Private Capital Available for Land

TRANSACTION OF THE WEEK!!!

$1,452,000 for 50-Unit Apartment Complex in Inland Empire: This is the 8th funding arranged by GSP for this multifamily investor specializing in San Gabriel Valley properties. This particular transaction is part of a series of apartment small loans for the same client. The lender's program features streamlined documentation and processing for loans $2,500,000 and under. The Property: 50-unit complex, garden style, well-landscaped, 100% occupied, built in 1987. Our borrower purchased the property in late 1999 with floating rate financing. Our borrower took advantage of an early rate lock at a treasury index below today's rate. Terms: (1) Rate: 8.51%; (2) Term/Amort: 10/30; (3) LTV: 75%; (4) DCR: 1.35; (5) Non-recourse; (6) Lender Fee: Par. (Steve Bram, David R. Pascale, Jr.)

HOT MONEY !!!

Private Capital Available for Land Acquisition/ Development: Non-recourse, 2 to 15 year term. Can fund both entitled and unentitled land projects. Debt Program: (1) Loan Size: $3MM to $40MM; (2) Rates: Deal specific, 8% pay rate, balance accrues; (3) Lender Fee: Par. JV Equity Program: Will invest up to 90% of equity required (this capital source has national relationships to bring in additional minority equity. Unique and friendly developer friendly promote structure where developer earns 80% of the profit over a 25% IRR.

Interest Rate/CMBS Update: Treasuries - Over the last two weeks, a plethora of economic reports (including productivity, import prices, jobless claims, PPI, CPI, Capacity Utilization) indicated that recent Fed policy has kept inflation in check, loosened labor markets, and slowed economic growth. This led to a bond market rally as traders became convinced that the Fed would leave rates unchanged at their June 27-28 meeting. That all changed this week as continued surging oil prices seemed to override all the earlier data. This week's OPEC announcement regarding raising their production quotas was "too little, too late" to avoid high gas prices this summer. Inflation worries combined with the perception that Greenspan needs to raise rates sooner rather than later to avoid meddling with the Presidential election, have convinced economists that a .25 raise is coming next Wednesday. CMBS: Volume is down this year: $25 billion so far in 2000, as compared to $35 billion at this time last year. One originator, Parallel Capital, closed down last week, other second tier players may follow suit. Two fixed rate pools priced this week: (1) $740MM (2 originators), AAA's priced at T + 161 or Swaps + 38 (pricing under 40 over Swaps is considered excellent execution); (2) $890MM (1 originator), AAA's priced at T + 163 or Swaps + 41 (swaps fluctuated between the two pricings), with several bond classes oversubscribed. Demand is still strong for the bonds, especially with the lower supply. However, Swap spreads remain high, cutting into profit margins. The 10-year Swaps today are +120. Originators continue to push the envelope to chase a smaller universe of potential transactions. Stay tuned……

GSP Welcomes Joel Simaie!!!

Mr. Simaie joins the GSP production team on Monday, June 26th. Mr. Simaie began his career at Arthur Andersen, LLP as a real estate consultant. At Arthur Andersen he conducted finance, real estate and strategy consulting, including transactional due diligence, valuation, and industry analysis. Prior to Arthur Andersen, he had internships with several real estate firms including CB Richard Ellis and L.J. Melody & Company. He is also a licensed insurance agent in the State of California. Joel is a graduate of University of Southern California Marshall School of Business. He has a B.S. in Business Administration with emphasis in Corporate and Real Estate Finance. Joel has been active in many organizations including USC Real Estate Association and Marshall Alumni Association. His hobbies include tennis and golf. Joel can be reached at ext. 131 or jsimaie@gspartners.com