FIFTH EDITION

2005

Transforming Real Estate Finance
A CMBS Primer

Primary Analysts:

Howard Esaki Marielle Jan de Beur Masumi Goldman

This book is an overview of the Commercial Mortgage-Backed Securities (CMBS) market. The contents of this publication are over eight years in the making and include excerpts of research reports from as early as 1997. In this fifth edition of our primer, we have reorganized the chapters to highlight the different investment options within CMBS. New material since our last edition includes sections on the various types of AAA CMBS classes, total rate of return swaps, floating rate large loan transactions, and an updated version of the commercial mortgage default study. We hope you find this book useful and welcome comments so that we can improve future editions.

FIFTH EDITION

2005

Transforming Real Estate Finance
A CMBS Primer

Primary Analysts: Howard Esaki Marielle Jan de Beur Masumi Goldman
The Primary Analyst(s) identified above certify that the views expressed in this report accurately reflect his/her/their personal views about the subject securities/instruments/issuers, and no part of his/her/their compensation was, is or will be directly or indirectly related to the specific views or recommendations contained herein. This report has been prepared in accordance with our conflict management policy. The policy describes our organizational and administrative arrangements for the avoidance, management and disclosure of conflicts of interest. The policy is available at www.morganstanley.com/institutional/research. Please see additional important disclosures at the end of this report. Morgan Stanley & Co. Incorporated December 16, 2004

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Transforming Real Estate Finance

A CMBS Primer
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INTRODUCTION T O C MBS 1 – 8

History and Structure Rating Agency Methodology
MAJOR P ROPERTY T YPES I N