Base Offering Circular - Multifamily 482090 29 decrease in the stated interest rate (a “Governor”), or other similar restriction only if:  (a) the Cap, Floor, or Governor is fixed throughout the term of the related Security or (b) the Cap, Floor, or Governor, or similar restriction is not reasonably expected, as of the issue date, to cause the yield on the Security to be significantly less or significantly more than the expected yield on the Security determined without such Cap, Floor, Governor, or similar restriction, as the case may be.  Although the OID Regulations are unclear, it appears that a VRDI, the primary rate on which is subject to a Cap, Floor, or Governor that itself is a qualified floating rate, bears interest at an objective rate and not at a qualified floating rate. An objective rate is a rate (other than a qualified floating rate) that (i) is determined using a single fixed formula, (ii) is based on objective financial or economic information, and (iii) is not based on information that is within the control of the issuer (or a related party) or that is unique to the circumstances of the issuer (or a related party), such as the level of the issuer’s dividends, profits, or stock value.  The definition includes, for example, a rate that is based on changes in a general inflation index and a “qualified inverse floating rate” (generally a fixed rate minus a qualified floating rate).  A variable rate is not an objective rate, however, if it is reasonably expected that the average value of the rate during the first half of the term will be either significantly less than or greater than the average value for the second half of the term. If interest on a Variable Rate Security is stated at a fixed rate for an initial period of less than one year followed by a variable rate that is either a qualified floating rate or an objective rate for a subsequent period, and the value of the variable rate on the issue date approximates the fixed rate, the fixed rate and the variable rate together constitute a single qualified floating rate or objective rate.  A variable rate conclusively will be presumed to approximate an initial fixed rate if the value of the variable rate on the issue date does not differ from the value of the fixed rate by more than 25 basis points. Under the OID Regulations, all stated interest on a Variable Rate Security that qualifies as a VRDI and provides for stated interest unconditionally payable in cash or property at least annually at a single qualified floating rate or a single objective rate, including a qualified inverse floating rate (a “Single Rate VRDI Security”), is treated as qualified stated interest.  The amount and accrual of OID on a Single Rate VRDI Security is determined by converting such Security into a hypothetical fixed rate security and applying the rules applicable to fixed rate securities described under “Original Issue Discount” above to the hypothetical fixed rate security.  A Single Rate VRDI Security that provides for a qualified floating rate or a qualified inverse floating rate is converted to a hypothetical fixed rate security by assuming that the qualified floating rate or qualified inverse floating rate will remain at its value as of the issue date.  A Single Rate VRDI Security that provides for an objective rate other than a qualified inverse floating rate is converted to a hypothetical fixed rate security by substituting for the objective rate a fixed rate that reflects the yield that reasonably is expected for the Single Rate VRDI Security.  Qualified stated interest or OID allocable to an accrual period with respect to a Single Rate VRDI Security must be increased (or decreased) if the interest actually accrued or paid during such accrual period exceeds (or is less than) the interest assumed to be accrued or paid during such accrual period under the related hypothetical fixed rate security.