5-year, Fixed Rate, Interest Only Financing - FINfacts

KEY RATE INDICES

FANNIE MAE RATES *

Prime Rate	4.00%
11th District	1.946%
3 Mo. T’s (YTM)	0.90%
6 Mo. T’s (YTM)	0.99%

5 Yr. U.S. T’s	3.12%
10 Yr. US T’s	4.24%
30 Yr. US T’s	5.17%
12-MAT	1.302%

LIBOR - 1 mo.	1.12%
LIBOR - 3 mo.	1.15%
LIBOR - 6 mo.	1.18%
LIBOR - 1 yr.	1.35%

Tier 2+ (80% LTV)	5.80%
Tier 3+ (65% LTV)	5.62%
Tier 4+ (55% LTV)	5.42%
10 yr. term/30 yr. amort.

TRANSACTION OF THE WEEK!

$8,239,000 Fannie Mae DMBS Loan with an Initial Rate of 2.14% for the Refinance of a 72 Unit Apartment Building in the Palms Area of West Los Angeles: This is another loan that is part of a series of loans for a client which will aggregate close to $200 million by year end under the FNMA DMBS program. The Property: A two story building over a subterranean parking built in 1972. Unit mix consists of 2 studios, 22 one-bedroom/one-bath, 24 one-bedroom with den and 24 two-bedroom/two-bath. The property has minimal amenities, but has a 100% location with beautifully refurbished large and very livable units. Amenities include unit-controlled entrance, secured parking and 2 common area laundry facilities. FNMA DMBS Program Description: The DMBS (Discounted Mortgage Backed Security) loan is a 10 year adjustable rate trading mechanism with a 30 year amortization. It was formerly only available for cross-collateralized mortgage pools in excess of $100,000,000. It is selectively available for individual loans in excess of $50,000,000 and FNMA may allow waiver for smaller loans if the client can aggregate $50,000,000 or more over the next 12 months. The DMBS discount rate is re-priced every 90 days. The spread remains constant for the term of the loan. The competitive advantage of the program is that the discount rate generally trades inside of the 90 day LIBOR rate because of the AAA credit enhancement. Market Volatility Impacts the Cost of 5 Year Rate Caps: FNMA requires borrowers to purchase 5 year rate caps. To date we have funded seven loans under this program for the client with cap costs ranging between 67-132 bps. However, when we priced the cap for this loan, the cap cost had increased significantly. The increase, according to a trader, was caused by long term rates spiking while the short term rates remained low. The 5 year cap cost for this loan was 249 bps at a strike rate of 6.05%. At the time, this was a signal from the market that the short end of the yield curve was expected to start increasing and the market was pricing the predicted increase. Loan Terms: (1) Initial Interest Rate for 1st 90 Days: 2.14%; (2) Term/Amort: 10/30; (3) Adjustment: 90 days; (4) 1st 5 Year Interest Rate Cap Escrow Cost: 249 bps to cap the LIBOR rate at 6.05% (note rate cap of 7.05%). This is equivalent to 49 bps per year in rate; (5) LTV: 75.0%; (6) Gross Loan Multiplier: 11.5 X net cash flow; (7) Loan Per Unit: $114,430; (8) Prepayment: fee maintenance; (9) Non-recourse. (George Smith, Joel Simaie)

$5,000,000 Refinance at 5.11% Fixed Rate Interest only for 7 Years for a 102-Unit Apartment Building in Bellevue, Washington: GSP arranged this refinance which enabled the borrower to (1) Payoff the existing debt, (2) Pay the prepayment penalty and come out ahead on the effective rate, (3) Take cash-out and (4) increase cash flow. The Property: This 102-unit apartment building is located in a private community located east of downtown Bellevue. The building was built in 1979 with the following unit mixes: one-bedrooms, two-bedrooms and two-bedroom townhouses ranging from 667 s.f - 900 s.f. The building provides 24 hour laundry facility, fitness center, dry sauna, two heated pools, clubhouse and a community pea patch garden. The property is owned by an LLC which was bought in 1983, and George Smith has now financed it 3 times. Terms: (1) Tier 3 Rate: 5.11% fixed; (2) Term/Amort: 7 years, interest only; (3) LTV: 65%; (4) DCR: 1.35; (5) Prepayment: yield maintenance; (6) Non-recourse. (George Smith, Joel Simaie)

$3,500,000 Cash-Out Refinance ($462/s.f.) for 7,500 s.f. Single Tenant (Non-Credit) Retail in West Los Angeles: This boutique clothier is well located in one of LA's trendiest upscale shopping districts. The tenant is a privately held international company that did not provide financials or sales history. Lender is not requiring any reserves for taxes, insurance, tenant improvements or leasing commissions-even though the remaining lease term is 9 years. Terms: (1) Rate: T + 1.65% (5.95%); (2) Term/Amort: 10/30; (3) LTV: 57%; (4) DCR: 1.96; (5) Non-recourse; (6) Lender Fee: Par. (George Smith, David Stepanchak)

HOT MONEY!

5-year, Fixed Rate, Interest Only Financing for Apartments Under 5.5%! Maximum Leverage! Lender underwrites using a 1.0 DCR at the 9.66% "stress constant", 80% LTV, 1.20 actual DCR. Loans are 10/30 (term/amort), non-recourse, no lender fee.

ONLY 6 Days Left to Register!

9th ANNUAL
GSP REAL ESTATE LUNCHEON
To Benefit the A-T Medical Research Foundation
Thursday, October 23, 2003
George Smith will moderate an
"All-Start Economists' Panel"

Newly Registered Table Landlords
Archon Financial, Black Equities, Buchalter Nemer Fields & Younger, China Trust Bank, City National Bank, Elliot A. Gottfurcht, Imperial Capital Bank, La Salle Bank N.A., Loeb & Loeb LLP, Morgan Stanley Mortgage Capital, Watt Commercial Properties, Westrec Marinas.