$4,020,000 (82% of Total Project Cost)

$4,020,000 (82% of Total Project Cost) Acquisition/Reposition Financing for 14-Unit Rental Townhomes in West Hollywood: This 14-Unit complex is located in the historic Crescent Heights district. Although the property was built in the mid-1990's, it blends in with the 1920's vintage properties in the area. Features include: (1) Spanish courtyard style; (2) Lush landscaping; (3) 2 BR, 2.5 Bath Units with lofts, private rooftop decks and enclosed sleeping porches; (4) Property was sold with an existing condo-map. GSP arranged financing and acted in an advisory capacity on the sale. Our borrower is implementing a $500,000 rehab of the property, upgrading common areas and all units. Rents are presently 22% below market. The property will boast the premier rental townhomes in the submarket. GSP arranged financing structured as follows: $3,600,000 initial funding, $170,000 interest reserve and $250,000 holdback for improvements (borrower will provide remaining rehab funds). Terms: (1) Rate: 6 month LIBOR + 3.75% (8% floor); (2) Term/Amort: 2 years/interest only; (3) LTC: 82%; (4) Non-recourse; (5) Lender Fee: 1.0%. (Andy Levant)

Treasuries rallied this week, as a new "consensus" emerged in the market- the U S economic recovery will not occur in late 2001 as previously thought. The predictions now call for a recovery in early to mid 2002. Massive treasury buying pushed the yield on the 10 year to 4.84%. The middle of the week saw reports indicating continuing weakness in capacity utilization, a rare drop in business inventories and very tame inflation news. Then today saw multiple negative new reports further dampening hopes for recovery and adding ammunition for further rate cuts by the Fed: (1) Ford Motor company layoffs; (2) Lower profit expectations by Gap and Dell Computer; (3) A major court ruling against Microsoft; (4) Dramatic drop in U. S. exports. CMBS: Spreads remain stable with another $6 billion in conduit product scheduled to be securitized in August (after a $7B July total). The Swaps + 50 bps pricing for 10 year AAA's (the majority of the pool) has become a psychological threshold for investors and originators. Spreads are now in the Swap +46-47 range. Investor confidence remains high: A major IB report this week indicated that the rating agencies upgraded 59 CMBS classes vs. zero downgrades. CMBS continues to shine in relation to corporates. Why? The current downturn has not resulted in delinquencies and losses in real estate pools. A new Fitch study to be released shortly shows many delinquent commercial mortgages have become current or paid off in full. The very few foreclosures/liquidations result in an average loss of only 20%. Real Estate Investment Trends: Highlights from the CB Richard Ellis 2nd Quarter 2001 Survey: (1) Property type preferences (in this order): Apartments, Suburban Office, Urban Office, Warehouse/Distribution, Community Centers, Hotels, R&D, Regional Malls, Business Parks; (2) Top 5 metropolitan areas of choice: LA, San Diego, Orange County, Washington DC, Chicago (SoCal rules!); (3) Cap Rates have increased since the last survey: Class A +9%, Class B +20%, Class C +13%. Stay tuned… (David R. Pascale, Jr.)

"Join Four Los Angeles Real Estate Giants For Dinner" on September 12th at the 2001 Real Estate Panel and Networking "Schmooze Night" for The Guardians of the Los Angeles Jewish Home for the Aging. Speakers: Stan Ross, Richard Ziman, Steve Soboroff and George Smith Place: The Regent Beverly Wilshire Hotel Reservations: 310-479-2468