FCC Proudreed Properties 2005 HSBC SG CORPORATE ...
FCC Proudreed Properties 2005 HSBC SG CORPORATE ...
FCC Proudreed Properties 2005 HSBC SG CORPORATE ...
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Although any successor manager of a Secured Property appointed by a Borrower is required to be<br />
experienced in managing retail, industrial and office premises, there can be no assurance that there will<br />
not be a delay in the appointment of a successor, or a variation in the terms of any appointment of a<br />
successor or that the appointment of any successor manager of a Secured Property would not have an<br />
adverse effect on the relevant Borrower’s obligations to meet its obligations under the relevant<br />
Commercial Mortgage Loan Agreement and, therefore, ultimately, the Issuer’s ability to make payment<br />
under the Notes.<br />
The net cash flow realised from the Secured <strong>Properties</strong> may be affected by management decisions. The<br />
Property Manager will be responsible for property management pursuant to the terms of the applicable<br />
Property Management Agreement. Although the Property Manager is experienced in managing<br />
commercial property, there can be no assurance that decisions taken by it in the future will not adversely<br />
affect the value of or cashflow from the Secured <strong>Properties</strong>.<br />
The Property Manager may also operate, manage, acquire or sell properties, which are in the same<br />
markets as the Secured <strong>Properties</strong>. In such cases, the interests of the Property Manager or the interests<br />
of other parties for whom it performs servicing functions (which could include affiliates of the Borrowers)<br />
may differ from, and compete with, the interests of the Borrowers, and decisions made with respect to<br />
other real estate assets managed by it or in which it may have an interest may adversely affect the value<br />
of the Secured <strong>Properties</strong>. However, the Property Manager Duty of Care Agreement provides that, if in<br />
the course of providing the services under the Property Management Agreements and the Property<br />
Manager Duty of Care Agreement, a conflict arises between the interests of the Property Manager on the<br />
one hand and the interests of the Noteholders on the other, the interests of the Noteholders shall prevail.<br />
Delegation in respect of leasing etc.<br />
Except to the limited extent described herein, none of the Management Company, the Custodian, the<br />
<strong>FCC</strong> Servicers, any Lender or any Noteholder or any other creditor of any Borrower or the Issuer has any<br />
right to participate in the management or affairs of any Borrower. In particular, such parties cannot<br />
supervise the functions relating to the management or operation of the Secured <strong>Properties</strong> and the leasing<br />
and re-leasing of the space within the Secured <strong>Properties</strong> or otherwise. The Issuer will rely upon, inter alia,<br />
the Property Managers and the other service providers for all asset servicing functions. Failure by any<br />
such party to perform its obligations could have an adverse effect on a Borrower’s ability to meet its<br />
obligations under the relevant Commercial Mortgage Loan Agreement and, ultimately, the Issuer’s ability<br />
to make payments on the Notes. There can be no assurance that, were any such party to resign or its<br />
appointment be terminated, a suitable replacement service provider could be found, or found in a timely<br />
manner, and engaged on the same terms applicable to the relevant service provider as at the Closing Date<br />
or on terms acceptable to the Management Company.<br />
Dependence on Occupational Tenants – Re-letting risks<br />
A significant proportion of the Occupational Leases which are in place at the Closing Date and many new<br />
Occupational Leases granted (or to be granted) in the near future will expire or be determined in<br />
accordance with their respective contractual terms. There can be no assurance that Occupational Tenants<br />
will renew their respective Occupational Leases or, if they do not, that new Occupational Tenants of<br />
equivalent standing will be found to take up replacement Occupational Leases. This is particularly the<br />
case where a Secured Property requires refurbishment or redevelopment following the expiry of the<br />
Occupational Lease. Furthermore, even if such renewals are effected or replacement Occupational Leases<br />
are granted, there can be no assurance (in spite of the covenants given by each Borrower under the<br />
relevant Commercial Mortgage Loan Agreement in this regard) that such renewals or replacement<br />
Occupational Leases will be on terms (including rental levels and rent review terms) as favourable to the<br />
relevant Borrower as those which exist now or before such termination (particularly if there is a change<br />
in law relating to the terms of the Occupational Leases or some other change that is outside of any<br />
Borrower’s control), nor that the covenant strength of Occupational Tenants who renew their Occupational<br />
Leases or new Occupational Tenants who replace them will be the same as, or equivalent to, those now<br />
existing or existing before such termination.<br />
The ability of the Borrowers to attract new tenants paying rent levels sufficient to allow them to meet their<br />
obligations under the Transaction Documents will depend on demand for space at each relevant Secured<br />
Property and on the regional economy in the relevant Secured Property’s catchment area, which can be<br />
influenced by a number of factors. Rental levels and the affordability of rents, the size and quality of the<br />
building, the mix of tenants, the amenities and facilities offered, the convenience, location and local<br />
environment of the relevant Secured Property, the amount of competing space available, the transport<br />
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