Report from the ULI Reality Check on Growth

$12,400,000 Permanent Financing for Free Standing, Owner Developed Multi-Plex Theatre: Our borrower is a regional owner/developer/operator of multi-plex theatres in Northern California and Las Vegas. GSP arranged financing for a 5 year old, stand-alone, 14 screen multi-plex theatre. The theatre is truly "free-standing", it is not part of a community shopping center or shadow anchored. The theatre has had consistent year-to-year gross sales and EBITDA. Lender will consider additional theatres with a minimum three year track record and "all stadium seating." Value was based upon bifurcating EBITDA into two components: (1) theatre business operations and (2) real estate operations, i.e. if theatre was leased to an operator instead of owner-operated. Lender offered and borrower accepted additional proceeds upon underwriting a higher than anticipated MAI valuation. Terms: (1) Rate: 7.50%, fixed; (2) Term/Amort: 5/20 (25 year amortization was available for an additional 0.25% increase in rate); (3) LTV: 70%; (4) DCR: 1.25; (5) Recourse; (6) Lender Fee: 1.0%; (7) Prepayment: 3,2,1,0,0. (David Stepanchak, George Smith)

$11,574,312 Fixed Rate (6.00%), Permanent Financing for a 45,000 sf, Single Tenant Best Buy (BBB-) in Emeryville, CA: "Reverse Build to Suit"--Newly constructed Best Buy in a prime retail location built by the tenant and sold at C of O to our borrower. Challenges: (1) Borrower sought a 30 year amortization--lease term is 20 years. Typically a 30 year amortization for this type of single tenant financing is only available with a 25 year lease. (2) This Best Buy, due to the strength of the market, is paying double typical Best Buy rent; (3) Loan amount is $257/ft, considered pretty rich. (4) To facilitate the buyer's 1031 exchange needs, GSP negotiated terms allowing the borrower to bring in up to 10 Tenant in Common owners within 6 months of closing. (5) Loan was applied for with a 6.15% floor rate. When it came time to lock, floors and rates had dropped dramatically. GSP and the borrower negotiated a lower rate based on market research indicating that the loan would still be profitable to the lender at the lower rate. This is a case where the borrower "re-traded" the lender and everyone ended up happy. Terms: (1) Rate: 6.00%; (2) Term/Amort: 10/30; (3) LTV: 75%; (4) DCR: 1.25; (5) Non-recourse; (6) Lender Fee: Par; (7) 30 day free rate-lock. (Michael Schwartz)

GSP/R Problem Solving Recipe No. 811: (1) Take 3 buildings, (2) Add: A corporate title holder and start up tenant with no earnings or track record, (3) Add: Highly special purpose build out, (4) Bake for 11 days at high heat and you get the $4,000,000 solution.

GSP/R has just closed a $4,000,000 problem solving loan for an up and coming record label which owns 2 adjacent buildings in West Los Angeles. The three building complex consists of 2 commercial buildings that are highly improved for state of the art recording studios and sound engineering and one small residential building reserved for future parking. The building ownership is a foreign entity with no other assets besides the buildings in the US. The loan provides over $1,000,000 of working capital to fund operations. GSP/R solved the special purpose issue by requiring UCC filings on the key studio equipment. There is strong demand for these improvements--property is located in a "music and entertainment corridor." Loan closed in 11 days from initial contact from borrower. Terms: (1) Rate: 10%; (2) Term/Amort: 3 years/interest only; (3) Non recourse, (4) Prepayable at anytime without penalty.

Up Coming Events: Stay tuned for 2 blockbuster GSP/R year-end fundings. (Sneak peek: These include really big parking structures and high-end hospitality)

GSP/R has a giant pile of cash for year-end closings. We are looking for transactions up to $35,000,000. Please contact David Rifkind (ext. 111 ) or David Ellis (ext. 211 ) to discuss any of your quick close needs.

Conference discussed impact of population growth on land use planning in Southern California. Using actual demographic, geographic and economic data, the participants were asked to determine how best to accommodate housing and jobs for the population growth of the next 20 years (expected to be 6 million).

Fundamental principle: People must understand the dynamics of growth in order to be able to grapple with the inherent challenges. The concept is known as Growth Visioning - rethinking how the future might be shaped at the neighborhood, community and regional level. Benefits include understanding issues and trade-offs associated with future growth and providing the tools to affect it.

Key points: (1) 6 million people to be added to Southern California (not including San Diego) population over the next 20 years; (2) This growth will come from birth rate (2/3) and immigration (1/3) - largely independent of economic stimulus; (3) Substantial growth in Inland Empire, particularly south of Ontario; (4) New single family housing will be built in distant areas (i.e. Palmdale, Victorville), in areas that are currently environmentally protected, or not at all; (5) SFR housing cannot address the housing needs of population growth; developers need to focus on moderate to high density, mixed-use projects. (Larry Wilemon, Joel Simaie)

George Smith will be speaking at the Law Firm of Gilchrist and Rutter on November 8, 2002.

Gregory Walden will be addressing the AIA (American Institute of Architects) at the Desert Practice Conference 2002 on November 16. Conference Info: (1) November 15-17, 2002; (2) Renaissance Esmeralda Resort, Indian Wells, California; (3) For more info: www.aiacc.org.