Office and Retail Financing -- Non-Recourse

$14,968,000 ARCS (Fannie Mae/DUS) Tier 2+ Financing (5.64% fixed rate) for 5 Apartment Buildings Totaling 149 Units in Playa Del Rey, California: Borrower purchased 9 apartment buildings (195 units) in May of 2001 with a business plan of renovating all of the buildings and then selling four and keeping five. GSP was retained to arrange fixed rate permanent financing for the five buildings being retained. The buildings were built between 1958 and 1970. An extensive architectural exterior renovation program changed the character of the buildings, bringing them to "A" class character. The interior of the units have been extensively upgraded as they become available. The interior renovations include new bathrooms, kitchen cabinets, ceramic tile, stone or granite countertops, new hardware and appliances for the kitchens, new carpets, vertical blinds, and other fixtures. The general building and interior unit repositioning has allowed the units to achieve rental levels competitive with newer high-end properties in the sub-market, 50% to 100% rental increases. Currently 69 units have been renovated so there is considerable value to be harvested once all of the units have turned over. The following is the breakdown of the buildings and the respective loan amounts:

Opportunity: The borrower's financing objective was to get the maximum proceeds and lowest fixed rate today and still have the ability to go back to the lender and get more dollars as the income increases. Fannie Mae has a specific program where the borrower can apply twice for loan increases as the net operating income increases. Each time the application is made, the loan is underwritten as if it was a new 1st mortgage and the incremental amount is priced at then prevailing 1st mortgage rates with a slight pricing premium. Terms: (1) Rate: 5.64% fixed; (2) Term/Amort: 10/30; (3) LTV: 80%; (4) DCR: 1.25; (5) Avg. Loan per unit: $100,456; (6) Non-recourse; (7) Lender Fee Including GSP: 1.00%. (George Smith, Joel Simaie)

$5,750,000 Fixed-Rate Acquisition Financing (80% of Total Cost) for 89% Occupied, Multi-Tenant Retail Center in Northern California: GSP has arranged fixed-rate acquisition/reposition financing for this 3-building, 70's vintage, 91,246 s.f shopping center. The 17 tenant property is anchored by Ross and 99¢ Only Stores. The anchors occupy 67% of the total space. Of the remaining 15 tenant spaces, 4 are vacant. Challenges to Financing: The client wanted to take advantage of a low interest rate, but the property is not stabilized yet. GSP structured a fixed-rate 10-year loan including the flexibility typically found in floating rate reposition loans. (1) The 99¢ Only store space had been vacant for 3 years (the tenant just took occupancy in June); (2) Ross had declining sales for the past three years due to the vacancy of the other anchor space; (3) Both anchor leases roll during the loan term; (4) Over 30% of the shop space was vacant. Solutions: TI/LC holdbacks for vacant space (80% of which were funded by lender) plus borrower posted an LC in lieu of ongoing reserves. The LC can be reduced if either anchor extends their lease past loan term. Deal Highlights: The lender allowed borrower to provide mezzanine financing (secured by partnership interest) to a new buyer if the property is sold. The loan provided 80% of all costs including upfront repair reserves, tenant improvements, leasing commissions, closing costs and financing fees. Terms: (1) Rate: 10 year T + 2.05%; (2) Term/Amort: 10/30; (3) LTV: 80%; (4) DCR: 1.20; (5) Non-recourse; (6) Lender Fee: Par; (7) 30 day free rate-lock. (Gary E. Mozer, Lee Norman, Mark Wintner)

$1,350,000 ARCS Fannie Mae Fixed Rate Financing for a 20-Unit Apartment Complex in Isla Vista, CA: GSP has arranged fixed rate financing for this two story, 20-unit property, which serves as housing for students attending the University of California, Santa Barbara. Property Specs: (1) Located in Isla Vista (2) 20 units in one, two story, building with a mix of 1 & 2 Bedroom units. Terms: (1) Rate: 5.44%; (2) Tier 4 Enhanced; (3) Term/Amort: 10 years/30 years; (4) LTV: 45%; (5) DCR: 2.30; (6) Prepayment: Yield Maintenance; (7) Non-Recourse; (8) Lender Fee: Par. (Andrew Levant, Shlomi Ronen)

Office and Retail Financing -- Non-Recourse, Fixed Rate: For retail or office space that cannot be financed through the conduits, we are placing 5 and 10-year fixed rate loans at 6.40% and 7.68%, respectively. The lender will go to 65% LTV, based upon MAI appraisal, up to $4 million. These loans are non-recourse to the borrower and have a 25 year amortization. Examples of retail properties that fit this program include stand-alone Barnes & Noble, Circuit City, Eckerd's, Gap, Goodyear, Petco and stores of other non-investment grade retailers.

GSP/Rifkind Update! Need to close by year-end? Do you want certainty? There are less than 15 business days left in 2002, but we are still able to close transaction this year. GSP/Rifkind Capital Advisors offers certainty to borrowers with year-end deadlines. This program works great for negotiating discounts and other favorable terms for time sensitive deals. Program Highlights: (1) Geographic: Nationwide; (2) Investment Size: $1.0M+ (in CA), $3.0M+ (outside of CA); (3) Minimal Due Diligence: Usually no third party reports; (4) Negotiable Recourse; (5) Limited or no prepayment penalty; (6) All property types considered. For more information, contact David Rifkind (ext. 111, drifkind@gspartners.com) or David Ellis (ext. 211, dellis@gspartners.com)

George Smith will moderate the finance panel at Real Estate 2003, January 21, 2003 at the Beverly Hilton Hotel, Beverly Hills. Real estate outlook by over 40 top leaders in the industry! For more information, call (310) 271-1276 or visit www.realestateoutlook.com.