Commercial Bank allocates $200,000,000

$3,100,000 Construction Loan for a 51,260 s.f. Self-Storage Facility in Sun Valley, CA: GSP has arranged construction financing for a 2-story self-storage facility. The property will feature: (1) Automatic individual door alarms; (2) State of the art video surveillance; (3) Climate controlled units. Financing Challenges: (1) Borrower FICO score low due to 7 years of unpaid medical bills stemming from dispute with Medi-Cal; (2) Borrower liquidity was insufficient, as a pending cash-out refinance on another property did not close in time; (3) General Contractor had numerous mechanic's liens filed. Lender required a performance bond. Terms: (1) Rate: Prime + 1.00%; (2) Term/Amort: 18 months/interest only (w/one 6 month extension option); (3) Loan to cost: 73% (70% of stabilized value); (4) Lender Fee: 1.00% (plus 0.25% fee to exercise the option if necessary); (5) Recourse guarantee by the General Partner. (Michael Schwartz).

Treasuries: A new "on-the-run" 10 year Treasury (which is now issued semi-annually in Feb. and Aug.) debuted on Wednesday with a maturity date of 8/15/2011. The new issue traded 6 bps inside the February issue (which is now "off the run") and Swaps widened 6-7 bps immediately to offset the drop. The new issue then rallied on its own Thursday and Friday (closing today at 4.99%) as investors flocked to bonds due to sluggish economic news: (1) The Fed reported that the economic slowdown (once thought to be limited to manufacturing), has spread into the general economy- in particular the retail sector; (2) More on retail: Sales flatlined or dropped nationwide for most chains. The numbers also indicated that the slowing economy pushed more consumers from luxury and department stores into bargain-priced discount chains; (3) The manufacturing sector continued its downward slide as inventories dropped 0.2%; (4) Productivity rose due to recent layoffs. Most investors expect a .25-.50% cut by the Fed on August 21st. CMBS: Investors continue to gobble up a massive supply of CMBS: July totaled $7 billion. Spreads widened only 2-3 bps during the entire month. (10 year AAA's from Swaps +46 to +49). Investor demand has not abated as a new issue this week (featuring 30% multifamily) priced the 10-year AAA's at Swaps +47. Latest Wall Street feature: AAA portions are now being divided into 4 tranches (before: just 5 and 10 year maturities; now: 3, 5, 7, and 10 years). This new structure eases investor fear of prepayment risk (which can result in "negative convexity" for you bond junkies out there). Bottom line: The different maturities attract more investors to CMBS, keeping spreads stable. Stay tuned…(David R. Pascale, Jr.)

Commercial Bank allocates $200,000,000 for immediate funding, fixed rate loans at cutting edge pricing. These loans will be "kept on book". Program Highlights: (1) Term: 5,7 or 10 year fixed rate. (2) Amortization: 25 to 30 yrs, negotiable and function of quality, LTV, stability of cash flow and sub-market outlook. (3) Pricing Spread: 175 - 235 over the corresponding treasury. Spread is based on risk-based pricing matrix. As example, asked about pricing for newly completed in-fill Ralph's anchored center in high-density area and 70% LTV, 1.40 DCR and preliminary quote was 10 yr T's +200, i.e. about 7.08% with 30 yr amortization. (4) Product Type: Apartments, Anchored Retail, and multi-tenant industrial (No office at this time although might consider by exception). Seeking lifeco quality and lifeco underwritings. Will be selective on product quality and sponsorship. (5) Non-Recourse; (6) LTV and DCR: Up to 75% LTV; 125 DCR. (7) Prepayment: 4 year lockout and then yield maintenance. (6) Loan Size: $2 to $20 million. Sweet spot is $10 million. (7) Occupancy Status: Properties must be at stabilized occupancy. (8) No Impounds: Old-fashioned lending with no impounds for taxes, insurance, tenant improvement and leasing commission reserves or capital improvement reserves. (9) Lender Origination Fee: ¼% to 1% depending on combination of loan terms. (10) Processing: 45-60 days from GSP submission to funding.

George Smith, will moderate the Finance Panel at Apartments 2001, September 24, 2001 at the Century Plaza Hotel, Los Angeles. Keynote speakers are W. Dean Henry- President, Legacy Partners and R. Scot Sellers- Chairman and CEO, Archstone Communities. More than 40 Industry leaders will explore how, why, where and what's in store for apartments. For more information, call (310) 271-1276; visit www.realestateoutlook.com.