C1,192,021,267 Fleet Street Finance Two P.L.C.

Transcription

1 C1,192,021,267 Fleet Street Finance Two P.L.C. (a public company incorporated with limited liability under the laws of Ireland with registration number ) C780,000,000 Class A Commercial Mortgage Backed Floating Rate Notes due 2014 C170,000,000 Class B Commercial Mortgage Backed Floating Rate Notes due 2014 C143,100,000 Class C Commercial Mortgage Backed Floating Rate Notes due 2014 C98,921,267 Class D Commercial Mortgage Backed Floating Rate Notes due 2014 On 24 October 2006 (or such other date as Fleet Street Finance Two P.L.C., a public company incorporated with limited liability under the laws of Ireland (the Issuer), the Lead Manager and the Co-Manager agree) (the Issue Date), the Issuer will issue the A780,000,000 Class A Commercial Mortgage Backed Floating Rate Notes due 2014 (the Class A Notes), the A170,000,000 Class B Commercial Mortgage Backed Floating Rate Notes due 2014 (the Class B Notes), the A143,100,000 Class C Commercial Mortgage Backed Floating Rate Notes due 2014 (the Class C Notes) and the A98,921,267 Class D Commercial Mortgage Backed Floating Rate Notes due 2014 (the Class D Notes, and, together with the Class A Notes, the Class B Notes and the Class C Notes, the Notes). Application has been made to the Irish Financial Services Regulatory Authority (the Financial Regulator), as competent authority under Directive 2003/71/EC (the Prospectus Directive), for this prospectus (the Prospectus) to be approved. Application has been made to the Irish Stock Exchange for the Notes to be admitted to the Official List of the Irish Stock Exchange (the Official List) and trading on its regulated market. Copies of this Prospectus have been filed and approved by the Financial Regulator as required by the Prospectus Directive (2003/71/EC) Regulations 2005 (the Prospectus Regulations). Upon approval of this Prospectus by the Financial Regulator, this Prospectus will be filed with the Companies Registration Office in Ireland in accordance with Regulation 38(1) (b) of the Prospectus Regulations. This Prospectus constitutes a prospectus for the purposes of the Prospectus Directive. On or about the Issue Date, the Issuer will apply the net proceeds of the issue of the Notes to purchase a senior term loan in the aggregate amount of A1,192,021,267 (the Loan) made by Goldman Sachs Credit Partners L.P. (the Originator) to Highstreet B Portfolio GbR (the Borrower) pursuant to an amended and restated senior facility agreement dated 30 June 2006, as further amended by an amendment agreement dated 5 September 2006 (as amended and restated, the Senior Facility Agreement), which is secured by, among other things, commercial properties situated in the Federal Republic of Germany (Germany). The Issuer will acquire the right to payment of interest payable on the Loan, other than the Retained Interest (which will be retained by the Originator, in that capacity and including any subsequent assignee, the Retained Interest Holder) and to the repayment of principal on the Loan. The Issuer will also acquire the benefit of the security for the Loan. Interest on the Notes will be payable quarterly in arrear in euro on 26 January, April, July and October in each year, subject to adjustment for non-business Days as described herein (each a Payment Date). The first Payment Date will be in January Unless previously redeemed in full, the Notes are expected to mature on the Payment Dates indicated in the table below (the Expected Maturity Date), and each Class of Notes will, in any event, mature no later than the Payment Date falling in July 2014 (the Final Maturity Date). Before the Expected Maturity Date and the Final Maturity Date, each Class of Notes will be subject to mandatory and/or optional redemption in whole or in part in certain circumstances (as set out in Condition 6 (Redemption and Cancellation) of the terms and conditions of the Notes (the Conditions)). The Notes and interest thereon will not be obligations or responsibilities of any person other than the Issuer. On issue it is expected that each Class of Notes will be assigned the respective ratings of Moody s Investor Service Limited (Moody s), Standard & Poor s Rating Services, a division of The McGraw-Hill Companies, Inc. (S&P) and Fitch Ratings Ltd (Fitch and together with Moody s and S&P, the Rating Agencies) set forth in the table below. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation. CLASS INITIAL PRINCIPAL AMOUNT MARGIN OVER BASE INTEREST RATE (1) EXPECTED MATURITY DATE (2) FINAL MATURITY DATE (2) WEIGHTED AVERAGE LIFE (YEARS) (2) ISSUE PRICE EXPECTED RATINGS (FITCH/S&P/ MOODY S) A A780,000, per cent. January 2011 July per cent. AAA/AAA/Aaa B A170,000, per cent. January 2011 July per cent. AA/AA/NR C A143,100, per cent. January 2011 July per cent. A/A/NR D A98,921, per cent. January 2011 July per cent. BBB/BBB/NR 1. All of the Notes will bear interest at the rate equal to the European Interbank Offered Rate (EURIBOR) for three month euro deposits plus the margin specified above (other than in respect of the first Interest Period, the rate for which shall be determined by a linear interpolation of EURIBOR for three month and four month euro deposits). 2. Assuming, amongst other assumptions made herein, that the Issuer redeems the Notes upon the aggregate Principal Amount Outstanding of the Notes becoming less than 10 per cent. of their aggregate Principal Amount Outstanding on the Issue Date, the Issuer does not sell any assets and the Borrower meets its business plan. In any event the maturity date of the Notes of any Class may not be longer than the respective Final Maturity Date set forth above. The Notes will be limited recourse secured obligations of the Issuer only. The Notes have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the Securities Act), or any State securities laws, and are subject to U.S. tax law requirements. The Notes are being offered by the Issuer only to persons who are not U.S. persons (as defined in Regulation S under the Securities Act (Regulation S)) in offshore transactions in reliance on Regulation S and in accordance with applicable laws. The Notes may not be offered or sold, directly or indirectly, in the United States or to, or for the account or benefit of, any U.S. persons except pursuant to an exemption from or in a transaction not subject to the registration requirements of the Securities Act and applicable State securities laws. IF ANY WITHHOLDING OR DEDUCTION FOR OR ON ACCOUNT OF TAX IS APPLICABLE TO PAYMENTS OF INTEREST AND/OR REPAYMENTS OF PRINCIPAL ON ANY CLASS OF NOTES, SUCH PAYMENTS AND/OR REPAYMENTS WILL BE MADE SUBJECT TO SUCH WITHHOLDING OR DEDUCTION, WITHOUT THE ISSUER BEING OBLIGED TO PAY ANY ADDITIONAL AMOUNTS AS A CONSEQUENCE. The Notes of each class will each initially be represented on issue by a temporary global note in bearer form (each a Temporary Global Note) for such Class of Notes, without interest coupons attached. The Temporary Global Notes will be delivered on or about the Issue Date to a common safekeeper (the Common Safekeeper) for Euroclear Bank S.A./N.V. (Euroclear) and Clearstream Banking, société anonyme (Clearstream, Luxembourg). Each Temporary Global Note will be exchangeable for interests in a permanent global note in bearer form (each a Permanent Global Note) representing the same Class of Notes, without interest coupons attached, not earlier than 40 days following the Issue Date (the Exchange Date) (provided that certification as to non-u.s. beneficial ownership has been received). Ownership interests in the Temporary Global Notes and the Permanent Global Notes (together the Global Notes) will be shown on, and transfer thereof will only be effected through, records maintained by Euroclear and Clearstream, Luxembourg and their respective participants. The Permanent Global Notes will be exchangeable for Definitive Notes in bearer form only in certain limited circumstances as set forth therein. The Notes will be governed by English law. Capitalised terms contained in this document and defined herein have the meaning given to them on the page indicated in the Index of Principal Definitions at page 240. A Risk Factors section is included in this Prospectus. Prospective Noteholders should be aware of the aspects of the issuance of the Notes that are described in that section. Each person contemplating making an investment in the Notes must make its own investigation and analysis of the creditworthiness of the Issuer and the Borrower and its own determination of the suitability of any such investment, with particular reference to its own investment objectives and experience and any other factors which may be relevant to it in connection with such investment. A prospective investor who is in any doubt whatsoever as to the risks involved in investing in the Notes should consult its own independent professional advisors. Prospectus dated 19 October ARRANGER AND LEAD MANAGER GOLDMAN SACHS INTERNATIONAL CO-MANAGER LEHMAN BROTHERS INTERNATIONAL (EUROPE)

2 IMPORTANT NOTICE THE NOTES AND INTEREST THEREON WILL BE OBLIGATIONS OF THE ISSUER ONLY. THE NOTES WILL NOT BE OBLIGATIONS OR RESPONSIBILITIES OF, NOR WILL THEY BE GUARANTEED BY, THE FINANCE PARTIES (OTHER THAN THE ISSUER), THE ARRANGER, THE MANAGERS, THE ORIGINATOR, THE RETAINED INTEREST HOLDER, THE SERVICER, THE SPECIAL SERVICER, THE NOTE TRUSTEE, THE ISSUER SECURITY TRUSTEE, THE CASH MANAGER, THE CORPORATE SERVICES PROVIDER, THE BORROWER SECURITY TRUSTEE, THE PAYING AGENTS, THE AGENT BANK, THE LIQUIDITY FACILITY PROVIDER, THE BASIS SWAP COUNTERPARTY OR THE ISSUER ACCOUNT BANK (AS EACH TERM IS DEFINED IN THIS PROSPECTUS) OR ANY COMPANY IN THE SAME GROUP OF COMPANIES AS ANY OF THEM. Responsibility Statement Save as discussed below, the Issuer (a Responsible Person for the purposes of the Prospectus Directive) accepts responsibility for all information contained in this Prospectus and, to the best of the knowledge and belief of the Issuer (who has taken all reasonable care to ensure that such is the case), such information is in accordance with the facts and does not omit anything likely to affect the import of such information. The delivery of this Prospectus at any time does not imply that the information contained in this Prospectus is correct at any time subsequent to the date of this Prospectus. The information relating to the Borrower, which is set out in the Summary, Risk Factors, Appendix 1 Borrower Information, Appendix 2 KarstadtQuelle AG, the Master Lessee and the Major Subtenants and Appendix 3 Leased Properties sections of this Prospectus, has been accurately reproduced from information made available by the Borrower and/or derived from the terms of the Loan and Related Security and/or which is publicly available. So far as the Issuer is aware and is able to ascertain from information published by the Borrower, no facts have been omitted which would render the reproduced information misleading. Goldman Sachs International accepts responsibility for the information contained in the section of this Prospectus entitled Goldman Sachs International having taken all reasonable care to insure that such is the case, insofar as the same relates to it. To the best of the knowledge and belief of Goldman Sachs International, the information contained in such section is in accordance with the facts and does not omit anything likely to affect its import. Any investment in Notes does not have the status of a bank deposit and is not within the scope of the deposit protection scheme operated by the Financial Regulator. The Issuer is not and will not be regulated by the Financial Regulator as a result of issuing the Notes. No person is or has been authorised to give any information or to make any representation in connection with the issue and sale of the Notes other than those contained in this Prospectus and, if given or made, such information or representation must not be relied upon as having been authorised by or on behalf of the Issuer, the Borrower (or any companies in the same group of companies as, or affiliated to, the Borrower), the Finance Parties, the Arranger, the Managers (as defined in Subscription and Sale ), the Originator, the Retained Interest Holder, the Servicer, the Special Servicer, the Note Trustee, the Issuer Security Trustee, the Cash Manager, the Liquidity Facility Provider, the Corporate Services Provider, the Borrower Security Trustee, the Paying Agents, the Agent Bank, the Basis Swap Counterparty or the Issuer Account Bank or any of their respective affiliates or advisors. Neither the delivery of this Prospectus nor any sale, allotment or solicitation made in connection with the offering of the Notes shall, under any circumstances, create any implication or constitute a representation that there has been no change in the affairs of the Issuer, the Borrower (or any companies in the same group of companies as, or affiliated to, the Borrower) or in any of the information contained herein since the date of this Prospectus or that the information contained in this Prospectus is correct as of any time subsequent to its date. No person is or has been authorised in connection with the issue and sale of the Notes to give any information or to make any representation not contained in this Prospectus and, if given or made, 2

3 such information or representation must not be relied upon as having been authorised by or on behalf of the Issuer, the Originator, the Retained Interest Holder, the Managers, the Servicer, the Special Servicer, the Cash Manager, the Note Trustee, the Issuer Security Trustee, the Borrower Security Trustee, the Corporate Services Provider, the Paying Agents, the Agent Bank, the Liquidity Facility Provider, the Basis Swap Counterparty or the Issuer Account Bank. Neither the delivery of this Prospectus nor any sale or allotment made in connection with the offering of any of the Notes will, under any circumstances, constitute a representation or create any implication that there has not been any change in the information contained herein since the date of this Prospectus or that the information contained in this Prospectus is correct as of any time subsequent to its date. This Prospectus may only be used for the purposes for which it has been prepared. Other than the approval by the Financial Regulator of this Prospectus as a prospectus in accordance with the requirements of the Prospectus Directive, no action has been or will be taken to permit a public offering of the Notes or the distribution of this Prospectus in any jurisdiction where action for that purpose is required. The distribution of this Prospectus and the offering of the Notes in certain jurisdictions may be restricted by law. Persons receiving or obtaining this Prospectus or any part of this Prospectus are required by the Issuer and the Managers to inform themselves about, and to observe, any such restrictions. Neither this Prospectus nor any part of this Prospectus constitutes an offer of the Notes or an invitation by or on behalf of the Issuer or the Managers to subscribe for or purchase any of the Notes and neither this Prospectus, nor any part of this Prospectus, may be used for or in connection with an offer to, or solicitation by, any person in any jurisdiction or in any circumstances in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation. For a further description of certain restrictions on offers and sales of the Notes and distribution of this Prospectus or any part of this Prospectus see Subscription and Sale below. None of the Managers, the Note Trustee, the Issuer Security Trustee, the Borrower Security Trustee nor any of their respective affiliates has separately verified the information contained herein, and accordingly none of the Managers, the Note Trustee, the Issuer Security Trustee, the Borrower Security Trustee nor any of their respective affiliates makes any representation, recommendation or warranty, express or implied, regarding the accuracy, adequacy, reasonableness or completeness of the information contained herein or in any further information, notice or other document which may at any time be supplied in connection with the Notes or their distribution, or the future performance and adequacy of the Notes, and none of them accepts any responsibility or liability therefore. None of the Managers, the Note Trustee, the Issuer Security Trustee, the Borrower Security Trustee nor any of their respective affiliates undertakes to review the financial condition or affairs of the Issuer during the life of the arrangements contemplated by this Prospectus nor to advise any investor or potential investor in the Notes of any information coming to their attention. The material contained on the web sites at the web addresses mentioned in this Prospectus do not form part of the information set out in this Prospectus. STABILISATION In connection with the issue of the Notes, Goldman Sachs International (the Stabilising Manager) or any person acting for it may over-allot Notes (provided that the aggregate principal amount of Notes allotted does not exceed 105 per cent. of the aggregate principal amount of the relevant Notes) or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However, there is no assurance that the Stabilising Manager or any person acting for it will undertake stabilisation action. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the Notes is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the Notes and 60 days after the date of the allotment of the Notes. Any loss or profit sustained as a consequence of any such over-allotment or stabilising shall be for the account of Goldman Sachs International. 3

4 CAPITALISED TERMS USED IN THIS PROSPECTUS; CURRENCY REFERENCES; NUMERICAL INFORMATION From time to time capitalised terms are used in this Prospectus. Each of those capitalised terms has the meaning assigned to it in this Prospectus. An index of principal definitions is included at the end of this Prospectus for purposes of identifying where the definitions of certain capitalised terms are located. All references in this document to euro or A and to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty establishing the European Community (signed in Rome on 25 March 1957), as amended. Prospective Noteholders should note that the information contained in this Prospectus with respect to the Loan is presented on the following basis: (a) all information unless otherwise specified, is stated as at the Cut Off Date; (b) all numerical information provided with respect to the Loan is provided on an approximate basis; and (c) where reference is made to, or calculation based on, the value of a Property, such value is based on the value attributed by the Initial Valuation to that Property. See The Loan and the Related Property Summaries. 4

5 TABLE OF CONTENTS Clause Page Summary 6 Risk Factors 36 The Loan and the Related Security 60 Description of the Loan and the Related Security and the Structure of the Accounts 60 Description of the Mezzanine Facility Agreement and Intercreditor Arrangements 100 Description of the Master Lease and the Permitted Subleases 107 Portfolio Due Diligence 115 The Loan and the Related Property Summaries 118 The Transaction Documents 128 The Loan Sale Agreement and Retained Interest Holder Intercreditor Deed 128 The Servicing Agreement 134 The Note Trust Deed 144 The Liquidity Facility Agreement 146 The Basis Swap Agreement 148 The Cash Management and Issuer Bank Account Agreement 151 Goldman Sachs International 159 The Issuer 160 Yield, Prepayment and Maturity Considerations 162 Summary of the Provisions Relating to the Notes while in Global Form 167 Terms and Conditions of the Notes 169 Certain Matters of German Law 199 Certain Matters of Dutch Law 206 Use of Proceeds 207 Fees and Expenses 208 Irish Taxation 209 German Taxation 211 Subscription and Sale 214 General Information 217 Appendix 1. Borrower Information KarstadtQuelle AG, the Master Lessee and the Major Subtenants Details of Properties Term Sheet Index of Principal Definitions 239 5

6 SUMMARY The following information is a summary of the principal features of the issue of the Notes. This summary does not purport to be complete and is taken from, and is qualified in its entirety by reference to the detailed information appearing elsewhere in the Prospectus and, in relation to the terms and conditions of the Notes, the Conditions. Prospective purchasers of the Notes are advised to read carefully, and to rely solely on, the detailed information appearing elsewhere in this Prospectus in making any decision whether or not to invest in any Notes. Capitalised terms used, but not defined, in this section can be found elsewhere in this Prospectus, unless otherwise stated. An index of defined terms is set out at the end of this Prospectus. This summary constitutes a general description of the Notes for the purpose of Article 22.5(3) of Commission Regulation (EC) No. 809/2004 implementing the Prospectus Directive. 1. INTRODUCTION TO THE TRANSACTION On the Issue Date, the Issuer will issue the Notes and with the net proceeds of such issuance (being an aggregate initial principal amount of A1,192,021,267) will acquire from the Originator, pursuant to the terms of a loan sale agreement to be entered into between them, amongst others, on or prior to the Issue Date (the Loan Sale Agreement), the Loan excluding the right to receive Retained Interest (which will be retained by the Originator). The Loan is secured by, among other things, a portfolio of commercial properties located in Germany (each a Property and collectively, the Properties or the Portfolio). The Issuer will also acquire the benefit of security granted by the Borrower or other obligors as security for the Loan (the Related Security). The Loan (together with the Related Security) has an initial purchase price of A1,192,021,267 which is equal to the outstanding principal balance of the Loan as at the Issue Date. The aggregate market value of the Properties is set out below in Risk Factors Factors Relating to the Properties Limitations of Valuations below. The Properties are more fully described below in The Loan and Related Property Summaries. The Portfolio consists of 109 Properties which have been or are being acquired by the Borrower from subsidiaries of KarstadtQuelle AG pursuant to the Real Property Purchase Agreement. As at the date of this Prospectus the conditions precedent to the closing of the sale of 92 Properties have been fulfilled and their sale to the Borrower has taken place. The details of these properties are set out in Appendix 4. For further information concerning the Real Property Purchase Agreement see Transfer of the Properties to the Borrower in Appendix 1. As at 11 October 2006 Land Charges over 70 Properties have been registered and, in respect of the remaining Properties, registration of Land Charges has been applied for in respect of all but 15. In respect of all Properties the sale of which has been completed, Land Charges have been registered or registration applied for. These Land Charges will be first-ranking after all prior-ranking encumbrances in Division III of the relevant land register have been deleted. In respect to the registration of transfer of ownership in the Properties (in respect of which sale to the Borrower has been completed), registration has been applied for in respect of all but 25 Properties and has been completed in respect of eight Properties. The obligations of the Issuer under the Notes and to the other Issuer Secured Creditors will be secured pursuant to the terms of the Issuer Deed of Charge and Assignment and the German Security Assignment Agreement. The Issuer will use receipts of principal and interest (other than the Retained Interest) in respect of the Loan together with certain other funds available to it (as described elsewhere in this Prospectus) to make payments of, among other things, principal and interest due in respect of the Notes. The Notes will constitute a single series of notes, designated the Fleet Street Finance Two P.L.C. Commercial Mortgage Backed Floating Rate Notes, consisting of multiple classes. The table below identifies the respective classes of the Notes and specifies various characteristics of each class of the Notes. 6

7 2. PRINCIPAL FEATURES OF THE NOTES The following is a brief overview of the principal characteristics of the Notes referred to in this Prospectus. This information is subject to, and is more fully explained in, the other sections of this Prospectus. Notes Class A Notes Class B Notes Class C Notes Class D Notes Initial Principal Amount A780,000,000 A170,000,000 A143,100,000 A98,921,267 Issue price 100% 100% 100% 100% Interest rate 1 EURIBOR % per annum EURIBOR % per annum EURIBOR % per annum EURIBOR % per annum Expected Maturity Date 23 January 2011 January 2011 January 2011 January 2011 Final Maturity Date 2 July 2014 July 2014 July 2014 July 2014 Weighted average life years 3.0 years 3.0 years 3.0 years Day count Actual/360 Business Day convention/ Business Days Payment Dates Form of Notes Denomination Clearing system Credit enhancement (provided by other Classes of Notes subordinated to the relevant Class) Modified following/london, Dublin, Frankfurt and Amsterdam and TARGET Days Quarterly on 26 January, 26 April, 26 July and 26 October] Bearer A50,000 (or an integral multiple of A1,000 in excess thereof in the case of the Class A Notes, Class B Notes and Class C Notes, or an integral multiple of A1 in excess thereof in the case of the Class D Notes). Euroclear and Clearstream, Luxembourg Subordination of the Class B Notes, Class C Notes and Class D Notes Subordination of the Class C Notes and Class D Notes Subordination of the Class D Notes No subordination / credit enhancement Listing Irish Stock Exchange regulated market ISIN XS XS XS XS Common Code Expected rating -Fitch AAA AA A BBB Expected rating Moody s Aaa NR NR NR Expected rating S&P AAA AA A BBB Intended to be held in a manner which would allow Eurosystem eligibility Yes. Note that the designation yes simply means that the Notes are intended upon issue to be deposited with one of the international central securities depositaries as common safekeeper and does not necessarily mean that the Notes will be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem either upon issue or at any or all times during their life. Such recognition will depend upon satisfaction of the Eurosystem eligibility criteria. 1. All of the Notes will bear interest at the rate equal to EURIBOR for three month euro deposits plus the margin specified above (other than in respect of the first Interest Period, the rate for which shall be determined by a linear interpolation of EURIBOR for three month and four month euro deposits). 2. Based on the assumptions set out in Yield, Prepayment and Maturity Considerations, to which investors should refer, the current expected maturity date of each Class of Notes is the Expected Maturity Date set forth above. In any event, the maturity date of any Class may not be longer than the respective Final Maturity Date set forth above. 3. Based on the assumption that the Issuer exercises its option to redeem the Notes upon the aggregate Principal Amount Outstanding becoming less than 10% of their Principal Amount Outstanding on the Issue Date. 7

8 3. PARTIES TO THE TRANSACTION Issuer: Fleet Street Finance Two P.L.C. (the Issuer), a public company incorporated with limited liability in Ireland with registration number , whose registered office is at 5 Harbourmaster Place, IFSC, Dublin 1, Ireland. The entire issued share capital of the Issuer is held by or on behalf of Deutsche International Finance (Ireland) Limited on trust for charitable purposes. Originator and Retained Interest Holder: Borrower: Facility Agent: Borrower Security Trustee: Issuer Security Trustee: Note Trustee: Servicer: Goldman Sachs Credit Partners L.P., a limited partnership registered in Bermuda with its principal office at 85 Broad Street, New York, New York, U.S.A., in its capacity as original lender under the Senior Facility Agreement relating to the Loan (the Originator). Highstreet B Portfolio GbR (the Borrower) as described in Appendix 1 Borrower Information. Capmark Services Ireland Limited a limited liability company incorporated under the laws of Ireland with its registered office at Clanmore, Mullinger, Co. Westmeath, Ireland (the Facility Agent) will act as facility agent under the Senior Facility Agreement. ABN AMRO Trustees Limited in its capacity as the borrower security trustee and trustee for the Finance Parties (the Borrower Security Trustee) in respect of the Related Security (a) governed by German law pursuant to the joint security trust agreement dated 6 September 2006 among the Originator, the Original Mezzanine Lender, the Facility Agent, the Borrower Security Trustee and the Loan Arranger (the Joint Security Trust Agreement), and (b) governed by English law, pursuant to the security trust deed to be dated on or about the Issue Date, among the Originator, the Original Mezzanine Lender, the Facility Agent, the Borrower Security Trustee and the Loan Arranger (the Loan Security Trust Deed). Deutsche Trustee Company Limited, a limited liability company incorporated in England, whose registered office is at Winchester House, 1 Great Winchester Street, London EC2N 2DB will hold on trust for itself and the other Issuer Secured Creditors (in such capacity, the Issuer Security Trustee) the security granted by the Issuer in favour of the Issuer Secured Creditors pursuant to (a) a deed of charge and assignment governed by English law (the Issuer Deed of Charge and Assignment) and (b) a security assignment agreement governed by German law (the German Security Assignment Agreement), in each case to be dated the Issue Date. Deutsche Trustee Company Limited will act as trustee (the Note Trustee) for the holders of the Notes pursuant to the terms of a note trust deed to be dated on or about the Issue Date (the Note Trust Deed) between the Note Trustee and the Issuer. Capmark Services Ireland Limited and Capmark Services UK Limited will act jointly (subject as otherwise mentioned in the section The Loan and the Related Security The Servicing Agreement ) as the servicer (together the Servicer) and will carry out certain servicing functions on behalf of the Issuer in connection with the Loan and the Related Security. Both entities are specialists in the loan servicing business. Capmark Services Ireland Limited is a limited liability company incorporated under the laws of Ireland with registered number and operates out of its registered 8

9 Special Servicer: Cash Manager: Issuer Account Bank: Principal Paying Agent and Agent Bank: office at Clonmore, Mullingar, Co. Westmeath, Ireland. Capmark Services UK Limited is a limited liability company organised under the laws of England and Wales with registered number and operates out of its registered office at Norfolk House, 31 St. James s Square, London SW1Y 4JJ, United Kingdom. As at the date hereof, Capmark Services Ireland Limited was rated CPS1 minus by Fitch and Strong by S&P and Capmark Services UK Limited was rated CSS2 minus by Fitch and Above Average by S&P. Capmark Services UK Limited, whose registered office is located at Norfolk House, 31 St James s Square, London SW1Y 4JJ, will be appointed as special servicer (the Special Servicer) to carry out certain special servicing functions on behalf of the Issuer in connection with the Loan and the Related Security. Deutsche Bank AG, London Branch will be the cash manager to the Issuer (in such capacity, the Cash Manager) pursuant to the terms of a cash management and issuer account bank agreement to be dated on or about the Issue Date (the Cash Management and Issuer Account Bank Agreement) between, among others, the Issuer, the Issuer Security Trustee and the Cash Manager. The Cash Manager will, subject to the terms of the Cash Management and Issuer Account Bank Agreement, on behalf of the Issuer, manage the Issuer Accounts, determine the amounts of and arrange payments to be made by the Issuer and keep certain records on the Issuer s behalf. Deutsche Bank AG, London Branch will be the account bank to the Issuer (in such capacity, the Issuer Account Bank) pursuant to the terms of the Cash Management and Issuer Account Bank Agreement. Pursuant to the terms of the Cash Management and Issuer Account Bank Agreement, the Issuer Account Bank will provide certain banking services to the Issuer in relation to the accounts to be opened with the Issuer Account Bank in the name of the Issuer (the Issuer Accounts). The Issuer Account Bank is required to have a short-term rating of at least F1+ from Fitch, P-1 from Moody s and A-1+ from S&P. Deutsche Bank AG, London Branch will be appointed to act as principal paying agent and agent bank in respect of the Notes (in such capacities, the Principal Paying Agent and the Agent Bank) pursuant to the terms of an agency agreement in respect of the Notes to be dated on or about the Issue Date (the Agency Agreement) between the Issuer, the Note Trustee, the Issuer Security Trustee, the Agent Bank, the Principal Paying Agent and the Irish Paying Agent. Irish Paying Agent: Deutsche International Corporate Services (Ireland) Limited, whose registered office is at 5 Harbourmaster Place, International Financial Services Centre, Dublin 1, Ireland will be appointed to act as Irish paying agent pursuant to the terms of the Agency Agreement (in such capacity, the Irish Paying Agent and together with the Principal Paying Agent and any other person appointed as a paying agent in accordance with and pursuant to the terms of the Agency Agreement, the Paying Agents). Pursuant to the terms of the Agency Agreement, the Paying Agents will make payments on behalf of the Issuer of principal and interest on the Notes. 9

10 Basis Swap Counterparty: Liquidity Facility Provider: Issuer Secured Creditors: Goldman Sachs Mitsui Marine Derivative Products, L.P. will be the basis swap counterparty (the Basis Swap Counterparty) pursuant to the terms of a hedging agreement in the form of an International Swaps and Derivatives Association, Inc. (ISDA) 1992 Master Agreement (Multicurrency-Cross Border) and Schedule thereto to be dated on or prior to the Issue Date (the Basis Swap Agreement) with the Issuer. Lloyds TSB Bank plc, acting through its office at 10 Gresham Street, London EC2V 7AE, will act as the committed facility provider (the Liquidity Facility Provider) pursuant to the terms of a committed facility agreement to be dated on or about the Issue Date (the Liquidity Facility Agreement) between the Liquidity Facility Provider, the Issuer and the Issuer Security Trustee. The Issuer will be required to maintain a liquidity facility with a bank which has a rating assigned to its short-term unsecured, unsubordinated and unguaranteed debt obligations of which are rated F1 by Fitch, P-1 by Moody s and A-1+ by S&P (the Minimum Liquidity Facility Provider Ratings). If the Liquidity Facility Provider ceases to have the Minimum Liquidity Facility Provider Ratings, the Issuer shall make arrangements for a new liquidity facility provider which has the Minimum Liquidity Facility Provider Ratings to enter into a new liquidity facility agreement on substantially the same terms as the Liquidity Facility Agreement. See the section entitled The Transaction Documents The Liquidity Facility Agreement below. As applicable in the relevant context, each of the Noteholders, the Note Trustee, the Issuer Security Trustee, any appointee of either the Note Trustee or the Issuer Security Trustee, any receiver appointed pursuant to the terms of the Issuer Deed of Charge and Assignment, the Corporate Services Provider, the Servicer, the Special Servicer, the Cash Manager, the Liquidity Facility Provider, the Basis Swap Counterparty, the Paying Agents, the Agent Bank, the Issuer Account Bank, the Originator and the Retained Interest Holder. Corporate Services Provider: Deutsche International Corporate Services (Ireland) Limited, whose registered office is at 5 Harbourmaster Place, International Financial Services Centre, Dublin 1, Ireland, will be the corporate services provider (the Corporate Services Provider) and will provide certain administrative services to the Issuer, pursuant to the terms of a corporate services agreement to be dated on or about the Issue Date (the Corporate Services Agreement) between the Corporate Services Provider, the Issuer Security Trustee and the Issuer. Finance Parties: Master Lessee: The Finance Parties under the Senior Facility Agreement include the Originator and any person which becomes party to the Senior Facility Agreement as a lender, which in each case has not ceased to be a party thereunder (each a Lender), the Facility Agent, the Borrower Security Trustee and Goldman Sachs International in its capacity as arranger under the Senior Facility Agreement. The Finance Parties will include the Issuer following the sale of the Loan to the Issuer on the Issue Date. W2005/Seven BV, a limited liability company established under the laws of the Netherlands whose registered office is at Strawinskylaan 1207, 1077xx Amsterdam, The Netherlands, is the master lessee 10

11 under the Master Lease (the Master Lessee). For further information see Appendix 2 KarstadtQuelle AG, the Master Lessee and the Major Subtenants. Major Subtenants: Karstadt Warenhaus GmbH, a limited liability company established under the laws of Germany whose registered office is at Theodor-Althoff-Strasse 2, Essen, Germany and Quelle GmbH, a limited liability company established under the laws of Germany, whose registered office is at Nürnberger Strasse 91-95, Fürth, Germany, are the subtenants under the two Permitted Subleases (the Major Subtenants). For further information see Appendix 2 KarstadtQuelle AG, the Master Lessee and the Major Subtenants. 4. RELEVANT DATES AND PERIODS Issue Date: The Notes will be issued on or about 24 October 2006 (or such later date as the Issuer, Goldman Sachs International as Lead Manager and Arranger and Lehman Brothers International (Europe) as Co- Manager may agree) (the Issue Date). Cut-Off Date: 1 September 2006 (the Cut-Off Date). Final Maturity Date: Unless previously redeemed in full, the Issuer will redeem the Notes in full (together with all interest accrued thereon) on the Payment Date falling in July 2014 (the Final Maturity Date). Payment Date: Each Note will bear interest on its Principal Amount Outstanding from, and including, the Issue Date. Interest will be payable on the Notes quarterly in arrear on 26 January, 26 April, 26 July and 26 October in each year (or, if such day is not a Business Day, the next following Business Day) (each a Payment Date) in respect of the Interest Period ending immediately prior thereto. The first Payment Date in respect of the Notes will be the Payment Date falling in January Loan Payment Date: The payment dates for the Loan (each a Loan Payment Date) are the 20th day of each of January, April, July and October in each year and the Loan Final Maturity Date or, if any such day is not a Business Day, the next Business Day in the case of a Loan Payment Date or the immediately preceding Business Day in the case of the Loan Final Maturity Date. Business Day: Any day other than a Saturday, Sunday or day on which banks are not open for interbank business in London, Amsterdam, Dublin or Frankfurt which is also a TARGET Day. TARGET Day: A day on which the Trans-European Automated Real-Time Gross Settlement Express System is open for settlement payments in euro. Determination Date: Two Business Days prior to each Payment Date, except in respect of the Payment Date which is the Final Maturity Date when such date will be the Final Maturity Date (each such day, a Determination Date), the Cash Manager will, based on information relating to collections on the Loan received from the Servicer, perform calculations in respect of the immediately preceding Collection Period and payments to be made to, among others, the holders of the Notes (the Noteholders) in accordance with the relevant Priority of Payments on such Payment Date. The Determination Date is the date by which the Servicer will be required to identify, among other things, the sources and allocation of the amounts received in respect of the Loan. 11

12 Collection Period: Amounts available for payment on the Notes on any Payment Date will depend on the payments and other collections received with respect to the Loan during the applicable Collection Period, the payments received with respect to the Basis Swap Agreement for the applicable Collection Period including, for the avoidance of doubt, payments which relate to that Collection Period but which are received after that collection period but on or prior to the immediately following Determination Date and any Liquidity Drawings relating to such Payment Date with respect to the Notes. Each Collection Period will. (a) (b) (c) relate to the Payment Date immediately following such Collection Period. start from (and include) the preceding Loan Payment Date (or in the case of the first Collection Period, the Issue Date); and end on (but exclude) the Loan Payment Date that occurs in the same month as the immediately following Payment Date. Interest Period: Interest Determination Date: Interest on the Notes is payable by reference to successive interest periods (each an Interest Period). The first Interest Period will commence on (and include) the Issue Date and end on (but exclude) the Payment Date falling in January Each successive Interest Period will commence on (and include) the next (or first) Payment Date and end on (but exclude) the following Payment Date. The rate of interest applicable to each Note for each Interest Period will be calculated and set on, in respect of the first Interest Period, two TARGET Days prior to the Issue Date and, in respect of all subsequent Interest Periods, two TARGET Days prior to the first day of each such Interest Period (each an Interest Determination Date). 5. THE LOAN Parties to the Loan: Purpose: Rate of Interest: Pursuant to the Senior Facility Agreement, the Originator made available to the Borrower a term loan facility for the Senior Facility Amount. On 3 July 2006, the Borrower drew down a loan in the aggregate amount of A877,596, (the Initial Drawdown) and on 31 August 2006 the Borrower drew down a loan in the aggregate amount of A317,966, (the Second Drawdown and together with the Initial Drawdown, in the amount of A1,195,562,471 the Loan). The Borrower applied the proceeds of the Loan to finance or refinance the acquisition of the Properties, to pay fees, costs and expenses relating to the Loan and Related Security and to fund capital expenditures of the Borrower under the Maser Lease. The rate of interest payable on the Loan for each Loan Interest Period is calculated as the sum of EURIBOR plus a margin plus Mandatory Costs (if any). For a more detailed description of the interest rate, see The Loan and the Related Security. On the Issue Date the Originator will assign to the Issuer all rights to receive interest on the Loan other than the right to receive Retained Interest, which will be retained by the Retained Interest Holder. 12

13 Repayment: Prepayment: Interest Coverage Ratio: The Borrower must repay the Loan in full on the Loan Final Maturity Date, subject to the various provisions in the Senior Facility Agreement regarding repayment or prepayment in whole or in part (including provisions regarding scheduled amortisation). The Borrower must prepay the Loan, in whole or in part, as applicable, in the following circumstances: (a) if it becomes unlawful in any applicable jurisdiction for a Lender to perform any of its obligations under the Senior Facility Agreement or maintain its participation in the Loan; (b) if required by the Majority Lenders following a Change of Control; or (c) upon a Disposal of any Property (in which case prepayment shall be through application of Disposal Proceeds deposited in the Sales Account on the date of such disposal). The Borrower may voluntarily prepay the Loan, in whole or in part, upon six Business Days prior notice. If the Borrower makes any prepayment, prepayment fees will be payable by the Borrower in certain circumstances as agreed between the Borrower and the Originator. All prepayments must be made with accrued interest on the amount prepaid, together with Break Costs and Mandatory Costs (if any). For a more detailed description of the provisions of the Senior Facility Agreement regarding prepayment of the Loan see The Loan and the Related Security Description of the Loan and the Related Security and the Structure of Accounts below. See further Risk Factors Factors relating to the Notes Liability under the Notes below. The Borrower covenants that the interest coverage ratio (as determined in accordance with the Senior Facility Agreement, the ICR) shall not be less than 135 per cent. as of two consecutive Loan Payment Dates. See further The Loan and the Related Security Description of the Loan and the Related Security and the Structure of Accounts. A Cash Trap Period (which, among other things restricts payments that can be made to the Mezzanine Facility Agent and the General Account, payments that can be made out of the Portfolio B Capital Maintenance Account and the ability of the Borrower to make distributions to equity holders) will commence on any Loan Payment Date as of which ICR is less than 150 per cent., and will terminate on the next following Loan Payment Date as of which the ICR is 150 per cent. or greater. Loan to Value: The Borrower covenants that the loan to value ratio (as determined in accordance with the Senior Facility Agreement, the LTV) is not greater than 70 per cent. on any relevant test date. If the test is not satisfied, the Borrower must prepay the Loan, or make a prepayment to bring the LTV to 70 per cent., otherwise a breach of this covenant shall constitute a Loan Event of Default. See further The Loan and the Related Security Description of the Loan and the Related Security and the Structure of Accounts. The Related Security: The obligations of the Borrower under the Senior Finance Documents are secured pursuant to the security (the Related Security) created by, and administered pursuant to, the Senior 13

14 * Sale of this Property is not yet completed. Property is currently cash collateralised. Security Documents. The Related Security includes the following (each a Senior Security Document and collectively the Senior Security Documents): (a) a first-ranking pledge over all partnership interests in the Borrower pursuant to the Borrower Pledge Agreement; (b) a first-ranking pledge over all Shares in JV Holding BV pursuant to the JV Holding Pledge Agreement; (c) a first-ranking pledge over all Shares in the Master Lessee pursuant to the Master Lessee Pledge Agreement; (d) first-ranking pledges over the General Account, the Rent Account, the Sales Account, the Junior Reserve Account and the Cash Collateral Account pursuant to the Borrower Account Pledge Agreements; (e) a first ranking pledge over the B Portfolio Rent Account pursuant to the Borrower and Master Lessee Account Pledge Agreements (items (a) through (e), inclusive, are the Pledges); (f) first-ranking uncertificated land charges over the Properties created by the Land Charges, provided that the Land Charges granted in respect of the Property situated at Wandererstrasse 159 in Nürnberg may rank junior to certain other existing land charges; (g) security purpose agreement among the Borrower Security Trustee, also acting as Borrower Security Trustee under the Mezzanine Facility Agreement, the Borrower, the Parent and their respective partners relating to the Properties and the Land Charges; (h) one or more declarations of assignment relating to the assignment to the Borrower Security Trustee in full of each of the existing land charges over the Property located in Offenburg, Lindenplatz 3*, as well as an enforceable counterpart (vollstreckbare Ausfertigung) of the submittal to the immediate enforcement (Unterwerfung unter die sofortige Zwangsvollstreckung) in the full nominal amount of each such land charge (item (f) through (h), inclusive, are the Land Charges); (i) a security assignment of the Borrower s rights: (i) under the Master Lease with respect to the Properties, under easements (Dienstbarkeiten) and rights of use (Nießbräuche) granted to the sublessees pursuant to or in connection with the Permitted Subleases, under the Dritte Leases and any hereditary building rights granted with respect to the Properties, pursuant to the Assignment of Leases; (ii) under the Acquisition Documentation and all future sales proceeds generated by Disposals of the Properties, pursuant to the Assignment of Acquisition Documentation; (iii) as beneficiary under the insurance contracts required under the Senior Facility Agreement with respect to the Properties (other than any insurance required under the 14

15 Senior Facility Agreement against product and third party and public liability risks), pursuant to the Assignment of Insurance; and (iv) under any applicable Asset Management Services Agreement and/or Facilities Management Services Agreement, pursuant to the Borrower Assignment of Services Agreements; (j) a security assignment of the Master Lessee s rights: (i) under the Permitted Subleases to the extent such Permitted Subleases pertain to the Properties, pursuant to the Master Lessee Assignment of Permitted Subleases; and (ii) under any applicable Asset Management Services Agreement and/or Facilities Management Services Agreement, pursuant to the Master Lessee Assignment of Services Agreements; and (k) an assignment by way of security of the Borrower s rights under the Hedge Documents pursuant to the Assignment of Hedge Documents (items (i) through (k) are, inclusive, the Assignment Agreements. Additionally, a share mortgage under Irish law (the Irish Share Mortgage) has been granted by the Borrower to the Borrower Security Trustee over shares acquired in Eligible Investments from the Cash Colleral Account. The pledges created pursuant to the Pledge Agreements are the accessory security rights (akzessorische Sicherheiten). The Land Charges and the security assignments created pursuant to the Assignment Agreements (other than the Assignment of Hedge Documents) are the non-accessory security rights (nicht akzessorische Sicherheiten). ABN AMRO Trustees Limited in its capacity as the borrower security trustee for the Finance Parties (the Borrower Security Trustee) will, pursuant to the Joint Security Trust Agreement, administer the accessory security rights granted by the Borrower and other obligors in favour of the Finance Parties (including the Issuer, following the sale of the Loan from the Originator to the Issuer) pursuant to the Pledges. In addition, the Borrower Security Trustee will, pursuant to the Joint Security Trust Agreement, hold and administer the non-accessory security rights created pursuant to the Land Charges and the Assignment Agreements (other than the Assignment of Hedge Documents), as well as any accessory security securing rights granted to the Borrower Security Trustee as a Finance Party. Furthermore, the Borrower Security Trustee will hold the security assigned by the Assignment of Hedge Documents, as well as the Pledges, the Land Charges, the Assignment Agreements and the Irish Share Mortgage on trust for the Finance Parties (including the Issuer following the sale of the Loan from the Originator to the Issuer) pursuant to the Loan Security Trust Deed. The Borrower Security Trustee will delegate substantially all of its duties and discretions as Borrower Security Trustee to the Servicer and, as applicable, the Special Servicer under the Servicing Agreement. 15

16 Acquisition of the Loan: Representations and Warranties: Servicer: Special Servicer: On the Issue Date, the Issuer will issue the Notes and with the net proceeds of such issue will acquire the Loan (excluding the right to receive Retained Interest) from the Originator pursuant to the terms of the Loan Sale Agreement. The Originator will give notice to the Borrower of the sale of the Loan from the Originator to the Issuer. See further The Transaction Documents the Loan Sale Agreement and Retained Interest Holder Intercreditor Deed. The Loan Sale Agreement contains certain representations and warranties given by the Originator in relation to the Loan and the Related Security. These representations and warranties are described under The Transaction Documents the Loan Sale Agreement and Retained Interest Holder Intercreditor Deed Representations and Warranties of the Originator. If there has been a material breach of a representation or warranty in relation to the Loan or the Related Security and such breach is not capable of remedy or, if capable of remedy, has not been remedied within the time specified in the Loan Sale Agreement then the Originator will be required to either (a) repurchase the Loan or (b) indemnify the Issuer to its satisfaction, as described below in The Transaction Documents The Loan Sale Agreement and Retained Interest Holder Intercreditor Deed Representations and Warranties of the Originator. Capmark Services Ireland Limited and Capmark Services UK Limited will be appointed to act jointly (subject as otherwise mentioned in The Transaction Documents The Servicing Agreement ) as Servicer pursuant to the terms of a servicing agreement (the Servicing Agreement) to be entered into on the Issue Date between, among others, the Issuer, the Servicer, the Special Servicer, the Facility Agent, the Issuer Security Trustee and the Borrower Security Trustee. The Servicer will service and administer the Loan and the Related Security in the ordinary course, including making certain calculations and preparing reports in respect of the Loan and the Properties. The Servicer will, subject to the terms of the Servicing Agreement, receive an annual fee payable quarterly in arrear on each payment date (the Servicing Fee) equal to per cent. per annum (plus VAT, if any) of the outstanding principal balance of the Loan at the beginning of the Loan Interest Period relating to such Payment Date. See The Transaction Documents The Servicing Agreement Servicing Fee, Special Servicing Fee, Liquidation Fee and Workout Fee. Capmark Services UK Limited will be appointed as Special Servicer pursuant to the Servicing Agreement. The Special Servicer will formally assume special servicing duties in respect of the Loan and the Related Security, and the Loan and the Related Security will become a Specially Serviced Loan, on the occurrence of a Special Servicing Transfer Event (which includes, among other things, the occurrence of a payment default on the Loan on the Loan Final Maturity Date or a payment default by the Borrower that is more than 45 days overdue and certain other events). The Loan will cease to be a Specially Serviced Loan and will become a Corrected Loan if the events giving rise to it becoming a Specially Serviced Loan are cured. See The Transaction Documents The Servicing Agreement below. 16

17 Controlling Class and Operating Advisor: Property Protection Advances: The Special Servicer will be entitled to be paid, in accordance with the terms of the Servicing Agreement: (i) a fee (the Special Servicing Fee) equal to 0.18 per cent. per annum (plus VAT, if any) of the outstanding principal amount of the Loan, for each day the Loan is designated as a Specially Serviced Loan and which is payable in addition to the Servicing Fee; (ii) a liquidation fee (the Liquidation Fee) equal to 0.65 per cent. per annum (plus VAT, if any) of the proceeds of sale, net of costs and expenses of sale, if any, arising from the sale of the Loan or any of the Properties following the enforcement of the Related Security provided the Loan is designated as a Specially Serviced Loan; and (iii) a workout fee (the Workout Fee) equal to 0.65 per cent. (plus VAT, if any) of each collection of interest and principal received on the Loan, for so long as it remains a Corrected Loan, if the Loan becomes a Specially Serviced Loan and then subsequently becomes a Corrected Loan. See The Transaction Documents The Servicing Agreement Servicing Fee, Special Servicing Fee, Liquidation Fee and Workout Fee. The most junior Class of Notes outstanding shall be the Controlling Class if at the relevant time it meets the Controlling Class Test. A Class of Notes will meet the Controlling Class Test if it has a total Principal Amount Outstanding which is not less than 25 per cent. of the Principal Amount Outstanding of such Class of Notes on the Issue Date. If the most junior Class of Notes outstanding does not meet the Controlling Class Test, the next most junior Class of Notes outstanding that does meet the Controlling Class Test will be the Controlling Class. If no Class of Notes has a Principal Amount Outstanding that satisfies the Controlling Class Test then the Controlling Class will be the most junior class of Notes then outstanding. For the avoidance of doubt, the Principal Amount Outstanding of a Class of Notes for the purposes of calculating the Controlling Class Test shall be the Principal Amount Outstanding of such Class less any Appraisal Reduction Amounts that have been applied to that Class. The Note Trustee shall determine which Class of Notes meets the Controlling Class Test and shall notify the Servicer and the Special Servicer accordingly. The Controlling Class will have the right to appoint an advisor (the Operating Advisor) to represent its interests when the Servicer or the Special Servicer is acting in relation the Loan. The appointment of the Operating Advisor will be deemed effective upon notification by it of its appointment to the Note Trustee to the Issuer, the Issuer Security Trustee, the Servicer and the Special Servicer. The Operating Advisor will, subject to certain conditions being met, be entitled to require the Issuer to replace the Special Servicer and will have certain rights with respect to certain material actions relating to the Loan. See The Transaction Documents The Servicing Agreement Operating Advisor. The Senior Facility Agreement obliges the Borrower to pay certain amounts to third parties, such as insurers and persons providing services in connection with the operation of the Properties. If: (a) the Borrower fails to pay any such amount (and there are insufficient funds available in the relevant Borrower Accounts to pay it); (b) the Senior Facility Agreement entitles the Issuer as lender to pay or discharge the obligation to the third party; (c) the Senior Facility Agreement requires the Borrower to reimburse the 17

18 Issuer as lender for any payments so made; (d) the Servicer or, as applicable, the Special Servicer is satisfied that such amounts will, in addition to all other amounts due, be recoverable from the relevant Borrower; and (e) the Servicer or, as the case may be, the Special Servicer, is otherwise satisfied that it would be in accordance with the Servicing Standard to do so, the Servicer or Special Servicer, as the case may be, may at its sole discretion make the relevant third party payment (any such payment being a Property Protection Advance) from its own funds. If the Servicer or the Special Servicer makes a Property Protection Advance from its own funds, it will be repaid by the Issuer in accordance with the Pre-Enforcement Priority of Payments or the Post-Enforcement Priority of Payments, as applicable, (subject to the Issuer having sufficient funds) together with interest thereon at EURIBOR plus the Liquidity Margin (the Reimbursement Rate) on the Payment Date immediately following the date on which such Property Protection Advance was made. 6. THE INTERCREDITOR DEED BETWEEN THE ORIGINATOR AND THE ISSUER The Retained Interest Holder Intercreditor Deed: On the Issue Date, the Originator, the Issuer, the Issuer Security Trustee and the Borrower Security Trustee will enter into an intercreditor deed (the Retained Interest Holder Intercreditor Deed) which will regulate the rights of the Originator (in its capacity as original Retained Interest Holder) and the Issuer as regards the payment of Retained Interest. For further information, see The Transaction Documents The Loan Sale Agreement and Retained Interest Holder Intercreditor Deed below. 7. THE MEZZANINE LOAN AND THE LOAN INTERCREDITOR AGREEMENT Mezzanine Facility Agreement: Pursuant to an amended and restated mezzanine facility agreement dated 30 June 2006 as amended by an amendment agreement dated 5 September 2006 (as amended and restated, the Mezzanine Facility Agreement) among Highstreet Holding GbR, as mezzanine borrower (the Mezzanine Borrower), Highstreet A Portfolio GbR (Highstreet A and together with the Borrower, the Mezzanine Facility Guarantors), Goldman Sachs Credit Partners L.P., as the original mezzanine lender (the Original Mezzanine Lender), Goldman Sachs International, as the arranger of the Mezzanine Loan (the Mezzanine Loan Arranger), the Facility Agent and the Borrower Security Trustee, the Original Mezzanine Lender advanced to the Mezzanine Borrower a loan in the amount of A1,465,673,480 (with an available facility of up to A1,470,200,750) by 31 August 2006 of which A416,842,345 was allocated to the 109 Properties. As at the Issue Date, A415,607,676 is expected to be allocated to the 109 Properties after the scheduled amortisation due on 20 October The Borrower (along with Highstreet A) guarantees to each Mezzanine Finance Party the punctual performance of all the Mezzanine Borrower s obligations under the Mezzanine Finance Documents. The Mezzanine Facility Agreement is governed by German law and amends and restates the mezzanine facility agreement dated 27 March 2006 among the parties to the Mezzanine Facility Agreement. 18

19 For further information see: The Loan and the Related Security Description of the Mezzanine Facility Agreement and the Loan Intercreditor Arrangements The Mezzanine Facility Agreement below. Common Security Agreements: Loan Intercreditor Arrangement: The Common Security Agreements are the following Senior Security Documents relating to assets which secure both the Loan and the Mezzanine Loan: (a) the Land Charges; (b) the Security Purpose Agreement; (c) the Borrower Account Pledge Agreements; (d) the Assignment of Leases; (e) the Master Lessee Assignment of Permitted Subleases; (f) the Assignment of Acquisition Documentation; (g) the Assignment of Insurance; and (h) the Master Lessee Assignment of Services Agreements. For further information see The Loan and the Related Security Description of the Mezzanine Facility Agreement and the Loan Intercreditor Arrangements The Intercreditor Arrangements. On 5 September 2006, the Borrower Security Trustee, the Facility Agent on behalf of the Finance Parties and on behalf of the Mezzanine Finance Parties, the Originator and the Mezzanine Lender entered into an intercreditor agreement (the Loan Intercreditor Agreement) with respect to the relative rights of the Finance Parties, the finance parties under the Mezzanine Finance Documents (the Mezzanine Finance Parties) to (a) direct the Borrower Security Trustee as to enforcement of the security created by the Common Security Agreements (the Common Security), (b) receive payments under the Senior Finance Documents and the Mezzanine Finance Documents, and (c) receive the proceeds of enforcement by the Borrower Security Trustee of the Common Security. The Loan Intercreditor Agreement was amended on or about 21 September For further information see: The Loan and the Related Security Description of the Mezzanine Facility Agreement and the Loan Intercreditor Arrangements The Intercreditor Arrangements below. 8. THE MASTER LEASE AND PERMITTED SUBLEASES Lease Regime: The Borrower leases the Properties to W2005/Seven BV (the Master Lessee) pursuant to an intermediate lease agreement (Zwischenmietvertrag) dated 30 June 2006 as amended on 5 September 2006 between the Borrower, as lessor and the Master Lessee, as Lessee (the Master Lease). Other properties (the Portfolio A Properties), most of which are used in the business of the KarstadtQuelle group and owned by Highstreet A, are also leased to the Master Lessee pursuant to a separate intermediate lease agreement (Zwischenmietvertrag) on similar terms. Both the Properties and the Portfolio A Properties are then leased by the Master Lessee to Karstadt Warenhaus GmbH and Quelle GmbH (each a Major Sub-Tenant in respect of the Properties and/or the Portfolio A Properties, as applicable, leased by it and together the 19

20 Major Subtenants) pursuant to two global lease agreements (Gesamtmietverträge) (the Permitted Subleases) dated 27 March 2006 as amended on 30 June 2006 and on 30 August/12 September/ 13 September The Master Lease: Leased Properties: Duration of Master Lease: The parties to the Master Lease are the Borrower and the Master Lessee. The Master Lease is also expressed to be entered into with the concurrence (unter Mitwirkung) of the Major Subtenants. All of the Properties other than the Non-Leased Properties (each a Leased Property and collectively the Leased Properties) are leased by the Borrower to the Master Lessee pursuant to the Master Lease. Relevant information in respect of such Properties is set out in Appendix 3 below. For further information see The Loan and the Related Security Description of the Master Lease and the Permitted Subleases The Master Lease Leased Property and Purpose below. The Master Lease is expressed to commence on 1 July 2006 and the initial term is expressed to run for a period of 15 years from commencement of the Master Lease. The Master Lessee has three extension options (or two extension options, in the case of the Property at Bahnhofplatz 7, Munich)* of five years each. The Master Lease also provides that at the end of the term of the Lease (including any renewal periods) the Master Lease will continue indefinitely until terminated by either party (on 11 months notice by the Master Lessee or 13 months notice by the Borrower). The parties also have rights to terminate the Master Lease before the end of the term for significant cause (aus wichtigem Grund). For further information in relation to the term and termination rights, see The Loan and the Related Security Description of the Master Lease and the Permitted Subleases The Master Lease Duration of Lease below. The Permitted Sublease: Leased Properties: Pursuant to the Permitted Sublease between the Master Lessee and Karstadt Warenhaus GmbH (Karstadt), the Master Lessee subleases certain of the Properties (other than the Non-Leased Properties), along with other properties leased to it under the master lease agreement between Highstreet A, as lessor, and the Master Lessee, as lessee, (the Portfolio A Master Lease) to Karstadt (the Karstadt Sublease). Pursuant to the Permitted Sublease between the Master Lessee and Quelle GmbH (Quelle), the Master Lessee subleases the remaining Properties (other than the Non-Leased Properties), along with other properties leased to it under the Portfolio A Master Lease, to Quelle (the Quelle Sublease). The Properties identified in the table in Appendix 3 as being leased to Karstadt are leased pursuant to the Karstadt Sublease and the Properties identified as being leased to Quelle are leased pursuant to the Quelle Sublease. Properties leased to the Master Lessee under the Portfolio A Master Lease are also leased pursuant to the Permitted Subleases but such properties do not form part of the Related Security and are not identified in Appendix 3. For further * Sale of the Property not yet completed. Property is currently cash collateralised. 20