / 

Meatpacking, Midtown South 

RTW Investments

 

10.0

 

13,815

 

June 2021

 

$107.75

 

Modified Gross

 

345 Park Avenue South 

Flatiron / Union Square, 

Midtown South 

Protara Theraputics

 

7.0

 

10,252

 

December 2020

 

$105.56

 

Modified Gross

 

421 Eighth Avenue 

Far West Side, 

Midtown 

Facebook

 

16.2

 

770,000

 

August 2020

 

$94.16

 

Modified Gross

 

60-74 Gansevoort Street 

Hudson Square / 

Meatpacking, Midtown South 

Match.com

 

11.3

 

40,569

 

May 2020

 

$98.68

 

Modified Gross

 

375 Hudson Street 

Hudson Square / 

Meatpacking, Midtown South 

Lion Re:Sources, Inc.

 

25.0

 

960,225

 

December 2019

 

$87.05

 

Net (Grossed Up)

 

410 Tenth Avenue 

Far West Side, 

Midtown 

Amazon16.2335,408December 2019$86.77

Modified Gross

 

341 Ninth Avenue 

Chelsea, 

Midtown South 

Dentsu Holdings USA16.2322,000December 2019$103.86

Modified Gross

 

550 Washington Street 

Hudson Square / 

Meatpacking, Midtown South 

Google17.01,257,529September 2019$138.82

Net (Grossed Up)

 

295 Lafayette Street 

Noho / Soho, 

Midtown South 

Plaid8.530,733August 2019$97.96

Modified Gross

 

620 Avenue of the Americas 

Flatiron / Union Square, 

Midtown South 

WeWork12.5212,037June 2019$86.68

Modified Gross 

Source: Appraisal.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-49

 

 

Office – CBDLoan #2Cut-off Date Balance: $51,823,204
161 Avenue of the AmericasOne SoHo SquareCut-off Date LTV: 34.8%
and 233 Spring Street U/W NCF DSCR: 4.88x
New York, NY 10013 U/W NOI Debt Yield: 13.6%

 

Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and Underwritten Net Cash Flow at the One SoHo Square Property:

 

Cash Flow Analysis(1)
 201920204/30/2021 TTMUWUW PSF
Base Rent(2)$53,253,724$63,763,493$65,746,242$67,140,237$85.32
Contractual Rent Steps(3)$0$0$0$5,035,662$6.40
Vacant Income$0$0$0$3,588,186$4.56
Total Recoveries$2,129,581$2,664,812$2,973,859$10,451,209$13.28
Other Income(4)$665,493$545,417$410,353$515,692$0.66
Less Vacancy & Credit Loss

($16,604,337) 

($5,059,796) 

($2,158,794) 

($3,588,186) 

($4.56) 

Effective Gross Income$39,444,461$61,913,927$66,971,660$83,142,799$105.66
      
Real Estate Taxes$8,227,689$8,719,383$9,219,628$12,375,948$15.73
Insurance$206,930$243,429$250,248$260,503$0.33
Management Fee$999,290$1,803,666$2,032,696$1,000,000$1.27
Other Expenses

$5,014,852 

$4,189,974 

$4,060,796 

$5,595,035 

$7.11 

Total Expenses$14,448,761$14,956,452$15,563,367$19,231,486$24.44
      
Net Operating Income(5)$24,995,700$46,957,475$51,408,293$63,911,313$81.22
Replacement Reserves$0$0$0$15,738$0.02
TI/LC

$0 

$0 

$0 

$566,788 

$0.72 

Net Cash Flow$24,995,700$46,957,475$51,408,293$63,328,788$80.48
      
Occupancy %(6)NAPNAP92.5%95.9% 
NOI DSCR(7)1.93x3.62x3.96x4.92x 
NCF DSCR(7)1.93x3.62x3.96x4.88x 
NOI Debt Yield(7)5.3%10.0%10.9%13.6% 
NCF Debt Yield(7)5.3%10.0%10.9%13.5% 

 

 

(1)For the avoidance of doubt, no COVID-19 specific adjustments have been made to the lender underwriting.

(2)Underwritten Base Rent is based on the in-place rent roll as of June 1, 2021.

(3)Underwritten Contractual Rent Steps reflects the present value of contractual rent steps from investment grade credit tenants and are taken through the remainder of tenants’ lease terms.

(4)Underwritten Other Income includes a Vertical Decommission Revenue Adjustment of $115,232.

(5)The increase from the 4/30/2021 TTM Net Operating Income to UW Net Operating Income is primarily attributable to the inclusion of the present value of contractual rent step increments over the remainder of the investment-grade tenants’ lease terms ($5,035,662), as well as incremental expense reimbursements to account for adjusted real estate taxes ($6,755,521).

(6)Historical occupancies are not presented as the One SoHo Square Property was undergoing lease up.

(7)The debt service coverage ratios and debt yields are based solely on the One SoHo Square Senior Notes.

 

Escrows and Reserves.

 

Real Estate Taxes – During the continuance of a Cash Sweep Period (as defined below), the borrowers are required to deposit into a real estate tax reserve, on a monthly basis, 1/12 of the reasonably estimated annual real estate taxes.

 

Insurance – During the continuance of a Cash Sweep Period, unless the borrowers maintain a blanket policy in accordance with the One SoHo Square Whole Loan documents, the borrowers are required to deposit into an insurance reserve, on a monthly basis, 1/12 of reasonably estimated insurance premiums.

 

TI/LC Reserve – During the continuance of a Cash Sweep Period, the borrowers are required to deposit into a rollover reserve, an amount equal to the lesser of (i) $65,984 and (ii) the amount that would cause the rollover reserve account to contain $1.5 million.

 

Replacement Reserve – The borrowers are required to deposit into a replacement reserve during the continuance of a Cash Sweep Period, an amount equal to the lesser of (i) $13,197 and (ii) the amount that would cause the replacement reserve account to contain $150,000.

 

Lockbox and Cash Management. The One SoHo Square Whole Loan is structured with a hard lockbox and springing cash management. The borrowers are required to direct each tenant to remit all rents directly to a lender-controlled lockbox account. In addition, the borrowers are required to cause all cash revenues relating to the One SoHo Square Property and all other money received by the borrowers or the property manager with respect to the One SoHo Square Property (other than tenant security deposits) to be deposited into the lockbox account or a lender-controlled cash management account within one business day of receipt. On each business day during the continuance of a Cash Sweep Period, all amounts in the lockbox account are required to be remitted to the cash management account. Provided no Cash Sweep Period is continuing, all amounts in the lockbox account are required to be remitted each business day to a borrower-controlled operating account.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-50

 

 

Office – CBDLoan #2Cut-off Date Balance: $51,823,204
161 Avenue of the AmericasOne SoHo SquareCut-off Date LTV: 34.8%
and 233 Spring Street U/W NCF DSCR: 4.88x
New York, NY 10013 U/W NOI Debt Yield: 13.6%

   

On each due date during the continuance of a Cash Sweep Period (as defined below), all funds on deposit in the cash management account will be applied to debt service, operating expenses, rollover reserve, replacement reserve, extraordinary expenses and mezzanine debt service, in accordance with the payment priorities in the One SoHo Square Whole Loan documents and any excess funds are required to be deposited into an excess cash flow reserve account as additional collateral for the One SoHo Square Whole Loan.

 

“Cash Sweep Period” means a period:

 

(A)commencing on any of the following;

 

(i)an event of default under the One SoHo Square Whole Loan documents and concluding upon a cure of such event of default;

(ii)an event of default under the One SoHo Square Mezzanine Loan and concluding upon a cure or waiver of such event of default;

(iii)the debt yield (as calculated under the related loan documents) on the One SoHo Square Total Debt, as determined as of the last day of any two consecutive fiscal quarters, is less than 5.0% (a “Debt Yield Trigger”), and concluding when the One SoHo Square Total Debt debt yield, determined as of the last day of each of two consecutive fiscal quarters thereafter, exceeds 5.0%; and

(iv)a failure to deliver annual, quarterly or monthly financial reports as and when required under the One SoHo Square Whole Loan documents and concluding when such reports are delivered and indicate that no other Cash Sweep Period is continuing.

 

If a Cash Sweep Period is in effect or would be in effect solely as a result of a Debt Yield Trigger, the borrowers may avoid the commencement of or terminate the continuance of a Cash Sweep Period by either (x) prepaying (or partially defeasing) a portion of the One SoHo Square Whole Loan and/or One SoHo Square Mezzanine Loan, such that the resulting debt yield exceeds 5.0%, or (y) delivering to the lender, as additional collateral (the “One SoHo Square Debt Yield Collateral”), a letter of credit or cash equivalents satisfactory to the lender in an amount (the “One SoHo Square Debt Yield Cure Amount”) that, when subtracted from the sum of the then outstanding principal balance of the One SoHo Square Whole Loan and the One SoHo Square Mezzanine Loan would result in a debt yield that exceeds 5.0%. Thereafter, if the One SoHo Square Debt Yield Cure Amount as of the last day of any fiscal quarter exceeds the aggregate amount of the One SoHo Square Debt Yield Collateral held by the lender, then a Cash Sweep Period will commence unless the borrowers prepay (or partially defease) a portion of the One SoHo Square Whole Loan and/or One SoHo Square Mezzanine Loan, such that the resulting debt yield exceeds 5.0% or increases the amount of the One SoHo Square Debt Yield Collateral to the then-current One SoHo Square Debt Yield Cure Amount.

 

Additional Secured Indebtedness (not including trade debts). In addition to the One SoHo Square Mortgage Loan, the One SoHo Square Property also secures the remaining One SoHo Square Senior Notes (the “One SoHo Square Non-Serviced Pari Passu Companion Loans”), which have an aggregate Cut-off Date principal balance of $418,176,796, and the One SoHo Square Subordinate Notes, which have an aggregate Cut-off Date principal balance of $315,000,000. The One SoHo Square Non-Serviced Pari Passu Companion Loans and the One SoHo Square Subordinate Notes bear interest at the same rate as the One SoHo Square Mortgage Loan. The One SoHo Square Mortgage Loan and the One SoHo Square Non-Serviced Pari Passu Companion Loans are pari passu in right of payment and together are senior in right of payment to the One SoHo Square Subordinate Notes. The holders of the One SoHo Square Mortgage Loan, the One SoHo Square Non-Serviced Pari Passu Companion Loans and the One SoHo Square Subordinate Notes have entered into a co-lender agreement which sets forth the allocation of collections on the One SoHo Square Whole Loan. See “Description of the Mortgage Pool—The Whole Loans—The Non-Serviced Pari Passu-A/B Whole Loan—The One SoHo Square Whole Loan” in the prospectus.

 

Mezzanine Loan and Preferred Equity. Concurrently with the funding of the One SoHo Square Whole Loan, the lender (in such capacity, the “Mezzanine Lender”) also funded a mezzanine loan in the amount of $120.0 million (the “One SoHo Square Mezzanine Loan”). The One SoHo Square Mezzanine Loan is secured by the pledge of the direct equity interest in the borrowers and is coterminous with the One SoHo Square Whole Loan. The One SoHo Square Mezzanine Loan accrues interest at a rate of 5.05000% per annum and requires interest-only payments until its maturity date. The One SoHo Square Mezzanine Loan has been sold to a third-party holder.

 

The One SoHo Square Total Debt as of the origination date is summarized in the following table:

 

One SoHo Square Total Debt Summary
NoteOriginal BalanceInterest RateCumulative UW NCF
DSCR
Cumulative UW NOI
Debt Yield
Cumulative Cut-off
Date LTV
Senior Notes$470,000,0002.72466879%4.88x13.6%34.8%
Subordinate Notes$315,000,0002.72466879%2.92x8.1%58.1%
Mezzanine Loan$120,000,0005.0500%2.28x7.1%67.0%
Total Debt$905,000,0003.0330%2.28x7.1%67.0%

 

Permitted Future Mezzanine or Subordinate Secured Indebtedness. The related loan documents permit future mezzanine financing, subject to satisfaction of certain conditions, including among others, such mezzanine debt (i) is not in excess of $90.5 million, (ii) is subordinate to the One SoHo Square Mezzanine Loan, (iii) is obtained any time after July 9, 2023, (iv) is provided by a qualified lender (as defined in the loan documents), (v) is subject to an intercreditor agreement reasonably acceptable to the lender, (vi) is either coterminous with the One SoHo Square Whole Loan or freely pre-payable without premium or penalty from and after the related One SoHo Square Whole Loan maturity date, (vii) as of the date of its incurrence, does not cause the debt service coverage ratio of the One SoHo Square Total Debt and such additional mezzanine loan, to be less than 2.22x or the debt yield of the One SoHo Square Total Debt and such additional mezzanine loan to be less than 6.82%, (viii) as of the date of its incurrence, does not cause the aggregate loan-to-value ratio of the One SoHo Square Total Debt and such additional mezzanine loan, based on an updated appraisal of the One SoHo Square Property, to be greater than 67.0%, (ix) delivery of a rating agency confirmation and (x) if the mezzanine debt bears a floating rate of interest, execution of an interest rate cap agreement from a counterparty reasonably acceptable to the lender.

 

Release of Property. Not permitted.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-51

 

  

Office – CBDLoan #2Cut-off Date Balance: $51,823,204
161 Avenue of the AmericasOne SoHo SquareCut-off Date LTV: 34.8%
and 233 Spring Street U/W NCF DSCR: 4.88x
New York, NY 10013 U/W NOI Debt Yield: 13.6%

  

Letter of Credit. None.

 

Right of First Offer / Right of First Refusal. None.

 

Ground Lease. None.

 

Terrorism Insurance. The borrowers are required to obtain and maintain an “all risk” property insurance policy that covers perils of terrorism and acts of terrorism in an amount equal to the “full replacement cost” of the One SoHo Square Property together with 24 months of business interruption insurance, provided that such coverage is commercially available. For so long as the Terrorism Risk Insurance Act of 2002, as amended and modified by the Terrorism Risk Insurance Program Reauthorization Act of 2015 (“TRIPRA”) (including any extensions thereof or if another federal governmental program is in effect relating to “acts of terrorism” which provides substantially similar protections) is in effect and continues to cover both domestic and foreign acts of terrorism, the lender is required to accept terrorism insurance which covers against “covered acts” as defined by TRIPRA. If TRIPRA or a subsequent statute is no longer in effect, then the borrowers are required to obtain standalone policies covering terrorist acts, provided if the insurance premiums payable with respect to such policies exceed the Terrorism Premium Cap, the lender may, at its option, purchase such standalone policies, with the borrowers paying such portions of the premiums equal to the Terrorism Premium Cap and the lender paying any portions of such premiums in excess of the Terrorism Premium Cap (without seeking reimbursement from the borrowers). “Terrorism Premium Cap” means an amount equal to the greater of (A) the product of the rate of $0.10 per $100 times the lesser of (1) the outstanding principal balance of the One SoHo Square Whole Loan and (2) the sum of one hundred percent (100%) of the full replacement cost of the One SoHo Square Property and the required amount of rental loss and/or business income interruption insurance and (B) two times the amount of annual insurance premium that is payable at such time for the insurance coverage required pursuant to the One SoHo Square Whole Loan documents (without giving effect to the cost of terrorism coverage). See “Risk Factors—Risks Relating to the Mortgage Loans—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the prospectus.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-52

 

 

(THIS PAGE INTENTIONALLY LEFT BLANK)

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-53

 

Self Storage – Self StorageLoan #3Cut-off Date Balance: $51,050,000
Property Addresses – VariousInland Wentworth Self Storage PortfolioCut-off Date LTV: 48.3%
  UW NCF DSCR: 3.01x
  UW NOI Debt Yield: 9.3%

 

(GRAPHIC) 

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-54

 

 

Self Storage – Self StorageLoan #3Cut-off Date Balance: $51,050,000
Property Addresses – VariousInland Wentworth Self Storage PortfolioCut-off Date LTV: 48.3%
  UW NCF DSCR: 3.01x
  UW NOI Debt Yield: 9.3%

 

(GRAPHIC) 

 

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-55

 

 

Mortgage Loan No. 3 – Inland Wentworth Self Storage Portfolio

 

Mortgage Loan Information Property Information
Mortgage Loan Seller:KeyBank Single Asset/Portfolio:Portfolio
Credit Assessment (Fitch/KBRA/S&P):NR/NR/NR Location:Various
Original Balance:$51,050,000 General Property Type:Self Storage
Cut-off Date Balance:$51,050,000 Detailed Property Type:Self Storage
% of Initial Pool Balance:5.5% Title Vesting:Fee
Loan Purpose:Acquisition Year Built/Renovated:Various/Various
Borrower Sponsor:Inland Private Capital Corporation Size:798,975 SF
Guarantor:Inland Private Capital CorporationCut-off Date Balance per SF:$64
Mortgage Rate:2.9540%Maturity Date Balance per SF:$64
Note Date:7/30/2021 Property Manager:Life Storage Solutions, LLC
First Payment Date:9/1/2021  (Third Party)
Maturity Date:8/1/2031   
Original Term to Maturity:120 months Underwriting and Financial Information(3)
Original Amortization Term:0 months UW NOI(4):$4,737,883
IO Period:120 months UW NOI Debt Yield:9.3%
Seasoning:2 months UW NOI Debt Yield at Maturity:9.3%
Prepayment Provisions:L(25),YM1(92),O(3) UW NCF DSCR:3.01x
Lockbox/Cash Mgmt Status:None/Springing Most Recent NOI(4):$4,246,152 (5/31/2021 TTM)
Additional Debt Type:NAP 2nd Most Recent NOI(4):$3,818,358 (12/31/2020)
Additional Debt Balance:NAP 3rd Most Recent NOI:NAP
Future Debt Permitted (Type):No (NAP) Most Recent Occupancy:93.2% (7/9/2021)
Reserves(1)(2) 2nd Most Recent Occupancy(5):86.1% (12/31/2020)
TypeInitialMonthlyCap 3rd Most Recent Occupancy(5):86.7% (12/31/2019)
RE Tax:$0SpringingN/A Appraised Value (as of)(6):$105,800,000 (7/19/2021)
Insurance:$0SpringingN/A Appraised Value per SF(6):$132
Recurring Replacements:$180,000Springing$180,000 Cut-off Date LTV Ratio(6):48.3%
     Maturity Date LTV Ratio(6):48.3%
        
Sources and Uses
SourcesProceeds% of Total UsesProceeds% of Total
Loan Amount:$51,050,00046.2% Purchase Price:$102,100,00092.5%
Sponsor Equity:$59,336,55953.8% Reserves(2):$6,946,9436.3%
    Closing Costs:$1,339,6161.2%
Total Sources:$110,386,559100.0% Total Uses:$110,386,559100.0%

 

 

(1)See “Escrows and Reserves” below for further discussion of reserve requirements.

(2)Under the terms of the master lease, described under “Delaware Statutory Trust Master Lease” below, the borrower funded $6,766,943 at loan origination into a trust reserve account for the benefit of the borrower, which is collateral for the Inland Wentworth Self Storage Portfolio Mortgage Loan (as defined below) but is not held with the lender and is separate from the $180,000 initial replacements reserve. Collectively, the initial replacement reserve and the trust reserve account will be used to pay for (i) repairs and replacements of the structure, foundation, roof, exterior walls, and parking lot improvements at the Inland Wentworth Self Storage Portfolio Properties (as defined below), (ii) leasing commissions, (iii) any environmental costs, (iv) any repairs identified in the property condition reports, (v) insurance deductibles and (vi) any other necessary property improvements.

(3)The novel coronavirus pandemic is an evolving situation and could impact the Inland Wentworth Self Storage Portfolio Mortgage Loan more severely than assumed in the underwriting of the Inland Wentworth Self Storage Portfolio Mortgage Loan and could adversely affect the NOI, NCF and occupancy information, as well as the appraised value and the DSCR, LTV and Debt Yield metrics presented above and herein. See “Risk FactorsRisks Related to Market Conditions and Other External FactorsThe Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the prospectus.

(4)The increase in UW NOI from Most Recent NOI and 2nd Most Recent NOI is primarily driven by the seller increasing occupancy at several of the Inland Wentworth Self Storage Portfolio Properties, with occupancy for the Inland Wentworth Self Storage Portfolio (as defined below) increasing from 86.1% as of December 31, 2020 to 93.2% as of July 9, 2021.

(5)2nd Most Recent Occupancy only represents three of the Inland Wentworth Self Storage Portfolio Properties and 3rd Most Recent Occupancy only represents six of the Inland Wentworth Self Storage Portfolio Properties due to the seller of the Inland Wentworth Self Storage Portfolio Properties providing limited occupancy history as a result of multiple changes in operators and/or managers at several of the Inland Wentworth Self Storage Portfolio Properties over the past few years.

(6)The Appraised Value reflects an “as-portfolio” appraised value, which includes a 3.7% portfolio premium based on a portfolio valuation of the Inland Wentworth Self Storage Portfolio Properties. The Appraised Value excluding the portfolio premium is $101,980,000. The Cut-off Date LTV Ratio and Maturity Date LTV Ratio assuming the $101,980,000 value are 50.1% and 50.1%, respectively. See “Inland Wentworth Self Storage Portfolio Properties Summary” chart below for individual appraised values for the Inland Wentworth Self Storage Portfolio Properties.

 

The Mortgage Loan. The third largest mortgage loan (the “Inland Wentworth Self Storage Portfolio Mortgage Loan”) is evidenced by a promissory note in the original principal amount of $51,050,000. The Inland Wentworth Self Storage Portfolio Mortgage Loan is secured by a first priority fee mortgage encumbering 15 self-storage facilities located in six states (collectively, the “Inland Wentworth Self Storage Portfolio” or “Inland Wentworth Self Storage Portfolio Properties”). Proceeds from the Inland Wentworth Self Storage Portfolio Mortgage Loan were used to acquire the Inland Wentworth Self Storage Portfolio Properties for $102.1 million, fund the trust reserve account and the recurring replacements reserve, and pay closing costs.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-56

 

 

Self Storage – Self StorageLoan #3Cut-off Date Balance: $51,050,000
Property Addresses – VariousInland Wentworth Self Storage PortfolioCut-off Date LTV: 48.3%
  UW NCF DSCR: 3.01x
  UW NOI Debt Yield: 9.3%

 

The Borrower and the Borrower Sponsor. The borrower is Self-Storage Portfolio XIII DST, a newly formed Delaware statutory trust (“DST”) that is structured to be bankruptcy-remote with one independent director. The master tenant is Self-Storage Portfolio XIII LeaseCo, L.L.C., a Delaware limited liability company (“Master Tenant”) and the signatory trustee is Self-Storage Portfolio XIII Exchange, L.L.C., a Delaware limited liability company (“Signatory Trustee”). See “Delaware Statutory Trust Master Lease” below.

 

Inland Private Capital Corporation (“IPCC”) is the non-recourse carveout guarantor and the borrower sponsor with respect to the Inland Wentworth Self Storage Portfolio Mortgage Loan. IPCC reported that as of December 31, 2020 it had sponsored 266 1031-exchange private placement programs that have provided approximately $6.3 billion in equity and included 748 properties. IPCC reported approximately $9.0 billion in assets under management for the same period.

 

The Properties. The Inland Wentworth Self Storage Portfolio Properties are comprised of 15 self-storage properties located in six states. Five of the Inland Wentworth Self Storage Portfolio Properties comprising approximately 49.4% of the UW NOI are located in Arizona, four in the Phoenix metropolitan area and one in Tucson. Five of the Inland Wentworth Self Storage Portfolio Properties comprising approximately 27.7% of the UW NOI are located in San Antonio, Texas. Two of the Inland Wentworth Self Storage Portfolio Properties comprising approximately 4.5% of the UW NOI are located in the Atlanta, Georgia metropolitan area. The three remaining properties in the Inland Wentworth Self Storage Portfolio comprise approximately 9.8%, 4.6%, and 4.1% of the UW NOI and are located in Portland, Oregon, Lake Mary, Florida, and Vancouver, Washington, respectively. The Inland Wentworth Self Storage Portfolio Properties were built between 1977 and 2009. The Inland Wentworth Self Storage Portfolio Properties range from 22,912 to 156,896 SF and contain a total of 6,162 storage units. Approximately 13.4% of the storage units are climate controlled. Nine of the Inland Wentworth Self Storage Portfolio Properties contain leasable parking spaces, for a total of 407 spaces that are 91.4% leased as of July 9, 2021. Occupancy across the Inland Wentworth Self Storage Portfolio Properties was 93.2% as of July 9, 2021 and individual occupancies range between 81.1% and 98.1%.

 

The following table presents certain information with respect to each of the Inland Wentworth Self Storage Portfolio Properties:

 

                                                      Inland Wentworth Self Storage Portfolio Properties Summary
Property NameCityStateAllocated Loan
Amount (“ALA”)
% of ALAAppraised ValueAppraised Value per SFUW NOI% of UW NOI
MesaMesaAZ$8,280,20416.2%$15,150,000$184$775,48416.4%
PhoenixPhoenixAZ$6,429,08512.6%$12,550,000$206$573,42912.1%
CinnabarPhoenixAZ$5,978,92011.7%$12,550,000$203$520,61211.0%
Loop 410San AntonioTX$5,842,86411.4%$10,700,000$68$560,10411.8%
PortlandPortlandOR$4,060,9638.0%$7,400,000$211$462,3419.8%
Perrin BeitelSan AntonioTX$3,812,1737.5%$7,000,000$70$356,8487.5%
GlendaleGlendaleAZ$3,400,6526.7%$6,470,000$138$301,5546.4%
Lake MaryLake MaryFL$2,502,0184.9%$5,550,000$145$219,6744.6%
IngramSan AntonioTX$2,355,2254.6%$5,190,000$102$208,6564.4%
VancouverVancouverWA$2,114,2284.1%$4,000,000$169$193,4974.1%
TucsonTucsonAZ$1,865,6883.7%$3,470,000$142$167,3773.5%
DuluthDuluthGA$1,547,5553.0%$3,300,000$85$138,6742.9%
San PedroSan AntonioTX$1,188,4512.3%$2,500,000$81$107,8382.3%
Vance JacksonSan AntonioTX$860,2251.7%$2,800,000$113$78,6721.7%
Peachtree CornersPeachtree CornersGA$811,7491.6%$3,350,000$146$73,1241.5%
Total/Wtd. Avg.   $51,050,000100.0% $105,800,000(1)  $132(1)$4,737,883100.0%
          

 

(1)The Total Appraised Value reflects an “as-portfolio” appraised value, which includes a 3.7% premium based on a portfolio valuation of the Inland Wentworth Self Storage Portfolio Properties. The sum of the Appraised Values of each of the Inland Wentworth Self Storage Portfolio Properties on an individual basis, which are reflected in the table above, excluding the portfolio premium, is $101,980,000, or approximately $128 per SF.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-57

 

 

Self Storage – Self StorageLoan #3Cut-off Date Balance: $51,050,000
Property Addresses – VariousInland Wentworth Self Storage PortfolioCut-off Date LTV: 48.3%
  UW NCF DSCR: 3.01x
  UW NOI Debt Yield: 9.3%

 

The following table presents certain information with respect to each of the Inland Wentworth Self Storage Portfolio Properties:

 

                           Inland Wentworth Self Storage Portfolio Properties Collateral Summary
Property NameYear BuiltYear RenovatedNRA (SF)(1)

Number of Buildings

Number of Stories

Occupancy(1)Total Units(1)Climate Controlled Units(1)Leasable Parking Spaces(1)
Mesa1983NAP82,18014194.2%790298133
Phoenix1986NAP60,9903296.6%708011
Cinnabar1985202061,8226291.2%5341010
Loop 4101985NAP156,89622194.8%764017
Portland1980NAP35,0567191.2%368015
Perrin Beitel1983NAP100,45811190.2%67000
Glendale1985NAP46,78612191.7%31300
Lake Mary2001, 2009NAP38,2538193.9%2312962
Ingram1999NAP51,1009198.0%4471240
Vancouver1977NAP23,7005195.1%225050
Tucson1978, 1981NAP24,5207198.0%253086
Duluth1986NAP38,7005193.7%257025
San Pedro1985NAP30,7775181.1%19100
Vance Jackson1991NAP24,8253187.7%2491128
Peachtree Corners1992NAP22,9121298.1%1621620
Total/Wtd. Avg.  798,975  93.2% 6,162 826407
            

 

Source: Appraisal, unless otherwise indicated.

(1)Based on the underwritten rent roll dated July 9, 2021.

 

The following table presents historical occupancy percentages at the Inland Wentworth Self Storage Portfolio Properties:

 

Inland Wentworth Self Storage Portfolio Properties Historical Occupancy
 
Property Name12/31/2019(1)12/31/2020(1)7/9/2021(2)
Mesa81.6%84.1%94.2%
PhoenixNAVNAV96.6%
CinnabarNAVNAV91.2%
Loop 41087.4%88.4%94.8%
PortlandNAVNAV91.2%
Perrin Beitel89.1%84.1%90.2%
Glendale86.4%NAV91.7%
Lake MaryNAVNAV93.9%
IngramNAVNAV98.0%
VancouverNAVNAV95.1%
Tucson90.9%NAV98.0%
DuluthNAVNAV93.7%
San PedroNAVNAV81.1%
Vance JacksonNAVNAV87.7%
Peachtree Corners

86.3% 

NAV 

98.1% 

Inland Wentworth Self Storage Portfolio Properties86.7%86.1%93.2%

 

 

(1)Occupancy history was provided by the seller and is very limited due to multiple changes in operators and/or managers at several of the Inland Wentworth Self Storage Portfolio Properties over the past few years.

(2)Based on the underwritten rent roll dated July 9, 2021.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-58

 

 

Self Storage – Self StorageLoan #3Cut-off Date Balance: $51,050,000
Property Addresses – VariousInland Wentworth Self Storage PortfolioCut-off Date LTV: 48.3%
  UW NCF DSCR: 3.01x
  UW NOI Debt Yield: 9.3%

 

The Markets. The Inland Wentworth Self Storage Portfolio Properties are located in 10 cities across six states.  Based on the rent comparables, the appraisal concluded to market rents of $0.66 to $1.84 PSF and market vacancy rates of 5.0% to 15.0% for the Inland Wentworth Self Storage Portfolio Properties.  Based on the rent roll dated July 9, 2021, the Inland Wentworth Self Storage Portfolio Properties have in place rents between $0.67 to $1.85 PSF and vacancy rates between 1.9% to 18.9%.

 

The following table presents certain information relating to the rent comparables and the appraisal’s market rent conclusions for the Inland Wentworth Self Storage Portfolio Properties:

 

Market Rent Summary
Property NameRent Comparables
Average Vacancy
Appraisal Stabilized
Vacancy
Appraisal
Concluded Rent PSF
In Place
Vacancy(1)
In Place Rent PSF(1)
Mesa8.5%7.0%$1.135.8%$1.08
Phoenix8.7%6.0%$1.203.4%$1.24
Cinnabar6.6%6.0%$1.728.8%$1.23
Loop 41011.6%12.0%$0.665.2%$0.67
Portland8.8%10.0%$1.848.8%$1.85
Perrin Beitel8.0%10.0%$0.959.8%$0.74
Glendale10.0%7.0%$1.008.3%$0.94
Lake Mary9.2%10.0%$1.286.1%$0.90
Ingram10.1%10.0%$1.092.0%$0.82
Vancouver12.5%10.0%$1.384.9%$1.37
Tucson10.5%8.0%$1.072.0%$1.10
Duluth9.6%15.0%$0.896.3%$0.95
San Pedro8.0%10.0%$0.9318.9%$0.82
Vance Jackson9.1%10.0%$1.3112.3%$0.99
Peachtree Corners5.0%5.0%$0.901.9%$0.93

 

Source: Appraisal, unless otherwise indicated.

(1)Based on the underwritten rent roll dated July 9, 2021.

 

The following table presents certain 2021 demographic information for the Inland Wentworth Self Storage Portfolio Properties:

 

Demographics Summary
Property NameCity, State

1-mile

 Population 

3-mile

Population

5-mile Population1-mile Median Household Income

3-mile

Median Household Income

5-mile Median Household Income
MesaMesa, AZ15,68491,466296,783$48,767$48,353$51,122
PhoenixPhoenix, AZ24,580202,715452,735$43,216$48,230$50,791
CinnabarPhoenix, AZ16,093102,146352,613$51,123$64,443$57,478
Loop 410San Antonio, TX13,643126,918301,980$40,220$52,754$54,183
PortlandPortland, OR8,29198,881277,545$81,408$78,599$73,861
Perrin BeitelSan Antonio, TX13,13897,465279,357$38,592$50,712$58,358
GlendaleGlendale, AZ21,275218,682541,448$39,126$39,460$44,477
Lake MaryLake Mary, FL7,04052,946156,627$80,478$82,232$72,850
IngramSan Antonio, TX15,402118,706374,554$42,354$44,767$47,345
VancouverVancouver, WA14,98967,206200,869$60,560$58,597$67,525
TucsonTucson, AZ15,73897,362217,980$36,313$38,184$44,192
DuluthDuluth, GA4,05073,138202,132$75,038$97,291$101,503
San PedroSan Antonio, TX13,492133,569345,270$42,350$49,523$45,425
Vance JacksonSan Antonio, TX20,380154,033410,818$34,168$42,375$43,825
Peachtree CornersPeachtree Corners, GA5,76674,375242,564$82,348$63,329$58,334

Source: Third party market research report.

 

COVID-19 Update. The Inland Wentworth Self Storage Portfolio Mortgage Loan is current as of its September 2021 debt service payment and is not subject to any forbearance, modification or debt service relief request. As of September 15, 2021, all the Inland Wentworth Self Storage Portfolio Properties are open and operating. The borrower sponsor provided an accounts receivable report dated September 15, 2021, which showed approximately $122,940 (1.7% of underwritten base rent) more than 30 days delinquent. No lease modifications or rent relief was granted.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-59

 

 

Self Storage – Self StorageLoan #3Cut-off Date Balance: $51,050,000
Property Addresses – VariousInland Wentworth Self Storage PortfolioCut-off Date LTV: 48.3%
  UW NCF DSCR: 3.01x
  UW NOI Debt Yield: 9.3%

 

Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and the Underwritten Net Cash Flow of the Inland Wentworth Self Storage Portfolio:

 

Cash Flow Analysis(1) 
  2020 5/31/2021 TTM UW UW Per SF 
Gross Potential Rent(2) $9,272,651 $7,793,351 $9,062,462 $11.34 
Parking Income(3) $0 $0 $441,705 $0.55 
Other Income(4) $606,724 $655,159 $683,575 $0.86 
Vacancy(2) ($1,897,993) $0 ($1,300,231) ($1.63) 
Credit Loss ($159,076) ($171,954) ($173,822) ($0.22) 
Concessions ($271,196) ($252,820) ($306,442) ($0.38) 
Effective Gross Income $7,551,109 $8,023,736 $8,407,246 $10.52 
          
Real Estate Taxes $910,758 $909,138 $1,025,853 $1.28 
Insurance $150,705 $165,112 $122,470 $0.15 
Other Expenses $2,671,288 $2,703,333 $2,521,040 $3.16 
Total Expenses $3,732,751 $3,777,584 $3,669,363 $4.59 
          
Net Operating Income(5) $3,818,358 $4,246,152 $4,737,883 $5.93 
Capital Expenditures $0 $0 $135,425 $0.17 
Net Cash Flow $3,818,358 $4,246,152 $4,602,458 $5.76 
          
Occupancy %(6) 86.1% 93.2% 80.4%   
NOI DSCR 2.50x 2.78x 3.10x   
NCF DSCR 2.50x 2.78x 3.01x   
NOI Debt Yield 7.5% 8.3% 9.3%   
NCF Debt Yield 7.5% 8.3% 9.0%   

 

 

(1)For the avoidance of doubt, no COVID-19 specific adjustments have been made to the lender UW.

(2)The seller-provided financials for 5/31/2021 TTM are inconsistent in the reporting of vacant rent across the Inland Wentworth Self Storage Portfolio Properties, with vacant rent either included as a separate line item or netted out of Gross Potential Rent. Therefore, 5/31/2021 TTM Gross Potential Rent is reported net of vacant rent.

(3)Parking Income is included in Gross Potential Rent for 2020 and 5/31/2021 TTM.

(4)Other Income is comprised of tenant paid insurance, merchandise sales, and fee income, as well as billboard income for the Portland and Duluth properties.

(5)The increase in UW Net Operating Income from 5/31/2021 TTM Net Operating Income is primarily driven by the seller increasing occupancy at several of the Inland Wentworth Self Storage Portfolio Properties, with occupancy for the Inland Wentworth Self Storage Portfolio increasing from 86.1% as of December 31, 2020 to 93.2% as of July 9, 2021.

(6)2020 Occupancy % is as of December 31, 2020 and only represents occupancy for the Mesa, Loop 410, and Perrin Beitel properties due to limited occupancy history available from the seller. 5/31/2021 TTM Occupancy % is as of July 9, 2021. UW Occupancy % represents underwritten economic occupancy.

 

Delaware Statutory Trust Master Lease. The borrower has master leased the Inland Wentworth Self Storage Portfolio Properties to the Master Tenant, which is ultimately owned by the guarantor. The Master Tenant is a Delaware limited liability company structured to be bankruptcy-remote. The master lease generally imposes responsibility on the Master Tenant for the operation, maintenance and management of the Inland Wentworth Self Storage Portfolio Properties and payment of all expenses incurred in the maintenance and repair of the Inland Wentworth Self Storage Portfolio Properties, other than capital expenses. The Master Tenant’s interest in all tenant rents was assigned directly to the lender. The master lease is subordinate to the Inland Wentworth Self Storage Portfolio Mortgage Loan and, upon an event of default under the Inland Wentworth Self Storage Portfolio Mortgage Loan documents, the lender has the right to cause the termination of the master lease.

 

The borrower may (i) convert to a different form of entity under Delaware law (a “Conversion Event”) or (ii) transfer one or more of the Inland Wentworth Self Storage Portfolio Properties to a new special purpose entity owned by the same beneficial owners as the borrower in substantially the same proportions as immediately prior to the transfer of the related mortgaged properties (a “Drop Down Contribution”). The lender may deliver a written notice (a “Conversion Notice”) to the borrower and the Signatory Trustee if one or more of the Inland Wentworth Self Storage Portfolio Properties is in jeopardy of being foreclosed upon due to an event of default, and the borrower is required to effect a Conversion Event or a Drop Down Contribution within 10 business days from its receipt of Conversion Notice unless it delivers a tax opinion (a “Conversion Opinion”) outlining (i) the borrower is able to remedy the default situation giving rise to the jeopardy of foreclosure or (ii) that effectuating a Conversion Event or Drop Down Contribution, in light of the circumstances, would not reasonably improve the ability of the borrower to remedy the default situation. If the borrower fails to remedy the default situation within 30 days of the lender’s receipt of the Conversion Opinion then the borrower is required to effect a Conversion Event or Drop Down Contribution, as applicable. See “Description of the Mortgage Pool—Mortgage Pool Characteristics—Delaware Statutory Trusts” in the prospectus.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-60

 

 

Self Storage – Self StorageLoan #3Cut-off Date Balance: $51,050,000
Property Addresses – VariousInland Wentworth Self Storage PortfolioCut-off Date LTV: 48.3%
  UW NCF DSCR: 3.01x
  UW NOI Debt Yield: 9.3%

 

Escrows and Reserves.

 

Real Estate Taxes – The borrower is required to deposit into a real estate tax reserve, on a monthly basis, 1/12 of the estimated annual real estate taxes for each respective property; provided, such monthly deposits will be waived for each applicable property so long as (i) no event of default exists, (ii) the borrower provides the lender, at least 10 days prior to the date on which such taxes are due, satisfactory evidence that all applicable taxes have been paid, and (iii) no DSCR Trigger Event (as defined below) has occurred.

 

Insurance – The borrower is required to deposit into an insurance reserve, on a monthly basis, 1/12 of estimated insurance premiums for each respective property; provided, such monthly deposits will be waived for each applicable property so long as (i) no event of default exists, (ii) no DSCR Trigger Event has occurred, and (iii) the borrower maintains a blanket insurance policy acceptable to the lender.

 

Recurring Replacements – The Inland Wentworth Self Storage Portfolio Mortgage Loan documents provide for an upfront reserve of $180,000 for approved capital expenditures, and if the balance of the reserve falls below $180,000, ongoing monthly deposits of $11,285 into such reserve for approved capital expenditures, until such time as the reserve is restored to $180,000.

 

Lockbox and Cash Management. The Inland Wentworth Self Storage Portfolio Mortgage Loan is structured with no lockbox and with springing cash management. Within five business days of the borrower’s receipt of the lender’s notice that a Cash Sweep Event has occurred, the borrower is required to establish and maintain a cash management account controlled by the lender and the borrower, Master Tenant, or property manager are required to send direction letters to all tenants under commercial leases instructing them to deposit all rents directly into the cash management account. Notwithstanding the foregoing, the borrower, Master Tenant, property manager and asset manager are required to deposit all revenues otherwise received into the cash management account within two business days of receipt. During the continuance of a Cash Sweep Event, all sums on deposit in the cash management account are required to be applied and disbursed in accordance with the Inland Wentworth Self Storage Portfolio Mortgage Loan documents, and in each case in connection with a Cash Sweep Event caused by a DSCR Trigger Event, all excess cash will be held by the lender as additional collateral for the Inland Wentworth Self Storage Portfolio Mortgage Loan.

 

A “Cash Sweep Event” will commence upon:

 

(1)the occurrence of an event of default and will continue until such event of default is cured; or

 

(2)the date on which the debt service coverage ratio as calculated in the Inland Wentworth Self Storage Portfolio Mortgage Loan documents based on the trailing three-month period is less than 1.95x (a “DSCR Trigger Event”) and will continue until such time as the debt service coverage ratio for two consecutive quarters based upon the trailing three-month period immediately preceding the date of determination is at least 2.00x.

 

Additional Secured Indebtedness (not including trade debts). None.

 

Mezzanine Loan and Preferred Equity. Not permitted.

 

Release of Property. At any time after September 1, 2023, and prior to the Inland Wentworth Self Storage Portfolio Mortgage Loan maturity date, the borrower may obtain the release of any of the Inland Wentworth Self Storage Portfolio Properties, provided that, among other things, (i) no event of default has occurred and is continuing, (ii) the borrower prepays a portion of the Inland Wentworth Self Storage Portfolio Mortgage Loan equal to 120% of the allocated loan amount of the property being released (the “Release Amount”), and if such property is released prior to May 2, 2031, the payment of a yield maintenance premium pursuant to the Inland Wentworth Self Storage Portfolio Mortgage Loan documents, (iii) the debt service coverage ratio for the remaining properties following the release is no less than the greater of (x) the debt service coverage ratio for the 12 calendar months immediately preceding such release (provided, however, that for the purposes of this clause (x) the debt service coverage ratio will be deemed to be no greater than 3.01x) and (y) 3.01x, (iv) the debt yield for the remaining properties is no less than the greater of (x) the debt yield for the remaining properties for the 12 calendar months immediately preceding such release (provided, however, that for the purposes of this clause (x) the debt yield will be deemed to be no greater than 9.02%) and (y) 9.02%, (v) the loan-to-value ratio for the remaining properties is no greater than the lesser of (x) the loan-to-value ratio immediately preceding such release and (y) 48.25% (provided, however, that this clause (v) will not apply to the release of any individual property to the extent that, after giving effect to such release, the aggregate allocated loan amount of all the individual properties which have been released is less than 20% of the total original principal balance), and (vi) the release is permitted under REMIC requirements.

 

Right of First Offer / Right of First Refusal. None.

 

Ground Lease. None.

 

Letter of Credit. None.

 

Terrorism Insurance. The borrower is required to obtain and maintain an “all risk” property insurance policy that covers perils of terrorism and acts of terrorism in an amount equal to the “full replacement cost” of the Inland Wentworth Self Storage Portfolio Properties and business interruption insurance of at least 18 months with a 180-day extended period of indemnity. See “Risk Factors—Risks Relating to the Mortgage Loans—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the prospectus.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-61

 

 

Retail – AnchoredLoan #4Cut-off Date Balance: $47,125,000
1614-1959 South Signal Butte RoadSuperstition GatewayCut-off Date LTV: 68.5%
10720-10746 East Baseline Road U/W NCF DSCR: 1.72x
Mesa, AZ 85209 U/W NOI Debt Yield: 10.3%

 

(GRAPHIC) 

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-62

 

 

Retail – AnchoredLoan #4Cut-off Date Balance: $47,125,000
1614-1959 South Signal Butte RoadSuperstition GatewayCut-off Date LTV: 68.5%
10720-10746 East Baseline Road U/W NCF DSCR: 1.72x
Mesa, AZ 85209 U/W NOI Debt Yield: 10.3%

 

(GRAPHIC) 

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-63

 

 

Retail – AnchoredLoan #4Cut-off Date Balance: $47,125,000
1614-1959 South Signal Butte RoadSuperstition GatewayCut-off Date LTV: 68.5%
10720-10746 East Baseline Road U/W NCF DSCR: 1.72x
Mesa, AZ 85209 U/W NOI Debt Yield: 10.3%

 

(GRAPHIC) 

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-64

 

 

Mortgage Loan No. 4 – Superstition Gateway

 

Mortgage Loan Information Property Information
Mortgage Loan Seller:KeyBank Single Asset/Portfolio:Single Asset
Credit Assessment (Fitch/KBRA/S&P):NR/NR/NR Location:Mesa, AZ 85209
Original Balance(1):$47,125,000 General Property Type:Retail
Cut-off Date Balance(1):$47,125,000 Detailed Property Type:Anchored
% of Initial Pool Balance:5.1% Title Vesting:Fee
Loan Purpose:Refinance Year Built/Renovated:2006-2007/2018-2021
Borrower Sponsors:Daniel S. Smith, DANCIN Trust and Size:495,204 SF
 Deck, L.L.C.Cut-off Date Balance per SF(1):$156
Guarantors:Daniel S. Smith, DANCIN Trust andMaturity Date Balance per SF(1):$141
 Deck, L.L.C.Property Manager:Troon Management Company
Mortgage Rate:3.6200% (borrower-related)
Note Date:9/16/2021   
First Payment Date:11/1/2021   
Maturity Date:10/1/2031 Underwriting and Financial Information(4)
Original Term to Maturity:120 months UW NOI:$7,914,811
Original Amortization Term:360 months UW NOI Debt Yield(1):10.3%
IO Period:60 months UW NOI Debt Yield at Maturity(1):11.4%
Seasoning:0 months UW NCF DSCR(1):2.56x (IO)     1.72x (P&I)
Prepayment Provisions(2):L(24),D(92),O(4) Most Recent NOI:$7,855,520 (6/30/2021 TTM)
Lockbox/Cash Mgmt Status:Hard/Springing 2nd Most Recent NOI:$7,825,009 (12/31/2020)
Additional Debt Type(1):Pari Passu 3rd Most Recent NOI:$7,209,895 (12/31/2019)
Additional Debt Balance(1):$30,000,000 Most Recent Occupancy:94.2% (8/19/2021)
Future Debt Permitted (Type):No (NAP) 2nd Most Recent Occupancy:88.4% (12/31/2020)
Reserves(3) 3rd Most Recent Occupancy:88.2% (12/31/2019)
TypeInitialMonthlyCap Appraised Value (as of):$112,600,000 (8/26/2021)
RE Tax:$676,125$112,687N/A Appraised Value per SF:$227
Insurance:$107,343$10,734N/A Cut-off Date LTV Ratio(1):68.5%
Recurring Replacements:$6,435$6,435$231,651 Maturity Date LTV Ratio(1):61.9%
TI/LC:$47,871$47,871$1,723,344   
Existing TI/LC Reserve:$47,600$0N/A   
Rent Concession Reserve:$22,000$0N/A   
        
Sources and Uses
SourcesProceeds% of Total UsesProceeds% of Total
Loan Amount:$77,125,00093.1% Loan Payoff:$81,342,90498.2%
Borrower Equity:$5,701,3506.9% Reserves:$907,3741.1%
    Closing Costs:$576,0720.7%
Total Sources:$82,826,350100.0% Total Uses:$82,826,350100.0%

 

 

(1)The Superstition Gateway Mortgage Loan (as defined below) is part of the Superstition Gateway Whole Loan (as defined below), which is evidenced by four pari passu promissory notes with an aggregate principal balance of $77,125,000. The Cut-off Date Balance per SF, Maturity Date Balance per SF, UW NOI Debt Yield, UW NOI Debt Yield at Maturity, UW NCF DSCR, Cut-off Date LTV Ratio and Maturity Date LTV Ratio numbers presented above are based on the aggregate principal balance of the promissory notes comprising the Superstition Gateway Whole Loan.

(2)Defeasance of the Superstition Gateway Whole Loan is permitted at any time after the end of the two-year period commencing on the closing date of the securitization of the last portion of the Superstition Gateway Whole Loan to be securitized. The assumed defeasance lockout period of 24 payments is based on the closing date of this transaction in October 2021.

(3)See “Escrows and Reserves” below for further discussion of reserve information.

(4)The novel coronavirus pandemic is an evolving situation and could impact the Superstition Gateway Mortgage Loan more severely than assumed in the underwriting of the Superstition Gateway Mortgage Loan and could adversely affect the NOI, NCF and occupancy information, as well as the appraised value and the DSCR, LTV and Debt Yield metrics presented above and herein. See “Risk FactorsRisks Related to Market Conditions and Other External FactorsThe Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the prospectus.

 

The Mortgage Loan. The fourth largest mortgage loan (the “Superstition Gateway Mortgage Loan”) is part of a whole loan (the “Superstition Gateway Whole Loan”) evidenced by four promissory notes in the aggregate original principal amount of $77,125,000, which is secured by a first priority fee mortgage encumbering an anchored retail property located in Mesa, Arizona (the “Superstition Gateway Property”). The Superstition Gateway Mortgage Loan is evidenced by the controlling Note A-1 and non-controlling Note A-4 with an aggregate original principal amount of $47,125,000. The remaining promissory notes comprising the Superstition Gateway Whole Loan (the “Superstition Gateway Serviced Pari Passu Companion Loans”) are summarized in the below table. The Superstition Gateway Whole Loan will be serviced pursuant to the pooling and servicing agreement for the MSC 2021-L7 securitization trust. Proceeds of the Superstition Gateway Whole Loan, along with approximately $5.7 million of borrower equity, were used to pay off a prior loan, fund reserves and pay closing costs. See “Description of the Mortgage Pool—The Whole Loans—The Serviced Pari Passu Whole Loans” and “Pooling and Servicing Agreement” in the prospectus.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-65

 

 

Retail – AnchoredLoan #4Cut-off Date Balance: $47,125,000
1614-1959 South Signal Butte RoadSuperstition GatewayCut-off Date LTV: 68.5%
10720-10746 East Baseline Road U/W NCF DSCR: 1.72x
Mesa, AZ 85209 U/W NOI Debt Yield: 10.3%

 


Superstition Gateway Whole Loan Summary

Notes
Original BalanceCut-off Date BalanceNote HolderControlling Note
A-1$40,000,000$40,000,000MSC 2021-L7Yes
A-2$20,000,000$20,000,000KeyBankNo
A-3$10,000,000$10,000,000KeyBankNo
A-4$7,125,000$7,125,000MSC 2021-L7No
Total$77,125,000$77,125,000  

 

The Borrowers and the Borrower Sponsors. The borrowers are DT-SGE, LLC and DT-SGW, LLC, each an Arizona limited liability company, structured to be bankruptcy-remote with two independent directors. The borrower sponsors and non-recourse carve-out guarantors are Daniel S. Smith, Deck, L.L.C., and DANCIN Trust. Mr. Smith is the president and co-founder of Desert Troon Companies, a commercial real estate company based in Scottsdale, Arizona that manages a diverse portfolio of investments throughout the United States. Desert Troon Companies has been established for more than 30 years, focusing on ownership of commercial, retail and lifestyle properties. Desert Troon Companies’ current development and investment holdings include 600,000 square feet of commercial and retail projects; one fully-developed private golf resort community; a 150-unit apartment complex under development; and a marina consisting of over 1,000 wet and dry slips.

 

The Property. The Superstition Gateway Property is a 495,204 SF anchored retail property situated on a 65.8-acre site in Mesa, Arizona and constructed in two phases in 2006 and 2007. The west phase (“Superstition Gateway West”) of the Superstition Gateway Property contains 244,451 SF of owned net rentable area and ground leased parcels with an aggregate of 100,308 SF of improvements owned by the respective ground tenants, Kohl’s, KFC, Chase Bank, and Del Taco. The east phase (“Superstition Gateway East”) of the Superstition Gateway Property contains 136,906 SF of owned net rentable area and ground leased parcels with an aggregate of 13,539 SF of improvements owned by the respective ground tenants, Chili’s Grill, Village Inn, and In-N-Out Burger. Superstition Gateway West is anchored by Kohl’s and Superstition Gateway East is anchored by AMC Theaters and LA Fitness. The Superstition Gateway Property contains 3,332 parking spaces, resulting in a parking ratio of approximately 6.7 parking spaces per 1,000 square feet. The Superstition Gateway Property is also shadow anchored by a Walmart Supercenter.

 

As of August 19, 2021, the Superstition Gateway Property was 94.2% occupied by 59 tenants. In addition to anchor tenants Kohl’s, LA Fitness, and AMC Theaters, the Superstition Gateway Property contains junior anchors Ross Dress for Less, Bed Bath & Beyond, Michaels, Marshalls, and PetSmart, which collectively represent 25.2% of the NRA and 19.7% of the underwritten base rent. Including Kohl’s, seven tenants totaling 113,847 SF or 23.0% of the NRA and 13.6% of underwritten base rent have ground leases in place where the tenants lease ground from the borrowers and own the related improvements during the applicable ground lease term. Excluding Kohl’s, no other tenant occupies more than 9.1% of the NRA or accounts for more than 9.7% of the underwritten base rent. Since January 2020, 20 tenants totaling 134,428 SF or 27.1% of NRA and 29.6% of the underwritten base rent executed new or renewal leases at the Superstition Gateway Property.

 

Major Tenants.

 

Kohl’s Corporation (88,904 SF, 18.0% of NRA, 2.6% of underwritten rent) (“Kohl’s”). Kohl’s is a specialty department store offering moderately priced, exclusive and national brand apparel, shoes, accessories, beauty and home products. Kohl’s operates more than 1,100 stores across 49 states and employs more than 85,000 people. Situated in Superstition Gateway West, Kohl’s owns its improvements and leases the underlying land under a ground lease that commenced October 1, 2006 and expires January 31, 2027, with eight, five-year renewal options.

 

LA Fitness (45,000 SF, 9.1% of NRA, 9.7% of underwritten rent). LA Fitness is a chain of health clubs with more than 700 clubs across the United States and Canada. LA Fitness has been a tenant at Superstition Gateway East since 2007 and has a current lease expiration of June 30, 2034, with three, five-year renewal options.

 

AMC Theaters (42,280 SF, 8.5% of NRA, 8.9% of underwritten rent). AMC Theaters is an American movie theater chain with approximately 1,000 theaters and 11,000 screens primarily located in the United States and Europe. AMC Theaters has been a tenant at Superstition Gateway East since 2017 and has a lease expiration of May 31, 2033, with three, five-year renewal options.

 

Ross Dress for Less (30,187 SF, 6.1% of NRA, 5.0% of underwritten rent). Ross Dress for Less is an off-price apparel and home fashion department store chain in the United States with 1,611 locations in 40 states, the District of Columbia and Guam. Ross Dress for Less has been a tenant at Superstition Gateway West since 2007 and has a current lease expiration of January 31, 2028, with three, five-year renewal options remaining.

 

Bed Bath & Beyond (28,042 SF, 5.7% of NRA, 4.3% of underwritten rent). Bed Bath & Beyond is an omnichannel retailer that sells an assortment of home, baby, beauty, and wellness merchandise, operating under the three main brands of Bed Bath & Beyond, buybuy BABY, and Harmon Health and Beauty. As of February 27, 2021, Bed Bath & Beyond operated 834 Bed Bath & Beyond stores worldwide. Bed Bath & Beyond has been a tenant at Superstition Gateway West since 2007 and has a current lease expiration of January 31, 2032, and has three, five-year renewal options remaining.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-66

 

 

Retail – AnchoredLoan #4Cut-off Date Balance: $47,125,000
1614-1959 South Signal Butte RoadSuperstition GatewayCut-off Date LTV: 68.5%
10720-10746 East Baseline Road U/W NCF DSCR: 1.72x
Mesa, AZ 85209 U/W NOI Debt Yield: 10.3%

 

The following table presents certain information relating to the leases at the Superstition Gateway Property:

 

Tenant Summary(1)
Tenant Name

Credit Rating

(Fitch/Moody’s/S&P)(2)

Tenant
SF
Approx. %
of SF
Annual UW
Rent
% of Total Annual
UW Rent
Annual
UW Rent PSF(2)
Lease
Expiration
Term. Options (Y/N)
Kohl’s(3)BBB-/Baa2/BBB-88,90418.0%$221,4002.6%$2.491/31/2027N
LA FitnessNR/NR/NR45,0009.1%$813,6009.7%$18.086/30/2034N
AMC TheatersNR/Caa2/CCC+42,2808.5%$745,0808.9%$17.625/31/2033N
Ross Dress for LessNR/A2/BBB+30,1876.1%$422,6185.0%$14.001/31/2028N
Bed Bath & BeyondNR/B1/B+28,0425.7%$364,5464.3%$13.001/31/2032N
Subtotal/Wtd. Avg. 234,41347.3%$2,567,24430.6%$10.95  
         
Other Tenants 231,96046.8%$5,827,65969.4%$25.12  
Vacant 28,8315.8%$00.0%$0  
Total/Wtd. Avg.(4) 495,204100.0%$8,394,903100.0%$18.00  

 

 

(1)Information obtained from the underwritten rent roll dated August 19, 2021.

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

(3)Kohl’s owns its improvements and leases the underlying land under a ground lease that commenced October 1, 2006 and expires January 31, 2027, with eight, five-year renewal options.

(4)Total/Wtd. Avg. Annual UW Rent PSF excludes vacant space.

 

The following table presents certain information relating to the lease rollover schedule at the Superstition Gateway Property:

 

Lease Rollover Schedule(1)
Year# of Leases
Rolling
SF RollingAnnual UW
Rent PSF
Rolling(2)
Approx. % of
Total SF
Rolling
Approx.
Cumulative %
of SF Rolling
Total UW Rent
Rolling(2)
Approx. % of
Total Rent
Rolling
Approx.
Cumulative %
of Total Rent
Rolling
MTM00$0.000.0%0.0%$00.0%0.0%
202100$0.000.0%0.0%$00.0%0.0%
2022820,272$29.704.1%4.1%$602,1507.2%7.2%
2023316,149$24.843.3%7.4%$401,0744.8%12.0%
2024612,380$30.702.5%9.9%$380,0494.5%16.5%
2025511,847$31.812.4%12.2%$376,8354.5%21.0%
2026921,174$33.174.3%16.5%$702,4258.4%29.3%
202713153479$13.4131.0%47.5%$2,057,77424.5%53.8%
2028551,824$18.5610.5%58.0%$961,92411.5%65.3%
2029224786$13.375.0%63.0%$331,3463.9%69.3%
2030110880$18.002.2%65.2%$195,8402.3%71.6%
2031325,700$14.405.2%70.4%$370,1004.4%76.0%
2032 & Beyond4117,882$17.1023.8%94.2%$2,015,38624.0%100.0%
Vacant028,831$0.005.8%100.0%$00.0%100.0%
Total/Wtd. Avg.(2)59495,204$18.00100.0%     8,394,903100.0% 

 

 

(1)Information obtained from the underwritten rent roll dated August 19, 2021.

(2)Total/Wtd. Avg. Annual UW Rent PSF Rolling and Total UW Rent Rolling excludes vacant space.

 

COVID-19 Update. The first payment date for the Superstition Gateway Mortgage Loan is November 1, 2021, and as of September 16, 2021, the Superstition Gateway Whole Loan is not subject to any modification or forbearance requests. The borrowers for the previous mortgage loan on the Superstition Gateway Property entered into a forbearance agreement with the previous lender. The previous lender agreed to five months of forbearance of all interest payments and reserve deposits due on the previous loan on the payment dates from May through September 2020, totaling approximately $2,274,809. Such amounts were repaid on December 18, 2020, prior to origination of the current mortgage loan and nine months ahead of schedule. As of September 10, 2021, the borrowers have reported that the Superstition Gateway Property is open and operating, with 100.0% of tenants by occupied NRA and 100.0% of tenants by underwritten base rent having paid their full August 2021 rent payments. Eight tenants (13.7% of NRA and 19.2% of underwritten rent) are still in the process of repaying deferred rent pursuant to the terms of repayment agreements with remaining repayment terms that range between three and 27 months.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-67

 

 

Retail – AnchoredLoan #4Cut-off Date Balance: $47,125,000
1614-1959 South Signal Butte RoadSuperstition GatewayCut-off Date LTV: 68.5%
10720-10746 East Baseline Road U/W NCF DSCR: 1.72x
Mesa, AZ 85209 U/W NOI Debt Yield: 10.3%

 

The Market. The Superstition Gateway Property is located in Mesa, Maricopa County, Arizona, within the Phoenix-Mesa-Scottsdale metropolitan area. The Superstition Gateway Property is situated in a neighborhood that consists of primarily retail, multifamily, and industrial uses. Primary highway access to the area is provided by U.S. 60 and the Loop 202 Freeway. U.S. 60 is a major arterial that crosses the area in an east-west direction and eventually connects to Interstate 10 near Phoenix. Access to the Superstition Gateway Property from U.S. 60 is provided by South Signal Butte Road. The Phoenix-Mesa Airport is located approximately seven miles southwest of the Superstition Gateway Property and serves as a demand generator and major employer for surrounding residential communities. Other nearby developments include Eastmark, a 3,154-acre master-planned community located approximately three miles south of the Superstition Gateway Property and adjacent to the Elliot Road Technology Corridor, which is home to Apple’s Global Operations Center.

 

According to a third party market research report, the estimated 2021 populations within a one-, three- and five-mile radius of the Superstition Gateway Property were 10,552, 94,401, and 205,358, respectively, which represent annual growth rates since 2010 of 3.90%, 1.87%, and 2.21%. The 2021 median household incomes within the same radii were $86,206, $61,673, and $61,767, respectively. According to a third party market research report, the East Valley multifamily submarket has a vacancy rate of 2.7% and more than 2,000 units under construction as of the second quarter of 2021, with a 284-unit complex under construction just to the north of the Superstition Gateway Property.

 

According to the appraisal, the Superstition Gateway Property is part of the Phoenix retail market and the Gateway Airport retail submarket. As of the second quarter of 2021, the Phoenix retail market consisted of approximately 235.9 million SF of retail space with an overall market vacancy of 7.9% and average asking rents of approximately $15.82 PSF. The Gateway Airport retail submarket consisted of approximately 2.9 million SF of retail space with an overall market vacancy of 4.3% and average asking rents of approximately $12.88 PSF as of the second quarter of 2021. For the trailing four quarters ending as of the second quarter of 2021, the Gateway Airport retail submarket had approximately 54,955 SF of retail inventory delivered and had positive net absorption of 126,769 SF.

 

The appraisal concluded a market rent at the Superstition Gateway Property for large anchor spaces to be $7.00 PSF; junior anchor spaces to be $13.00 PSF; small anchor spaces, fitness spaces, and movie theater spaces to be $18.00 PSF; and restaurant spaces to range from $35.00 PSF to $45.00 PSF.

 

The following table presents certain information relating to comparable retail leases with respect to the Superstition Gateway Property:

 

 Comparable Lease Summary
Property

Year Built

Distance from
Subject

Property Size (SF) 

TenantLease Area (SF)Lease Comm. DateInitial Rent PSFLease Term (Yrs.)Lease Type

Red Mountain Gateway

Mesa, AZ 

20179.7 miles6,000Cafe Rio2,800Jan-18$40.005.0Triple Net

Augusta Ranch

Mesa, AZ

20002.5 miles97,714Royal Dental1,742Oct-16$25.343.2Triple Net

The Highland

Gilbert, AZ 

20177.6 miles6,242Gather Loft4,860Feb-20$38.0010.0Triple Net
Higley Plaza
Gilbert, AZ
201713.5 miles54,930Valley Wellness Spa2,100Feb-19$32.005.0Triple Net
The Steelyard - Gilbert Road Chandler, AZ202021.4 miles26,201National Retailer2,000Dec-20$37.0010.1Triple Net
Queen Creek Commons Queen Creek, AZ202113.7 miles22,400Nail Salon2,080Aug-21$40.0010.0Triple Net

Crossroads Towne Center

Chandler, AZ 

200517.8 miles254,109Local Tenant1,400Mar-18$30.005.0Triple Net
Gilbert Gateway Towne Center North
Gilbert, AZ
20058.9 miles265,878Retail Tenant7,631Feb-21$16.000.0Triple Net
           

Source: Appraisal.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-68

 

 

Retail – AnchoredLoan #4Cut-off Date Balance: $47,125,000
1614-1959 South Signal Butte RoadSuperstition GatewayCut-off Date LTV: 68.5%
10720-10746 East Baseline Road U/W NCF DSCR: 1.72x
Mesa, AZ 85209 U/W NOI Debt Yield: 10.3%

 

Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and Underwritten Net Cash Flow of the Superstition Gateway Property:

 

Cash Flow Analysis(1) 
  2018 2019 2020 6/30/2021 TTM UW UW PSF 
Gross Potential Rent(2) $7,461,128 $7,835,249 $8,495,776 $8,473,047 $9,063,981 $18.30 
Reimbursements $2,080,743 $2,182,888 $2,175,296 $2,322,608 $2,639,475 $5.33 
Other Income $18,585 $5,665 $7,150 $6,600 $0 $0.00 
Vacancy $0 $0 $0 $0 ($822,749) ($1.66) 
Effective Gross Income $9,560,456 $10,023,803 $10,678,222 $10,802,255 $10,880,707 $21.97 
              
Real Estate Taxes $1,263,592 $1,187,152 $1,243,410 $1,281,702 $1,303,181 $2.63 
Insurance $113,126 $128,419 $125,255 $121,138 $122,678 $0.25 
Other Operating Expenses $1,481,630 $1,498,337 $1,484,548 $1,543,896 $1,540,038 $3.11 
Total Expenses $2,858,348 $2,813,908 $2,853,212 $2,946,736 $2,965,897 $5.99 
              
Net Operating Income $6,702,107 $7,209,895 $7,825,009 $7,855,520 $7,914,811 $15.98 
Capital Expenditures $0 $0 $0 $0 $99,041 $0.20 
TI/LC $0 $0 $0 $0 $579,565 $1.17 
Net Cash Flow $6,702,107 $7,209,895 $7,825,009 $7,855,520 $7,236,205 $14.61 
              
Occupancy%(3) 84.7% 88.2% 88.4% 94.2% 93.0%   
NOI DSCR (IO)(4) 2.37x 2.55x 2.76x 2.78x 2.80x   
NOI DSCR (P&I)(4) 1.59x 1.71x 1.86x 1.86x 1.88x   
NCF DSCR (IO)(4) 2.37x 2.55x 2.76x 2.78x 2.56x   
NCF DSCR (P&I)(4) 1.59x 1.71x 1.86x 1.86x 1.72x   
NOI Debt Yield(4) 8.7% 9.3% 10.1% 10.2% 10.3%   
NCF Debt Yield(4) 8.7% 9.3% 10.1% 10.2% 9.4%   

 

 

(1)For the avoidance of doubt, no COVID-19 specific adjustments have been incorporated into the UW.

(2)UW Gross Potential Rent is greater than the historical periods due to the inclusion of $669,078 for grossed-up vacant space.

(3)Occupancy % shown is the average occupancy for each respective year. 6/30/2021 TTM Occupancy % is as of August 19, 2021. UW Occupancy % represents underwritten economic occupancy.

(4)Debt service coverage ratios and debt yields include the Superstition Gateway Serviced Pari Passu Companion Loans.

 

Escrows and Reserves.

 

Real Estate Taxes - The borrowers deposited approximately $676,125 into a real estate tax reserve at origination and are required to deposit an ongoing monthly amount equal to 1/12 of the annual estimated real estate taxes, which currently equates to approximately $112,687.

 

Insurance - The borrowers deposited approximately $107,343 into an insurance reserve at origination and are required to deposit an ongoing monthly amount equal to 1/12 of the annual insurance premiums, which currently equates to approximately $10,734.

 

Replacements Reserve - The Superstition Gateway Whole Loan documents provide for an upfront reserve of $6,435 for approved capital expenditures, and ongoing monthly deposits of $6,435 into such reserve for approved capital expenditures, provided that such deposits are not required at any time the amount of such reserve equals or exceeds $231,651.

 

TI/LC Reserve - The Superstition Gateway Whole Loan documents provide for an upfront reserve of $47,871 for tenant improvements and leasing commissions, and ongoing monthly deposits of $47,871 into such reserve for tenant improvements and leasing commissions, provided that such deposits are not required at any time the amount of such reserve equals or exceeds $1,723,344.

 

Existing TI/LC Reserve - The Superstition Gateway Whole Loan documents provide for an upfront reserve of $47,600 for outstanding tenant improvement allowances owed to Chipotle and Paleta Bar.

 

Rent Concession Reserve - The Superstition Gateway Whole Loan documents provide for an upfront reserve of $22,000 for rent that has not yet commenced under the existing lease for Paleta Bar.

 

Lockbox and Cash Management. The Superstition Gateway Whole Loan is structured with a hard lockbox and springing cash management. The borrowers are required to direct each tenant of the Superstition Gateway Property to deposit funds directly into the lockbox account controlled by the lender. Notwithstanding the foregoing, the borrowers or property manager are required to deposit all revenues otherwise received into the lockbox account within one business day of receipt. Provided no Cash Sweep Event (as defined below) is in effect, all amounts on deposit in the lockbox account will be transferred on each business day to an account controlled by the borrowers. Upon the occurrence of a Cash Sweep Event, all sums on deposit in the lockbox account are required to be transferred on each business day to a cash management account controlled by the lender and applied and disbursed

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-69

 

 

Retail – AnchoredLoan #4Cut-off Date Balance: $47,125,000
1614-1959 South Signal Butte RoadSuperstition GatewayCut-off Date LTV: 68.5%
10720-10746 East Baseline Road U/W NCF DSCR: 1.72x
Mesa, AZ 85209 U/W NOI Debt Yield: 10.3%

 

in accordance with the Superstition Gateway Whole Loan documents, with any excess cash held by the lender as additional security for the Superstition Gateway Whole Loan during the continuance of such Cash Sweep Event.

 

A “Cash Sweep Event” will commence upon:

 

(i)the occurrence of an event of default under the Superstition Gateway Whole Loan documents and will continue until such event of default is cured;

 

(ii)the occurrence of any bankruptcy action of the borrowers (in no event will a Cash Sweep Event due to a bankruptcy action of the borrowers be cured);

 

(iii)the occurrence of any bankruptcy action of the property manager, and will continue until the borrowers replace the manager with a qualified manager under a replacement management agreement within 60 days of such bankruptcy action; or

 

(iv)the date on which the amortizing debt service coverage ratio as calculated in the Superstition Gateway Whole Loan documents based on the trailing three-month period is less than 1.20x and will continue until the amortizing debt service coverage ratio based on the trailing three-month period is at least 1.25x for two consecutive quarters.

 

Additional Secured Indebtedness (not including trade debts). In addition to the Superstition Gateway Mortgage Loan, the Superstition Gateway Property also secures the Superstition Gateway Serviced Pari Passu Companion Loans, which have an aggregate Cut-off Date principal balance of $30,000,000. The Superstition Gateway Serviced Pari Passu Companion Loans accrue interest at the same rate as the Superstition Gateway Mortgage Loan. The Superstition Gateway Mortgage Loan is entitled to payments of interest and principal on a pro rata and pari passu basis with the Superstition Gateway Serviced Pari Passu Companion Loans. The holders of the Superstition Gateway Mortgage Loan and the Superstition Gateway Serviced Pari Passu Companion Loans have entered into a co-lender agreement which sets forth the allocation of collections on the Superstition Gateway Whole Loan. See “Description of the Mortgage Pool—The Whole Loans—The Serviced Pari Passu Whole Loans” in the prospectus.

 

Mezzanine Loan and Preferred Equity. Not permitted.

 

Release of Property. Not permitted.

 

Right of First Offer/Right of First Refusal. None.

 

Ground Lease. None.

 

Letter of Credit. None.

 

Terrorism Insurance. The borrowers are required to obtain and maintain “all risk” property insurance that covers perils of terrorism and acts of terrorism in an amount equal to the full replacement cost of the Superstition Gateway Property and business interruption insurance in an amount equal to 100% of the projected gross revenues from the operation of the property for a period of not less than 18 months with a 180-days extended period of indemnity. See “Risk Factors—Risks Relating to the Mortgage Loans—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the prospectus.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-70

 

 

(THIS PAGE INTENTIONALLY LEFT BLANK)

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-71

 

 

Office – SuburbanLoan #5Cut-off Date Balance: $44,936,586
25700 Interstate 45Havenwood Office ParkCut-off Date LTV: 64.5%
Spring, TX 77386 U/W NCF DSCR: 1.93x
  U/W NOI Debt Yield: 9.0%

 

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-72

 

 

Office – SuburbanLoan #5Cut-off Date Balance: $44,936,586
25700 Interstate 45Havenwood Office ParkCut-off Date LTV: 64.5%
Spring, TX 77386 U/W NCF DSCR: 1.93x
  U/W NOI Debt Yield: 9.0%

 

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-73

 

 

Mortgage Loan No. 5 – Havenwood Office Park

 

Mortgage Loan Information Mortgaged Property Information
Mortgage Loan Seller:SMC Single Asset/Portfolio:Single Asset
Credit Assessment (Fitch/S&P/KBRA):NR/NR/NR Location:Spring, TX 77386
Original Balance:$45,000,000 General Property Type:Office
Cut-off Date Balance:$44,936,586 Detailed Property Type:Suburban
% of Initial Pool Balance:4.9% Title Vesting:Fee
Loan Purpose:Refinance Year Built/Renovated:2017/NAP
Borrower Sponsor:Rodrigo Pelaez Diaz Size:239,629 SF
Guarantor:Rodrigo Pelaez Diaz Cut-off Date Balance per SF:$188
Mortgage Rate:3.5500% Maturity Date Balance per SF:$169
Note Date:7/9/2021 Property Manager:The J. Beard Property
First Payment Date:9/6/2021  Management Company, LLC
Maturity Date:8/6/2031 Underwriting and Financial Information(2)
Original Term to Maturity:120 months UW NOI(2):$4,047,409
Original Amortization Term:540 months UW NOI Debt Yield:9.0%
IO Period:0 months UW NOI Debt Yield at Maturity:10.0%
Seasoning:2 months UW NCF DSCR:1.93x
Prepayment Provisions:L(26),D(87),O(7) Most Recent NOI:$1,822,471 (5/31/2021 TTM)
Lockbox/Cash Mgmt Status:Springing/Springing 2nd Most Recent NOI:$1,666,986 (12/31/2020)
Additional Debt Type:NAP 3rd Most Recent NOI:$751,847 (12/31/2019)
Additional Debt Balance:NAP Most Recent Occupancy:86.8% (7/6/2021)
Future Debt Permitted (Type):No (NAP) 2nd Most Recent Occupancy:58.6% (12/31/2020)
Reserves(1) 3rd Most Recent Occupancy:62.9% (12/31/2019)
TypeInitialMonthlyCap Appraised Value (as of):$69,650,000 (6/17/2021)
RE Tax:$456,795$57,099N/A Appraised Value per SF:$291
Insurance:$41,658$8,332N/A Cut-off Date LTV Ratio:64.5%
Recurring Replacements:$0$4,992$179,722 Maturity Date LTV Ratio:58.1%
TI/LC:$500,000$16,667$1,500,000   
Free Rent Reserve:$937,102$0N/A   
Outstanding TI/LC Reserve:$316,970$0N/A   
Rent Gap Reserve:$91,832$0N/A   
Med-Data Reserve:$0SpringingN/A   
       
Sources and Uses
SourcesProceeds% of Total UsesProceeds% of Total
Loan Amount:$45,000,000100.0% Loan Payoff:$34,237,51276.1%
    Return of Equity:$7,566,83816.8%
    Reserves:$2,344,3575.2%
    Closing Costs:$851,2931.9%
Total Sources:$45,000,000100.0% Total Uses:$45,000,000100.0%

 

 
(1)See “Escrows and Reserves” below for further discussion of reserve requirements.

(2)The novel coronavirus pandemic is an evolving situation and could impact the Havenwood Office Park Mortgage Loan (as defined below) more severely than assumed in the underwriting of the Havenwood Office Park Mortgage Loan and could adversely affect the NOI, NCF and occupancy information, as well as the appraised value and the DSCR, LTV and debt yield metrics presented above and herein. See “Risk FactorsRisks Related to Market Conditions and Other External FactorsThe Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the prospectus.

 

The Mortgage Loan. The fifth largest mortgage loan (the “Havenwood Office Park Mortgage Loan”) is evidenced by a single promissory note in the original principal amount of $45,000,000 and secured by a first priority fee mortgage encumbering an office building located in Spring, Texas (the “Havenwood Office Park Property”). Proceeds from the Havenwood Office Park Mortgage Loan were used to refinance the previous loan secured by the Havenwood Office Park Property, return equity to the borrower, pay closing costs and fund upfront reserves.

 

The Borrower and the Borrower Sponsor. The borrower is Havenwood Land Developments, L.P., a Texas limited partnership and single purpose entity with one independent director. The borrower sponsor and the non-recourse carveout guarantor is Rodrigo Pelaez Diaz. Rodrigo Pelaez Diaz is a partner and founder of Synergy SAR, a commercial real estate investor and developer in the Spring, Texas area. Mr. Diaz currently has an ownership interest in seven commercial properties encompassing approximately 471,000 SF. Mr. Diaz’s portfolio focuses largely on traditional and medical office product type. The borrower sponsor has a total cost basis in the Havenwood Office Park Property of approximately $59.7 million.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-74

 

 

Office – SuburbanLoan #5Cut-off Date Balance: $44,936,586
25700 Interstate 45Havenwood Office ParkCut-off Date LTV: 64.5%
Spring, TX 77386 U/W NCF DSCR: 1.93x
  U/W NOI Debt Yield: 9.0%

 

The Property. The Havenwood Office Park Property consists of one Class A, LEED silver certified, four-story office building developed by the borrower sponsor in 2017. As of July 6, 2021, the Havenwood Office Park Property was currently 86.8% leased and occupied by 18 tenants. The Havenwood Office Park Property offers amenities including an adjacent parking garage, covered walkways, high-quality finishes throughout, a fitness room, a large conference room and an outdoor plaza with seating area. The Havenwood Office Park Property also offers key-card access and 24-hour on-site security. The parking spaces at the Havenwood Office Park Property results in a parking ratio of approximately 4.4 spaces per 1,000 SF. Each floor level at the Havenwood Office Park Property is designed with two floor plates of approximately 31,000 SF each. The floor plates are interconnected by a common lobby, which allows for flexible bay depths and efficient space planning options for tenants of all sizes.

 

Major Tenants.

 

GSA (61,331 SF, 25.6% of NRA, 34.9% of underwritten base rent). The GSA is the nation’s largest government real estate organization, providing workspace for more than 1.2 million federal workers through its public buildings service. The GSA recently signed a lease for a term of 15 years with an initial lease expiration date in June 2036 (the “GSA Lease”). The GSA Lease commenced in June 2021. The GSA is currently in a free rent period through January 2022, which free rent was escrowed at the origination of the Havenwood Office Park Mortgage Loan. The GSA uses the site as a branch of the United States Department of Homeland Security. There are no termination, contraction or appropriation rights contained in the GSA Lease.

 

Med-Data (50,717 SF, 21.2% of NRA, 20.9% of underwritten base rent). Med-Data is a leading provider of technology-enabled revenue cycle management services designed to engage patients, empower hospitals and health systems, and improve financial outcomes throughout the healthcare space. For four decades, Med-Data has partnered with care providers at nearly 2,000 facilities nationwide to serve millions of patients onsite, in the field, and from its regional offices across the U.S. Med-Data has occupied space at the Havenwood Office Park Property since October 2019 and leases its space through September 2026. Med-Data has two five-year lease renewal options remaining. Med-Data has the right to terminate its lease after October 1, 2024 with (i) eight months’ prior written notice and (ii) a termination fee equal estimated to be approximately $615,759 plus unamortized tenant improvements and leasing commissions.

 

The Work Lodge (22,683 SF, 9.5% of NRA, 9.7% of underwritten base rent). The Work Lodge is a co-working space that provides private office suites for teams up to 100 people, shared workspace, virtual mailbox, meeting and conference room spaces and training rooms. The Work Lodge has been a tenant at the Havenwood Office Park Property since July 2017. The Work Lodge’s lease expires in December 2028 and has two five-year lease renewal options remaining. The Work Lodge does not have any unilateral termination options.

 

Enercorp (8,508 SF, 3.6% of NRA, 4.3% of underwritten base rent). Enercorp is an energy solutions company that focuses primarily on designing, building, selling and renting energy technologies. Enercorp has been a tenant at the Havenwood Office Park Property since December 2019. Enercorp’s lease expires in December 2024 and it has one three-year lease renewal option remaining. Enercorp does not have any unilateral termination options.

 

Momentum Title (8,231 SF, 3.4% of NRA, 3.9% of underwritten base rent). Momentum Title is a Texas-based title company serving the greater Houston area. Momentum Title has been at the Havenwood Office Park Property since July 2016, and expanded its footprint at the Havenwood Office Park Property by 4,290 SF in March 2019. Momentum Title’s lease expires in June 2025 and has two five-year lease renewal options remaining. Momentum Title does not have any unilateral termination options.

 

The following table presents a summary regarding the tenants at the Havenwood Office Park Property:

 

Tenant Summary(1)
Tenant NameCredit Ratings (Fitch/Moody’s/S&P)(2)Tenant SFApprox. % of SFAnnual UW Rent% of Total Annual UW RentAnnual UW Rent PSFLease ExpirationTermination Option (Y/N)Renewal Options
GSA(3)AAA/Aaa/AA+61,33125.6%$1,525,72334.9%$24.886/30/2036NNAP
Med-Data(4)NR/NR/NR50,71721.2%$912,90620.9%$18.009/30/2026Y2 x 5 Yrs
The Work LodgeNR/NR/NR22,6839.5%$425,3069.7%$18.7512/31/2028N2 x 5 Yrs
EnercorpNR/NR/NR8,5083.6%$187,1764.3%$22.0012/31/2024N1 x 3 Yrs
Momentum TitleNR/NR/NR8,2313.4%$172,6863.9%$20.986/30/2025N2 x 5 Yrs
Subtotal/Wtd. Avg. 151,47063.2%$3,223,79873.7%   $21.28   
          
Other Tenants 56,41823.5%$1,149,54326.3%$20.38   
Vacant Space 31,74113.2%$00.0%$0.00   
Total/Wtd. Avg. 239,629100.0%$4,373,341100.0%$21.04   

 

 
(1)Information is based on the underwritten rent roll dated as of July 6, 2021 with rent steps taken through March 2022 totaling $51,580.

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

(3)The GSA is currently in a free rent period through January 2022, which free rent was escrowed at the origination of the Havenwood Office Park Mortgage Loan.

(4)Med-Data has the right to terminate its lease after October 1, 2024 with (i) eight months’ prior written notice and (ii) a termination fee equal estimated to be approximately $615,759 plus unamortized tenant improvements and leasing commissions.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-75

 

 

Office – SuburbanLoan #5Cut-off Date Balance: $44,936,586
25700 Interstate 45Havenwood Office ParkCut-off Date LTV: 64.5%
Spring, TX 77386 U/W NCF DSCR: 1.93x
  U/W NOI Debt Yield: 9.0%

 

The following table presents certain information with respect to the lease rollover at the Havenwood Office Park Property:

 

Lease Rollover Schedule(1)(2)
Year# of Leases RollingSF RollingAnnual UW Rent PSF Rolling% of Total SF Rolling

Cumulative

% of SF

Rolling

Annual UW

Rent Rolling

% of Annual UW  Rent

Rolling

Cumulative %

of Annual UW

Rent Rolling

MTM00$0.000.0%0.0%$00.0%0.0%
202100$0.000.0%0.0%$00.0%0.0%
202200$0.000.0%0.0%$00.0%0.0%
2023311,904$22.615.0%5.0%$269,1336.2%6.2%
2024421,896$21.179.1%14.1%$463,56710.6%16.8%
2025213,027$18.215.4%19.5%$237,2105.4%22.2%
2026674,599$18.7131.1%50.7%$1,396,09831.9%54.1%
202700$0.000.0%50.7%$00.0%54.1%
2028225,131$19.1610.5%61.2%$481,61011.0%65.1%
202900$0.000.0%61.2%$00.0%65.1%
203000$0.000.0%61.2%$00.0%65.1%
203100$0.000.0%61.2%$00.0%65.1%
2032 & Beyond161,331$24.8825.6%86.8%$1,525,72334.9%100.0%
Vacant031,741$0.0013.2%100.0%$00.0%100.0%
Total/Wtd. Avg.18239,629$21.04100.0% $4,373,341100.0% 

 

 
(1)Information is based on the underwritten rent roll dated July 6, 2021 with rent steps taken through March 2022 totaling $51,580.

(2)Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the Lease Rollover Schedule.

 

COVID-19 Update. As of September 1, 2021, the Havenwood Office Park Property is open and operating with 100.0% of tenants by occupied NRA and 100.0% of tenants by underwritten base rent having paid their full July and August 2021 rent payments. No tenants requested or were granted rent relief. As of September 6, 2021, the Havenwood Office Park Mortgage Loan is not subject to any modification or forbearance requests. The first payment date of the Havenwood Office Park Mortgage Loan is on September 6, 2021 and the Havenwood Office Park Mortgage Loan is current as of September 6, 2021.

 

The Market. The Havenwood Office Park Property is located in the Houston market and The Woodlands submarket. Major retailers in the area include Kroger, Walmart Supercenter, HEB, Walgreens, and Dollar Tree, as well as numerous casual and quick-serve restaurants, dental offices, several bank branches and freestanding emergency rooms. The approximately 75-acre, 450,000 SF Grand Parkway Marketplace I & II are situated at the southeast corner of Grand Parkway and Kuykendahl Road, just south of the market area. Stores include Target Supercenter, Burlington Coat Factory, PetSmart, Ulta, TJ Maxx, Ross Dress for Less, Five Below, and Famous Footwear. Located along Lake Woodlands Drive, west of Interstate Highway 45 are Spring Mall and Lake Woodlands Plaza. Spring Mall is anchored by JCPenney, Dick’s Sporting Goods, Macy’s, Nordstrom and Dillard’s. Other specialty retailers in the area include Apple, Bath and Body Works, Abercrombie & Fitch and Sephora. Target and Academy are located across Lake Woodlands Drive. While office development is scattered throughout the neighborhood area, a majority is found along I-45. Major employers in Spring, Texas include Anadarko, Baker Hughes, Huntsman and Chevron Phillips. In the southeast corner of the neighborhood area is the ExxonMobil Houston Campus.

 

According to the appraisal, the 2021 estimated population within a one-, three- and five-mile radius of the Havenwood Office Park Property was 11,924, 66,621 and 162,292, respectively; and the 2021 estimated average annual household income within the same radii was approximately $96,413, $126,093 and $132,479, respectively.

 

According to the appraisal, the Havenwood Office Park Property is situated within The Woodlands office submarket of the Houston office market. As of the first quarter of 2021, the Houston office market reported a total inventory of approximately 340.9 million SF with an approximately 18.6% vacancy rate, and an average asking rent of $28.53 PSF. As of the first quarter of 2021, The Woodlands office submarket reported a total inventory of approximately 24.0 million SF with an approximately 15.5% vacancy rate, and an average asking rent of $32.36 PSF.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-76

 

 

Office – SuburbanLoan #5Cut-off Date Balance: $44,936,586
25700 Interstate 45Havenwood Office ParkCut-off Date LTV: 64.5%
Spring, TX 77386 U/W NCF DSCR: 1.93x
  U/W NOI Debt Yield: 9.0%

 

The following table presents certain information relating to the appraisal’s market rent conclusion for the Havenwood Office Park Property:

 

Market Rent Summary
  
Property SF239,629
Market Rent (PSF)$21.00
Lease Term (Months)60
Lease Type (Reimbursements)NNN
Rent Increase ProjectionNone
Tenant Improvements (New Tenant) (PSF)$15.00
Tenant Improvements (Renewal) (PSF)$0.00

  
Source: Appraisal

 

The following table presents recent leasing data at comparable office properties with respect to the Havenwood Office Park Property:

 

Comparable Leases Summary

Property Name /

City, State

Built / RenovatedNRADistance from SubjectOcc. %Tenant NameLease Area (SF)Lease Date / Lease Term (mos.)Rent PSFLease Type

Havenwood Office Park

25700 Interstate 45

Spring, TX

2017 / NAP239,629(1)-86.8%(1)-----

Town Center II

1330 Lake Robbins Drive

Spring, TX

1998 / NAP143,1263.3 miles83.4%

Confidential

 

10,151

Jun. 2021 / 60

 

$25.00NNN

24 Waterway

24 Waterway Avenue

The Woodlands, TX

2008 / NAP311,9383.4 miles90.8%

ChemEx Global

 

24,910

Jul. 2020 / 60

 

$24.50Gross

Ten Two Hundred Office

10200 Grogans Mill Road

Spring, TX

1980 / NAP80,8254.0 miles79.1%Pepper & Associates2,918

Feb. 2020 / 68

 

$19.00NNN

Sierra Pines II

1575 Sawdust Road

Spring, TX

2014 / NAP163,1452.5 miles84.7%

Jones & Carter

 

27,025

Jul. 2017 / 72

 

$24.00NNN

19221 Southwood Tower

19221 Interstate 45

Shenandoah, TX

1984 / 200483,1363.8 miles82.3%Liberty Energy Services2,139

Aug. 2019 / 60

 

$24.00Gross

 

 

Source: Appraisal, unless otherwise indicated.

(1)Information is based on the underwritten rent roll dated July 6, 2021.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-77

 

 

Office – SuburbanLoan #5Cut-off Date Balance: $44,936,586
25700 Interstate 45Havenwood Office ParkCut-off Date LTV: 64.5%
Spring, TX 77386 U/W NCF DSCR: 1.93x
  U/W NOI Debt Yield: 9.0%

 

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 Havenwood Office Park Property:

 

Cash Flow Analysis(1)
 2018201920205/31/2021 TTMUWUW PSF
Gross Potential Rent(2)$677,652$1,482,687$2,191,712$2,484,660$5,030,347$20.99
Reimbursements$407,752$907,740$1,347,044$1,306,151$1,719,585$7.18
Other Income$20,328$24,486$34,652$32,912$32,912$0.14
Vacancy and Concessions

$0

$0

$0

$0

($657,006)

($2.74)

Effective Gross Income$1,105,732$2,414,913$3,573,408$3,823,723$6,125,838$25.56
       
Taxes$596,041$600,971$530,472$530,472$685,193$2.86
Insurance$93,794$86,726$89,171$89,412$99,979$0.42
Other Operating Expenses

$723,414

$975,369

$1,286,780

$1,381,368

$1,293,257

$5.40

Total Operating Expenses$1,413,249$1,663,066$1,906,423$2,001,252$2,078,429$8.67
       
Net Operating Income($307,517)$751,847$1,666,986$1,822,471$4,047,409$16.89
TI/LC$0$0$0$0$119,815$0.50
Capital Expenditures

$0

$0

$0

$0

$59,907

$0.25

Net Cash Flow($307,517)$751,847$1,666,986$1,822,471$3,867,687$16.14
       
       
Occupancy %(3)30.6%62.9%58.6%86.8%90.3% 
NOI DSCR(0.15x)0.38x0.83x0.91x2.02x 
NCF DSCR(0.15x)0.38x0.83x0.91x1.93x 
NOI Debt Yield(0.7%)1.7%3.7%4.1%9.0% 
NCF Debt Yield(0.7%)1.7%3.7%4.1%8.6% 

 

 
(1)The Havenwood Office Park Property was built in 2017. The increase in Net Operating Income and Occupancy % can be primarily attributed to (i) the initial lease-up after completion of the Havenwood Office Park Property and (ii) the GSA recently signing a 15-year lease for 61,331 SF (25.6% of the NRA) and approximately $1.85 million in underwritten rent and reimbursements. Additionally, the borrower sponsor spent significant capital on COVID-19-related improvements including installation of touchless faucets throughout the building, renovations to outdoor areas for social distancing, automatic swinging doors in the restrooms, elevator air purification systems and the installation of an HVAC needlepoint bipolar ionization system. The capital improvements totaled in the hundreds of thousands of dollars and have not been removed from the historical operating expenses.

(2)UW Gross Potential Rent is based on the underwritten rent roll dated July 6, 2021 with vacant space grossed up to market rents and rent steps taken through March 2022 totaling $51,580.

(3)Occupancy % is as of December 31, of each respective year except for 5/31/2021 TTM, which is as of July 6, 2021. UW Occupancy % represents underwritten economic occupancy.

 

Escrows and Reserves.

 

The borrower deposited at origination approximately (i) $456,795 for property taxes, (ii) $41,658 for insurance, (iii) $500,000 for future tenant improvements and leasing commissions, (iv) $925,432 for free rent related to the GSA, (v) $316,970 for outstanding tenant improvements and leasing commissions, (vi) $51,855 for a rent gap reserve related to Synergy SAR, (vii) $39,977 for a rent gap reserve for Houston Association of Realtors, Inc. and (viii) $11,670 for free rent related to Silver Spring Healthcare.

 

Real Estate Taxes and Insurance - The borrower is required to reserve monthly 1/12 of the estimated annual property taxes (currently approximately $57,099) and 1/12 of the estimated annual insurance premiums (currently approximately $8,332).

 

Recurring Replacements Reserve - The borrower is required to reserve $4,992 monthly for replacements, subject to a cap of $179,722.

 

TI/LC Reserve - Ongoing deposits into the TI/LC Reserve are required in the amount of $16,667 per month, subject to a cap of $1,500,000. The TI/LC Reserve cap will be lowered to $500,000 upon the renewal of Med-Data’s lease for at least five years or a replacement tenant entering into a replacement lease for the Med-Data space for at least five years.

 

Med-Data Reserve - Upon the occurrence of a Med-Data Trigger Event (as defined below), the borrower will be required to deposit on each monthly payment date until such Med-Data Trigger Event is cured $167,000. Such amounts will be held for tenant improvements and leasing commissions that may be incurred in connection with re-leasing the Med-Data space. Additionally, any lease termination payments received from Med-Data are required to be deposited into the Med-Data Reserve.

 

A “Med-Data Trigger Event” commences if Med-Data or an approved replacement tenant (a “Med-Data Tenant”) (i) fails to extend its lease on or before the date that is 12 months prior to its lease expiration, (ii) defaults under its lease, (iii) goes dark or otherwise ceases operations in its leased space, (iv) sublets more than 15% of its leased space, (v) vacates or gives notice to vacate its leased space, (vi) terminates or gives notice to terminate its lease, (vii) becomes a debtor in any bankruptcy or other insolvency proceeding or (viii) fails to deliver to the lender on or before October 1, 2023 a written estoppel that irrevocably waives any and all termination rights available to the Med-Data Tenant under the related lease.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-78

 

 

Office – SuburbanLoan #5Cut-off Date Balance: $44,936,586
25700 Interstate 45Havenwood Office ParkCut-off Date LTV: 64.5%
Spring, TX 77386 U/W NCF DSCR: 1.93x
  U/W NOI Debt Yield: 9.0%

 

A Med-Data Tenant Trigger Event will terminate: with regard to clause (ii), upon the Med-Data Tenant curing such default, with regard to clause (iii), upon the Med-Data Tenant resuming ordinary business operations in the entirety of the leased space for at least two calendar quarters, with regard to clauses (v) and (vi), upon the written rescission of such Med-Data Tenant’s notice to vacate or terminate, with regard to clause (vii), if the lease for the Med-Data Tenant is assumed or affirmed in such proceeding and the Med-Data Tenant, among other things, is discharged from bankruptcy such that no proceedings are ongoing, with regard to clause (viii), the borrower delivers to the lender a written notice or signed estoppel from the Med-Data Tenant that such tenant waives any and all termination rights available under its lease, and with regard to clauses (i) through (vii) above, (1) upon the borrower depositing $2,000,000 into the Med-Data Reserve, not including any lease termination payments received from or otherwise with respect to, or unamortized tenant improvements attributable to, the Med-Data Tenant or (2) upon (x) the full execution and delivery to the lender of an approved lease extension (solely with regard to clause (i) above) or one or more approved replacement leases with respect to the entirety of the Med-Data Tenant’s leased space or (ii) a portion of the Med-Data space equal to or greater than 70% of the square footage of the Med-Data space as reasonably determined by the lender provided that, upon and following such re-tenanting of less than the entirety of the Med-Data space, the lender determines that (a) at least 80% of the square footage of the Havenwood Office Park Property is occupied, (b) the Havenwood Office Park Property supports a debt yield (as calculated by the lender) equal to or greater than 8.5%, and (c) the amortizing debt service coverage ratio (based on the trailing 12 calendar months) is equal to or greater than 1.45x for two consecutive calendar quarters, (y) delivery of satisfactory estoppels from the Med-Data Tenant or approved replacement tenant(s) and (z) delivery of evidence satisfactory to the lender that all tenant improvements and leasing commissions related to the re-leasing of the Med-Data Tenant space for which the borrower is responsible have been paid.

 

Lockbox and Cash Management. The Havenwood Office Park Mortgage Loan is structured with a springing lockbox and springing cash management. Prior to the occurrence of a Sweep Event Period (as defined below), all rents will be deposited into an account designated by the borrower. The Havenwood Office Park Mortgage Loan requires that during the continuance of a Sweep Event Period, the borrower must deliver tenant direction letters to the tenants directing such tenants to pay all rents into the lockbox account. Upon the occurrence and during the continuance of a Sweep Event Period, all funds in the lockbox account are required to be swept daily to a cash management account under the control of the lender to be applied and disbursed in accordance with the Havenwood Office Park Mortgage Loan documents and all excess cash flow funds remaining in the cash management account after the application of such funds in accordance with the Havenwood Office Park Mortgage Loan documents are required to be held by the lender in an excess cash flow reserve account as additional collateral for the Havenwood Office Park Mortgage Loan. To the extent that no Sweep Event Period is continuing, all excess cash flow funds are required to be disbursed to the borrower.

 

A “Sweep Event Period” will commence upon the earliest of the following: (i) the occurrence and continuance of an event of default, (ii) the date on which the debt service coverage ratio (calculated assuming a 30-year amortization period) based on the trailing 12-month period is less than 1.15x and (iii) the occurrence of a Major Tenant Trigger Event.

 

A Sweep Event Period will end: with regard to clause (i), upon the cure of such event of default, with regard to clause (ii), when the debt service coverage ratio (calculated assuming a 30-year amortization period) based on the trailing 12-month period is at least 1.20x for two consecutive calendar quarters and with regard to clause (iii), when such Major Tenant Trigger Event is cured, as further described below.

 

A “Major Tenant Trigger Event” commences if the GSA or an approved replacement tenant (a “Major Tenant”) (i) fails to renew its lease on or before the date that is 12 months prior to its lease expiration, (ii) defaults under its lease, (iii) goes dark or otherwise ceases operations in its leased space, (iv) sublets any or all of its leased space, (v) vacates or gives notice to vacate its leased space, (vi) terminates or gives notice to terminate its lease or (vii) becomes a debtor in any bankruptcy or other insolvency proceeding.

 

A Major Tenant Trigger Event will terminate: with regard to clause (ii), upon the Major Tenant curing such default, with regard to clause (iii), upon the Major Tenant resuming ordinary business operations in the entirety of the leased space for at least one calendar quarter, with regard to clauses (v) and (vi), upon the written rescission of such Major Tenant’s notice to vacate or terminate, with regard to clause (vii), if the lease for the Major Tenant is assumed or affirmed in such proceeding and the Major Tenant, among other things, is discharged from bankruptcy such that no proceedings are ongoing, and with regard to clauses (i) through (vii) above, upon (x) the full execution and delivery to the lender of an approved lease extension (solely with regard to clause (i) above) or one or more approved replacement leases with respect to the entirety of the Major Tenant’s leased space, (y) delivery of satisfactory estoppels from the Major Tenant or approved replacement tenant(s) and (z) delivery of evidence satisfactory to the lender that all tenant improvements and leasing commissions related to the re-leasing of the Major Tenant space for which the borrower is responsible have been paid.

 

Additional Secured Indebtedness (not including trade debts). None.

 

Mezzanine Loan and Preferred Equity. Not permitted.

 

Release of Property. Not permitted.

 

Ground Lease. None.

 

Letter of Credit. None.

 

Right of First Offer/Right of First Refusal. None.

 

Terrorism Insurance. The borrower is required to obtain and maintain property insurance that covers perils of terrorism and acts of terrorism in an amount equal to the full replacement cost of the Havenwood Office Park Property and business interruption insurance for 18 months with a 180-day extended period of indemnity. See “Risk Factors—Risks Relating to the Mortgage Loans—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the prospectus.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-79

 

 

Office – SuburbanLoan #6Cut-off Date Balance: $40,000,000
201 Helios WayHelios PlazaCut-off Date LTV: 64.1%
Houston, TX 77079 UW NCF DSCR: 3.10x
  UW NOI Debt Yield: 9.1%

 

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-80

 

 

Office – SuburbanLoan #6Cut-off Date Balance: $40,000,000
201 Helios WayHelios PlazaCut-off Date LTV: 64.1%
Houston, TX 77079 UW NCF DSCR: 3.10x
  UW NOI Debt Yield: 9.1%

 

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-81

 

 

Mortgage Loan No. 6 – Helios Plaza

 

Mortgage Loan Information Property Information
Mortgage Loan Seller:BMO Single Asset/Portfolio:Single Asset
Credit Assessment (Fitch/KBRA/S&P):NR/NR/NR Location:Houston, TX 77079
Original Balance(1):$40,000,000 General Property Type:Office
Cut-off Date Balance(1):$40,000,000 Detailed Property Type:Suburban
% of Initial Pool Balance:4.3% Title Vesting:Fee
Loan Purpose:Acquisition Year Built/Renovated:2009/NAP
Borrower Sponsor:AGC Equity Partners Holding Ltd. Size:377,185 SF
Guarantor:HOUCRE I Cayman Holding Ltd. Cut-off Date Balance Per SF(1):$314
Mortgage Rate:2.9000% Maturity Date or ARD Balance Per SF(1)(2):$314
Note Date:9/15/2021 Property Manager:Transwestern Property
First Payment Date:11/6/2021  Company SW GP, L.L.C.
Anticipated Repayment Date(2):10/6/2026   
Maturity Date:10/6/2031   
Original Term to Maturity(2):60 months Underwriting and Financial Information(5)
Original Amortization Term(2):0 months UW NOI:$10,793,013
IO Period(2):60 months UW NOI Debt Yield(1):9.1%
Seasoning:0 months UW NOI Debt Yield at Maturity(1)(2):9.1%
Prepayment Provisions(3):L(24),DorYM1(31),O(5) UW NCF DSCR(1):3.10x
Lockbox/Cash Mgmt Status:Hard/Springing Most Recent NOI:$10,115,465 (6/30/2021 TTM)
Additional Debt Type(1):Pari Passu 2nd Most Recent NOI:$10,015,401(12/31/2020)
Additional Debt Balance(1):$78,500,000 3rd Most Recent NOI:$9,819,021(12/31/2019)
Future Debt Permitted (Type):No (NAP) Most Recent Occupancy:100.0% (10/6/2021)
Reserves(4) 2nd Most Recent Occupancy:100.0% (12/31/2020)
TypeInitialMonthlyCap 3rd Most Recent Occupancy:100.0% (12/31/2019)
RE Tax:$0SpringingN/A Appraised Value (as of):$185,000,000 (8/18/2021)
Insurance:$0SpringingN/A Appraised Value Per SF:$490
Replacement Reserve:$0SpringingN/A Cut-off Date LTV Ratio(1):64.1%
TI/LC Reserve:$0SpringingN/A Maturity Date LTV Ratio(1)(2):64.1%
        
Sources and Uses
SourcesProceeds% of Total UsesProceeds% of Total
Whole Loan Amount(1):$118,500,00064.3% Purchase Price:$178,000,00096.6%
Borrower Equity:$65,705,36035.7% Additional Consideration(6):$5,114,0122.8%
    Closing Costs:$1,091,3490.6%
Total Sources:$184,205,360100.0% Total Uses:$184,205,360100.0%

 

 
(1)The Helios Plaza Mortgage Loan (as defined below) is part of the Helios Plaza Whole Loan (as defined below), which is comprised of five pari passu promissory notes with an aggregate original principal balance of $118,500,000. The Cut-off Date Balance Per SF, Maturity Date or ARD Balance Per SF, UW NOI Debt Yield, UW NOI Debt Yield at Maturity, UW NCF DSCR, Cut-off Date LTV Ratio, and Maturity Date LTV Ratio numbers presented above are based on the applicable aggregate principal balance of the Helios Plaza Whole Loan.

(2)The Helios Plaza Whole Loan is structured with an Anticipated Repayment Date (“ARD”) of October 6, 2026 and a final maturity date of October 6, 2031. Prior to the ARD, the Helios Plaza Whole Loan will accrue interest at a rate equal to the Initial Interest Rate (as defined below). From and after the ARD, until the outstanding principal balance of the Helios Plaza Whole Loan and all accrued interest has been paid in full, or until the final maturity date of October 6, 2031, whichever event occurs first, the Helios Plaza Whole Loan will accrue interest at a rate equal to the Extension Rate (as defined below), and, after the payment of interest at the Initial Interest Rate and any applicable reserves and fees in accordance with the Helios Plaza Whole Loan documents, all excess cash flow from the Helios Plaza Property will be collected by the lender and applied as follows: first, to reduce the principal balance of the Helios Plaza Whole Loan until the entire outstanding principal balance is paid in full, and second, to pay any additional interest on the Helios Plaza Whole Loan that has accrued at the Extension Rate and has been deferred until repayment of the Helios Plaza Whole Loan. The information presented in the charts above for Original Term to Maturity, Original Amortization Term, Maturity Date or ARD Balance per SF, UW NOI Debt Yield at Maturity and Maturity Date LTV Ratio are based on the ARD.

(3)Defeasance of the Helios Plaza Whole Loan is permitted at any time after the earlier to occur of (a) the end of the two-year period commencing on the closing date of the securitization of the last portion of the Helios Plaza Whole Loan to be securitized and (b) November 6, 2025. The assumed defeasance lockout period of 24 payments is based on the closing date of this transaction in October 2021.

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

(5)The novel coronavirus pandemic is an evolving situation and could impact the Helios Plaza Whole Loan more severely than assumed in the underwriting of the Helios Plaza Whole Loan and could adversely affect the NOI, NCF and occupancy information, as well as the appraised value and the DSCR, LTV and Debt Yield metrics presented above and herein. See “Risk Factors—Risks Related to Market Conditions and Other External Factors—The Coronavirus Pandemic Has Adversely Affected the Global Economy and Will Likely Adversely Affect the Performance of the Mortgage Loans” in the prospectus.

(6)In conjunction with the acquisition, the borrower paid defeasance costs of approximately $5,539,300 associated with the seller’s debt prepayment and received a seller rent credit of approximately $425,289.

 

The Mortgage Loan. The sixth largest mortgage loan (the “Helios Plaza Mortgage Loan”) is part of a whole loan (the “Helios Plaza Whole Loan”) evidenced by five pari passu notes in the aggregate original principal balance of $118,500,000. The Helios Plaza Whole Loan was co-originated by BMO and Barclays Capital Real Estate Inc. (“Barclays”) and is secured by a first priority fee mortgage encumbering an office property located in Houston, Texas (the “Helios Plaza Property”).

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-82

 

 

Office – SuburbanLoan #6Cut-off Date Balance: $40,000,000
201 Helios WayHelios PlazaCut-off Date LTV: 64.1%
Houston, TX 77079 UW NCF DSCR: 3.10x
  UW NOI Debt Yield: 9.1%

 

The non-controlling Notes A-2 and A-3, with an aggregate original principal balance of $40,000,000, represent the Helios Plaza Mortgage Loan and will be included in the MSC 2021-L7 securitization trust. The controlling Note A-4 and the non-controlling Notes A-1 and A-5, with an aggregate original principal balance of $78,500,000 (the “Helios Plaza Pari Passu Companion Loans”) will be held by BMO and Barclays and are expected to be contributed to one or more future securitizations. The Helios Plaza Whole Loan will initially be serviced pursuant to the pooling and servicing agreement for the MSC 2021-L7 securitization; however, once Note A-4 is contributed to a securitization trust, the Helios Plaza Whole Loan will be serviced pursuant to the pooling and servicing agreement for the securitization to which Note A-4 is contributed. See “Description of the Mortgage Pool—The Whole Loans—The Serviced Pari Passu Whole Loans” and “—The Non-Serviced Pari Passu Whole Loans” in the prospectus.

 

The Helios Plaza Whole Loan has a 5-year interest-only term through the ARD of October 6, 2026. Prior to the ARD, the Helios Plaza Whole Loan will accrue interest at a rate equal to 2.9000% per annum (the “Initial Interest Rate”). From and after the ARD, until the outstanding principal balance of the Helios Plaza Whole Loan and all accrued interest has been paid in full, or until the final maturity date of October 6, 2031, whichever event occurs first, (i) the Helios Plaza Whole Loan will accrue interest at a rate equal to 2.50% plus the Initial Interest Rate (the “Extension Rate”), with interest accrued at the excess of the Extension Rate over the Initial Rate deferred until principal is repaid in full, and, (ii) after the payment of interest at the Initial Interest Rate and any applicable reserves and fees in accordance with the Helios Plaza Whole Loan documents, all excess cash flow from the Helios Plaza Property will be collected by the lender and applied as follows: first, to reduce the principal balance of the Helios Plaza Whole Loan until the entire outstanding principal balance is paid in full, and second, to pay any additional interest on the Helios Plaza Whole Loan that has accrued at the Extension Rate and has been deferred until repayment of the Helios Plaza Whole Loan. The Helios Plaza Whole Loan proceeds along with borrower sponsor equity were used to purchase the Helios Plaza Property for $178.0 million, pay the seller’s defeasance costs and pay closing costs.

 

Note Summary
NotesOriginal Principal BalanceCut-off Date BalanceNote HolderControlling Interest
A-1$30,000,000$30,000,000BMONo
A-2$25,000,000$25,000,000MSC 2021-L7No
A-3$15,000,000$15,000,000MSC 2021-L7No
A-4$28,500,000$28,500,000BMOYes
A-5$20,000,000$20,000,000BarclaysNo
Total$118,500,000$118,500,000  

 

The Borrower and the Borrower Sponsor. The borrower is HOUCRE1 Investments LP, a Delaware limited partnership structured with two independent directors. The borrower is indirectly owned by HOUCRE I Cayman Holding Ltd (99%) and C&M Holding Ltd (1%, controlling member). The borrower sponsor is AGC Equity Partners Holding Ltd. (“AGC”), which indirectly owns C&M Holding Ltd. AGC, and which does not have any guarantee obligations under the Helios Plaza Mortgage Loan, is a London-based investment company established in 2009 that currently has approximately $6.5 billion assets under management. The non-recourse guarantor is HOUCRE I Cayman Holding Ltd. which entity does not have significant assets other than its interest in the borrower.

 

The Property. The Helios Plaza Property is a Class A+, 6-story office property totaling 377,185 SF, located in Houston, Texas. The Helios Plaza Property was built in 2009 and offers a structured parking garage with 1,699 spaces, resulting in a parking ratio of 4.5 spaces per 1,000 SF of net rentable area. The Helios Plaza Property is the first LEED Platinum certified building in Houston and features a fully equipped trading floor backed by infrastructure with redundant systems along with a complete building management system, providing monitoring and control functions for the electrical, mechanical, and security systems. Additional amenities include a 17,232 SF ground floor cafeteria, multiple enclosed meeting rooms, a 240-person capacity main conference center, and an 11,522 SF wellness center.

 

The Helios Plaza Property was constructed as a build-to-suit for, and as of October 6, 2021, was 100.0% leased to, Amoco Properties (“Amoco”), a subsidiary of BP Corporation North America (“BP N.A.”). The Helios Plaza Property is located adjacent to BP N.A.’s U.S headquarters, the Westlake Campus.

 

Major Tenant.

 

Amoco Properties (377,185 SF, 100.0% of net rentable area, 100.0% of underwritten rent). Amoco is a wholly-owned subsidiary of BP N.A. (rated NR/A3/A- by Fitch/Moody’s/S&P), which guarantees the lease. BP N.A. is wholly-owned by BP plc, a global energy company with a $94 billion market capitalization. BP N.A’s operations comprise substantially all of BP plc’s upstream and downstream activities in North America. BP plc was incorporated in 1889 and is based in Houston, Texas. The BP N.A. lease guarantee is subject to a cap of $275 million, which burns down by the amount of base rent already paid under the lease.

 

The Helios Plaza Property was built-to-suit for Amoco and houses BP N.A.’s gas and power trading operations, central disaster command center, wind operations and remote operations center. The trading floor at the Helios Plaza Property is one of two major BP N.A. trading operations in the United States, and one of five in the world. The Helios Plaza Property serves as BP N.A.’s central disaster command center in the event of a major disruptive event such as a hurricane or large-scale oil spill. The Helios Plaza Property also contains a remote operations center that centrally monitors all BP-operated wind farms on a continuous basis. According to the borrower sponsor, Amoco invested approximately $10.2 million into the Helios Plaza Property, converting the existing gas turbine and replacing the system with a new generator and prefabricated chiller/pump package that is expected to be more cost-effective and maintain redundancy.

 

The Amoco Properties Lease (the “Amoco Lease”). The Amoco Lease has a commencement date of December 16, 2016, and a current expiration date of December 15, 2031. There are three 5-year renewal options with notice of exercise sent to the landlord not less than 12 months and not more than 36 months prior to expiration of the current term, and no unilateral termination options. Amoco is required to pay absolutely net base rent and additional rent throughout the Amoco Lease term, and has fixed 2.0% annual rent escalations.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-83

 

 

Office – SuburbanLoan #6Cut-off Date Balance: $40,000,000
201 Helios WayHelios PlazaCut-off Date LTV: 64.1%
Houston, TX 77079 UW NCF DSCR: 3.10x
  UW NOI Debt Yield: 9.1%

 

The following table presents the annual base rent under the Amoco Lease for the designated years:

 

Amoco Lease Base Rent Schedule
Start DateEnd DateLease YearAnnual Base Rent
12/16/202012/15/2021 5$10,206,929.31
12/16/202112/15/2022 6$10,411,067.90
12/16/202212/15/2023 7$10,619,289.26
12/16/202312/15/2024 8$10,831,675.04
12/16/202412/15/2025 9$11,048,308.54
12/16/202512/15/202610$11,269,274.71
12/16/202612/15/202711$11,494,660.21
12/16/202712/15/202812$11,724,553.41
12/16/202812/15/202913$11,959,044.48
12/16/202912/15/203014$12,198,225.37
12/16/203012/15/203115$12,442,189.88

 

The base rent payable in connection with renewals of the Amoco Lease will be based on 90% of the fair market rental rate applicable to the triple net annual amount per rentable square foot a willing tenant would pay and a willing landlord would accept in arm’s length, bona fide negotiations for space of comparable size, use and quality to the Helios Plaza Property at the time of determination of the then applicable renewal option based upon comparable lease transactions made in other similarly classed buildings in the Katy Freeway/Energy Corridor. Such fair market rent will take into account a number of factors outlined in the Amoco Lease, including location, efficiency of space, and length of term, and is required to be provided to Amoco by landlord within 30 days after receiving the renewal notice.

 

Amoco is required to maintain insurance as set forth in the Amoco Lease, however, as long as no event of default has occurred and the self-insurance conditions under the Amoco Lease are met, Amoco may fulfill its insurance obligations under the Amoco Lease by self-insurance. Under the terms of the Helios Plaza Whole Loan, the borrower is entitled to rely on Amoco’s self-insurance, provided, among other things, BP N.A. maintains a rating of A- or better from S&P. Amoco has the right to sublet all or any portion of the Helios Plaza Property and to assign its rights under the Amoco Lease without landlord’s consent to any permitted transferee (successors, affiliates or third-party entities that are rated at least Baa3 by Moody’s or BBB- by S&P) under the Amoco Lease. Amoco is permitted to sublease the land or any portions thereof and sublease portions of the building (but not the entire building, except to permitted transferees under the Amoco Lease) without landlord’s consent, but must provide written notice to landlord within 30 days of any such sublease. In all other instances Amoco is not permitted to assign or sublet without landlord’s written prior consent. Amoco will be released from all obligations after the date of a transfer or permitted transfer under the Amoco Lease provided the transferee or the transferee’s guarantor has a credit rating of ‘’Baa3” or higher according to Moody’s, or a credit rating of “BBB-” or higher according to S&P, as of the date of such transfer or permitted transfer.

 

The following table presents a summary regarding the sole tenant at the Helios Plaza Property:

 

Tenant Summary(1)
Tenant Name

Credit Rating (Fitch/Moody’s/

S&P)(2)

Tenant SFApprox.% of SFAnnual UW Rent(3)Annual UW Rent PSF(3)App. % of Total Annual UW RentTerm. OptionRenewal OptionsLease Expiration
Amoco PropertiesNR/A3/A-377,185100.0%$10,793,013$28.61100.0%N3 x 5-yr12/15/2031
Subtotal/Wtd. Avg. 377,185100.0%$10,793,013$28.61100.0%   
          
Vacant Space 00.0%$0$0.000.0%   
Total/Wtd. Avg. 377,185100.0%$10,793,013$28.61100.0%   

 

 
(1)Information is based on the underwritten rent roll.

(2)Ratings represent those of the parent company, BP Corporation North America, which guarantees the lease.

(3)Annual UW Rent includes rent steps of $204,139 through December 2021 and straight lined rent of $381,945 for Amoco through the Helios Plaza Whole Loan term.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-84

 

 

Office – SuburbanLoan #6Cut-off Date Balance: $40,000,000
201 Helios WayHelios PlazaCut-off Date LTV: 64.1%
Houston, TX 77079 UW NCF DSCR: 3.10x
  UW NOI Debt Yield: 9.1%

 

The following table presents certain information relating to the lease rollover at the Helios Plaza Property:)

 

Lease Rollover Schedule(1)
Year# of Leases RollingSF RollingApprox. % of Total SF RollingApprox. Cumulative % of SF RollingTotal UW Rent Rolling(2)Annual UW Rent PSF RollingApprox. % of Total UW Rent RollingApprox. Cumulative % of Total UW Rent Rolling
MTM000.0%0.0%$0$0.000.0%0.0%
2021000.0%0.0%$0$0.000.0%0.0%
2022000.0%0.0%$0$0.000.0%0.0%
2023000.0%0.0%$0$0.000.0%0.0%
2024000.0%0.0%$0$0.000.0%0.0%
2025000.0%0.0%$0$0.000.0%0.0%
2026000.0%0.0%$0$0.000.0%0.0%
2027000.0%0.0%$0$0.000.0%0.0%
2028000.0%0.0%$0$0.000.0%0.0%
2029000.0%0.0%$0$0.000.0%0.0%
2030000.0%0.0%$0$0.000.0%0.0%
20311377,185100.0%100.0%$10,793,013$28.61100.0%100.0%
2032 & Beyond000.0%100.0%$0$0.000.0%100.0%
Vacant000.0%100.0%$0$0.000.0%100.0%
Total/Wtd. Avg.1377,185100.0% $10,793,013$28.61100.0% 

 

 
(1)Information is based on the underwritten rent roll.

(2)Total UW Rent Rolling includes rent steps of $204,139 through December 2021 and straight-lined rent of $381,945 for Amoco through the Helios Plaza Whole Loan term.

 

COVID-19 Update. The first debt service payment for the Helios Plaza Whole Loan is due in November 2021. As of September 15, 2021, the Helios Plaza Whole Loan is not subject to any forbearance, modification or debt service relief request. As of September 1, 2021, the borrower has reported that the Helios Plaza Property is open and operating, with the sole tenant having paid its full September 2021 rent payment. Amoco has not been granted any rent relief and has not missed any rent payments.

 

Market Overview. The Helios Plaza Property is located in Houston, Texas within the Energy Corridor. Major employers in the area include energy sector companies such as Citgo, ConocoPhillips and Shell Oil Company, along with non-energy companies such as Sysco and Gulf States Toyota Distributors, both of which are headquartered in the region. The Helios Plaza Property is located off Interstate 10 in the Katy Freeway submarket of Houston’s Energy Corridor, approximately 16-miles west of the Houston central business district. The Energy Corridor area contains more buildings than any other Houston-area market with nearly 200 buildings. The Helios Plaza Property’s local area is a combination of established single-family developments, newer apartment buildings and suburban office buildings. Primary access to the Helios Plaza Property is provided by Interstate 10, Westpark Tollway, Texas 8 Beltway and State Highway 6. According to the appraisal, as of the second quarter of 2021, the Houston office market had approximately 189.4 million SF of office space inventory, overall vacancy in the market was approximately 25.4% and asking rent was $30.89 PSF. According to the appraisal, as of the second quarter of 2021, the Katy Freeway office submarket had approximately 29.6 million SF of office space inventory, overall vacancy was approximately 28.6% and Class A average asking rent was $34.84 PSF. According to the appraisal, the 2020 estimated population within a 5.0-mile radius was approximately 241,628, with average annual household income of approximately $109,661.

 

The appraiser concluded a market rent for the Helios Plaza Property of $28.00 PSF, in line with the underwritten rent of $28.61 PSF.

 

The following table presents comparable office leases with respect to the Helios Plaza Property:

 

Comparable Office Lease Summary
 Lease TypeTerm (Years)Size (SF)Lease DateRent PSFLease Type
Comparable 1New (1st Gen)12.550k-100k SFJun. 2021$26.67NNN
Comparable 2New (2nd Gen)11.050k-100k SFFeb. 2022$21.50NNN
Comparable 3New (1st Gen)13.550k-100k SFJan. 2022$36.50NNN
Comparable 4New (1st Gen)11.550k-100k SFJan. 2021$25.00NNN
Comparable 5New (2nd Gen)12.350k-100k SFSep. 2021$22.00NNN
Comparable 6New (2nd Gen)13.0Over 100k SFJan. 2020$29.50NNN
Comparable 7New (2nd Gen)11.3Over 100k SFMay 2020$22.00NNN

Source: Appraisal.

 

This is not a research report and was not prepared by any Underwriter’s research department. Please see additional important information and qualifications at the end of this Term Sheet.

 

 T-85

 

 

Office – SuburbanLoan #6Cut-off Date Balance: $40,000,000
201 Helios WayHelios PlazaCut-off Date LTV: 64.1%
Houston, TX 77079 UW NCF DSCR: 3.10x
  UW NOI Debt Yield: 9.1%

 

Underwritten Net Cash Flow. The following table presents certain information relating to the Underwritten Net Cash Flow at the Helios Plaza Property:

 

Cash Flow Analysis(1)
 20192020T-12 6/30/2021UWUW PSF
Gross Potential Rent(2)$9,819,021$10,015,401$10,115,464$10,793,013$28.61
Total Recoveries$0$0$1,739,767$0$0.00
Other Income$0$0$0$0$0.00
Less Vacancy & Credit Loss

$0

$0

$0

$0

$0.00

Effective Gross Income$9,819,021$10,015,401$11,855,231$10,793,013$28.61
      
Real Estate Taxes$0$0$1,739,766$0$0.00
Insurance$0$0$0$0$0.00
Management Fee$0$0$0$0$0.00
Other Expenses

$0

$0

$0

$0

$0.00

Total Expenses(3)$0$0$1,739,766$0$0.00
      
Net Operating Income$9,819,021$10,015,401$10,115,465$10,793,013$28.61
Capital Expenditures$0$0$0$0$0.00
TI/LC

$0

$0

$0

$0

$0.00

Net Cash Flow$9,819,021$10,015,401$10,115,465$10,793,013$28.61
      
Occupancy %100.0%100.0%100.0%100.0% 
NOI DSCR(4)2.82x2.87x2.90x3.10x 
NCF DSCR(4)2.82x2.87x2.90x3.10x 
NOI Debt Yield(4)8.3%8.5%8.5%9.1% 
NCF Debt Yield(4)8.3%8.5%8.5%9.1% 

 

 
(1)For the avoidance of doubt, no COVID-19 specific adjustments have been made to the lender underwriting.

(2)UW Gross Potential Rent is as of October 6, 2021 and includes rent steps of $204,139 through December 2021 and straight lined rent of $381,945 for Amoco through the Helios Plaza Whole Loan term.

(3)The Amoco lease is absolute NNN, with all expenses paid directly by Amoco.

(4)The debt service coverage ratios and debt yields include the Helios Plaza Pari Passu Companion Loans.

 

Escrows and Reserves.

 

Real Estate Taxes – The Helios Plaza Whole Loan documents provide for ongoing monthly deposits into a reserve for real estate taxes in an amount equal to 1/12 of the real estate taxes that the lender estimates will be payable during the next twelve months for the Helios Plaza Property; provided that such monthly deposits are not required so long as the Reserve Waiver Conditions (as defined below) remain satisfied.

 

Insurance – The Helios Plaza Whole Loan documents provide for ongoing monthly deposits into a reserve for insurance premiums in an amount equal to 1/12 of the insurance premiums that the lender estimates will be payable for the renewal of coverage upon the expiration of the insurance policies; provided that such monthly deposits are not required so long as (i) a blanket or umbrella insurance policy covering the Helios Plaza Property acceptable to the lender is in effect and (ii) the Reserve Waiver Conditions remain satisfied.

 

Replacement Reserve – During the continuation of a Trigger Period (as defined below), the Helios Plaza Whole Loan documents provide for ongoing monthly deposits of approximately $6,286 into a reserve for approved capital expenditures.

 

TI/LC Reserve – During the continuation of a Trigger Period, the Helios Plaza Whole Loan documents provide for ongoing monthly deposits of approximately $23,574 into a reserve for tenant improvements and leasing commissions.

 

The “Reserve Waiver Conditions” means all of th