Market

Established or emerging market with a minimum population of 50,000 is preferred with no quantifiable population declines since 1980 based on US Census data.

Diverse employment and/or economic base.

In-fill locations that are reasonably insulated from the threat of new supply are preferred.

Property must be located near, and easily accessible to major highways/freeways, employment sources and other demand generators.

Property Condition and Characteristics

Post - 1980 construction is preferred.

Older properties in good repair and having undergone material renovations within the last ten years.

Remaining useful life of the property, with the shorter conclusion of either the Appraisal or Engineering Report will extend at least seven years beyond the end of the amortization period.

Building design, floor plan, technological capabilities and amenities will be appropriate for the immediate market area.

No material required repairs or deferred maintenance, unless satisfactory reserves are established.

Operating Performance

The property will show strong operating performance with no material declines in revenue and net operating income over the past two years.

The property's occupancy will be at or above the local market's average occupancy with no material declines over the past two years; however, newly constructed or recently rehabilitated properties which have not reached stabilized occupancy will be considered on a case-by-case basis.

The tenant base will be diverse and creditworthly.

Borrower and property manager should have significant experience in owning and managing, respectively, several properties similar to the mortgage property and situated in comparable markets.

Compliance With Laws (Requied Documentation)

Zoning compliance letter.

Certificates of Occupancy.

Applicable licenses and permits.

Borrower disclosure regarding current litigation.

Certificates of borrower or opinion of borrower's outside legal counsel demonstrating compliance with applicable statutes, rules and regulations relating to parking, zoning, land use, occupancy, enviornmental protection, access and egress, and facilities for disabled persons, equal opportunity, fair housing and anti-discrimination.

Where a property does not conform to current laws or regulations relating to use, size, density or parking, satisfactory evidence should be obtained of legislation or local zoning or building codes that permit the improvements to be rebuilt to pre-damage use, size and density in the event less that 50% of the improvements are destroyed.  Such evidence may include legal opinions and/or letters from the land use jurisdiction.  Law and ordinance insurance on these properties might be required.

Knowledge of any illegal activities on the mortgaged property, including activities relating to controlled substances should be disclosed.

Easements

Standard utility easements providing service to the mortgaged property are acceptable if they are (1) noted on the survey, (2) properly excepted to the Title Insurance Policy, and (3) not encroached upon the improvements.

Generally, a property is not acceptable if it shares or is burdened by (1) primary ingress or egress through an easement or private road, or (2) on-site recreational facilities or amenities that are not under the exclusive control of the borrower.

Ground Leases

If the mortgage loan is to be secured in whole or in part by a ground lease of the mortgaged property, the ground lease will meet the Ground Lease Requirements.

Unless the ground lease payments are required to be made on a monthly basis, the borrower might be required to establish an escrow account for such payments.