European Loan Conduit No. 32 (Oranje): 07 December 2018

The Issuer will make payments on the Notes and under the VRR Loan from payments of principal and interest received by the Issuer under loans advanced by the Original Lender to the Borrowers pursuant to the Facility Agreements. The Loans will be secured by, among other things, portfolios of office, commercial and industrial properties (and, in respect of the Cheetah Loan, residential properties) located in the Netherlands.

The Original Lender engaged the following valuers (who are each a member of the Royal Institution of Chartered Surveyors) to carry out independent valuations: in respect of the Cheetah Properties, by CW; in respect of the Cygnet Properties, by CW; in respect of the Le Mirage Property, by Savills; in respect of the Legion Properties, by Savills; and in respect of the Phoenix Properties, by JLL.

The Cheetah Property Portfolio is comprised of 43 assets situated throughout the Netherlands, of which 11 are residential, 10 are mixed residential/retail and 22 are retail. The Cheetah Properties offer 75,514 sqm of measured area which is approximately 94% occupied by 64 commercial tenants and 189 residential tenants. The Portfolio is well diversified across 38 conurbations in the Netherlands, with 27% by market value, 16% by measured area, and 24% by GRI located in the Randstad area.

The Cygnet Portfolio comprises 12 office properties and one light industrial property situated throughout the Netherlands. The Cygnet Properties offer 47,490 sqm of measured area which is approximately 84% occupied by 79 tenants. The Cygnet Portfolio is well diversified across 12 unique conurbations in the Netherlands, with 56% by market value, 51% by measured area and 59% by GRI concentrated in the Randstad area.

The Le Mirage Property Portfolio comprises of a high-rise office building situated in Utrecht. The Le Mirage Property offers 18,219 sqm of total measured area which is currently let to 17 tenants equating to a physical occupancy level of 80% (by measured area) as of the Property Portfolio Cut-Off Date. Since the Property Portfolio Cut-Off Date, 1,554 sqm of new leases have been signed and are fully binding; considering the new leasing, occupancy has increased to 89% (by measured area).

The Legion Property Portfolio comprises 4 office properties situated in three of the four G4 cities: Amsterdam, the Hague and Utrecht. The Legion Properties offer 15,733 sqm of measured area which is approximately 75% occupied by 8 tenants. The Portfolio is entirely located in and around the Randstad area.

The Phoenix Property Portfolio comprises 18 office properties situated throughout the Netherlands. The Properties offer 113,864 sqm of total measurable area which is approximately 83% let to 86 tenants across 90 leases. The Portfolio is well diversified across 11 conurbations in the Netherlands, with the majority located in and around the Randstad area.

EU risk retention: Morgan Stanley Bank NA, as originator, will retain a material net economic interest of not less than 5% in the securitisation in accordance with the text of each of Article 405(1) of the Regulation (EU) No 575/2013, Article 51(1) of the Regulation (EU) No 231/2013 and Article 254(2) of the EU Regulation (EU) no. 2015/35. As at the Closing Date, such interest will be comprised of the VRR Loan which has a nominal value equal to at least 5% of the aggregate Principal Amount Outstanding of the Notes of all Classes and the principal balance of the VRR Loan.

US Risk Retention: Morgan Stanley Principal Funding Inc, as the Retaining Sponsor, intends to satisfy the Credit Risk Retention Rules through Morgan Stanley Bank NA, its majority-owned affiliate. The Retaining MOA is expected to acquire, on the Closing Date, a "single vertical security" that is an "eligible vertical interest" in the Issuer, with an aggregate balance of €10,373,684.21 as of the Closing Date in the form of the VRR Loan. The VRR Loan will represent at least 5.0% of all "ABS interests" in the Issuer.

Compare/contrast: Arrow CMBS 2018, European Loan Conduit No. 31 (Libra)