$28,000,000 Fannie Mae Financing

$2,735,000 Acquisition Financing (6.80% Fixed) for 37,500 s.f. Shadow Anchored Retail Plaza in Southern California Tertiary Market: The 17 tenants making up the collateral are situated on 3 separate, non-contiguous lots within a larger, quasi-anchored Inland Empire center. The in-line shops are sandwiched between and surround the two anchor tenants: Pic N Save and 99 Cents Only. A mix of national, regional and local tenants occupy the center. Occupancy: 100% (including a month to month lease). Borrower requested a 7 year loan term in order to take advantage of future upside potential. Challenges/Solutions: (1) The largest economic tenant, a local restaurant representing 15% of the net rentable reported below average sales- Lender required a $50,000 TI/LC reserve funded at closing; (2) Incomplete historical records furnished by seller- Cash flow models rebuilt from CAM reconciliation statements. Terms: (1) Rate: 7 year T + 2.50% (rate: 6.80%); (2) Term/Amort: 7/30; (3) LTV: 75%; (4) DCR: 1.30; (5) Non-recourse; (6) Lender Fee: Par. (David Stepanchak, Steven Hamermesh)

$3,800,000 (2 separate loans, both sub 7.00% fixed) for 2 Apartment Buildings in Prime Orange County Community: GSP has arranged financing for two apartment buildings owned by the same owner, located in one of Orange County's best residential areas. Our borrower has owned the properties for approximately 7 years and was able to pay off higher rated debt with the new financing. A key to the "max dollar" financing was finding a lender willing to recognize the market cap rate in their underwriting (7.00%) and provide 80% LTV in loan proceeds. Financing was provided by a portfolio lender's small apartment loan program and featured a streamlined process. Property Specs/Financing Terms: Prop #1-18 units, 70's vintage, 100% occupied, rents below market. 6.375% fixed rate for the first 5 years, 30/30, 80% LTV, 1.25 DCR, 0.25% Lender Fee. Prop #2-19 units, 70's vintage, 100% occupied, rents below market. 6.875% fixed rate for the first 7 years, 30/30, 80% LTV, 1.25 DCR, 0.25% Lender Fee. Notes: Borrower may roll into a new fixed rate (at prevailing rates) at the end of the initial term or pay off with no penalty. If property is sold during initial term- no prepayment fee. (Henry Bryan, George Smith)

Treasuries: Bonds took a beating this week. Massive selling raised the yield on the 10 year Treasury to 4.89%, a 60 bp rise since last Friday. Why? (1) Recovery, or…? The markets feel that the U S Economy is on a major upswing due to: 7.1% increase in retail sales (however, excluding auto sales, the increase was only 1.0%), and less than expected unemployment claims. Some analysts caution that these reports are not definitive indications of a recovery; (2) Inflation is back?: While the monthly CPI for October was -0.3%, the core rate (excluding energy and food) rose 0.2%, (3) Competition from corporates: AT & T issued $10 billion in 10 year notes at 2.80% over the corresponding treasury. Total corporate issuance approached $20 billion this week. Also, traders traditionally sell during late November to book profits-their bonuses are usually calculated through 11/30. CMBS: New issue pricing remained tight (AAA's at Swaps +61). Early in the week originators were comfortable enough with the pricing to lower their floors. At this point, floor are a moot point with the run-up in Treasuries. They also are keeping a wary eye on Swaps, 10 year Swap gapped out 8-10 bps over the last week… Stay tuned… (David R. Pascale, Jr.)