GSP/Rifkind Capital Advisors Records

$34,000,000 ($167 Loan/sf. 3.5% LTV) Permanent Financing for 4 Property, Scientific Lab Space Portfolio Totaling 203,587 Rentable sf.: GSP arranged $34,000,000 of permanent financing ($167 loan/sf., 73.5% LTV) for these four properties located in Northern and Southern California. The loan had no holdbacks or reserves for re-tenanting until the final year of the loan term, and was structured to provide for partial release of collateral during the loan term. San Francisco Bay Properties: These properties consist of three buildings totaling 136,537 sf. Underwriting issues included large market vacancies, declining market rental rates, the non-investment credit nature of the tenants, and the condominium interest ownership structure of the real estate in the business park. Southern California Property: This property consists of a 67,050 sf. building that is 100% leased to a single tenant. The portfolio nature of this transaction addressed rollover exposure in year 8 of this loan term. Financing: (1) Pricing: 10-Year T + 2.25%; (2) Term/Amort: 10/25; (3) LTV: 73.5%; (4) Prepayment: locked for 4 years, then yield maintenance; (5) Non-Recourse; (6) Lender Fee: Par. (Gary Mozer, Lee Norman, Larry Wilemon)

GSP/Rifkind Capital Advisors Records a $14,800,000 Bridge Loan on the Landmark "House of Blues" Assemblage in West Hollywood, CA and on a Fully Entitled Land Assemblage in Encino, California: Here is another example of the use of GSP/R's privately placed investor funds creating a huge value for the sponsors. RCB Holdings and Gold Mountain Enterprises purchased these two properties as-is several years ago. They were successful at re-entitling the Encino assemblage under the new Ventura Blvd. Mixed-use plan in Los Angeles for 125 luxury apartment units and 17,000 sf. of street level retail (see rendering below). Watch out for this trend of "up zoning" to mixed use with a residential component to accelerate in the coming months. The sponsors had a passive partner who wanted to cash out. Our loan allowed the sponsor to use the value created in achieving the re-entitlement of the Encino property to borrow enough to buyout the equity partner, repatriate 100% of the ownership of the entire project. In addition, the loan created excess funds to implement an expansion plan for the Sunset Strip House of Blues and a re entitlement of the surrounding properties to build several hundred apartments and 44,000 sf. of retail on Sunset Blvd (see rendering below). GSP/R accomplished this entirely with debt. There is no mezzanine or profit participation. The business plan is for the sponsor to sell the Encino property in an orderly fashion and concentrate their efforts on completing a large scale re-entitlement program on the House of Blues parcel and surrounding properties. Rock ON! Terms: 10% for the first 2 years, 5 year total term, with release schedule designed for maximum flexibility. Use GSP/Rifkind’s quick-close capability to create value in your transaction. For more info., contact David Rifkind (ext. 111 drifkind@gspartners.com).

$19,000,000 Cash Out, Fixed Rate Financing for Unanchored Community Shopping Center in Tertiary Market: Subject property is a 275,000 sf. outdoor center in Central California. The property has over 60 tenants, almost none of which have investment grade credit. The Borrower has owned property for 20 years. GSP arranged financing to replace $13,150,000 in existing recourse debt. Issues that were overcome in the transaction included: (1) environmental remediation efforts that are ongoing at the property; (2) the lack of national or regional tenants with credit ratings; (3) the rollover risk inherent in 3 and 5-year tenant leases, (4) an underwriting vacancy in excess of 14.00% at time of application; and (5) tertiary market location. Financing: (1) Pricing: 10-Year T + 2.00%; (2) Term/Amort: 10/30; (3) LTV: 75%; (4) DCR: 1.50; (5) Prepayment: Defeasance; (6) Non-Recourse; (7) Lender Fee: Par. (Gary Mozer, Lee Norman, Larry Wilemon)

$5,350,000 CMBS Application And 30 Day Rate Lock (5.25% Fixed Rate) Executed On The Same Day For Non Student 39 Unit Apartment Building in Westwood/West LA, California; 1st Year Interest Only: This was the 4th loan to be funded by this lender for this borrower. The other 3 recently closed loans were all within a few blocks of this property with very similar features and amenities which gave the lender and borrower a strong comfort level to lock the rate for a 30 day close on the same day the application was signed. All 4 properties were developed by the Borrower in the mid to late 1980's. Borrower built this property in 1989 and owns and manages the property with a "pride of ownership." Features include 4 story building; penthouses on the 4th floor; pool on roof; spa; courtyard; laundry rooms on each floor; wood entries; burba carpeting; central air and heating; fireplaces and refrigerators in some units. The owner has kept the property in above average condition over the years by a planned and continuing investment in typical replacement and cap ex items.
Objective: The borrower's financing objective was to (1) lock the all in rate at the earliest possible opportunity without any added cost or yield; (2) lower the annual mortgage payment from a higher floating rate to a lower fixed rate but to keep the new debt payment at the same dollar level that currently is being paid on the existing loan; (3) pay off the existing debt and obtain 'significant' cash out; and (4) obtain economies of scales from the same 3rd party vendors used for the 3 other properties due to the similarities and closeness of the properties. Terms: (1) Rate: 5.25% fixed rate with the first year "interest only"; (2) Term/Amort: 10/30; (3) LTV: 68%; (4) DCR: 1.45; (5) Non-recourse; (6) Stress Test: Minimum 0.99 DCR using a 9.66 stress loan constant to achieve the final note rate; (7) Lender Fee: Par. (Gene Brunkhardt)

Treasury/CMBS Update: The 10 year T yield has risen over a full percent in the last month, up to 4.16% after dropping to 3.07% in mid-June. Rates are still at historic lows, but what's next? Look for next week's slew of economic reports to dictate buy/sell dynamics and corresponding yield fluctuations. (Thursday 7/31 and Friday 8/1 will see new data on: GDP, Consumer Confidence, Unemployment, Construction Spending and the new Fed "Beige Book") CMBS spreads are holding steady despite a slight widening of Swap spreads. Originators have not yet widened quotes, as competition is fierce for "executable transactions." 10 year Swap rate was as low as 29.5%, have widened to 41.5% as of today. New deals are still being priced in the T + 135-200 range depending on product type and leverage, etc. Stay tuned...

George Smith will be moderating the finance panel at the "Apartments 2003" conference. Bruce W. Duncan, CEO of Equity Residential and R. Scot Sellers, CEO of Archstone Smith will be the featured speakers. When: September 17, 2003. Where: Century Plaza Hotel, Los Angeles, California. More information: www.realestateoutlook.com or call (310) 271-1276.