CMBS Update! Report from January 2003 CMSA

$43,140,000 Apartment Portfolio Financing: George Smith: "Lowest Fixed and Floating Rates in my over 30 years of Apartment Financing"

These are the second and third DMBS (Discounted Mortgage Backed Security) loans that GSP has funded for this borrower in the past 4 months. GSP will have approximately $100 million approved or in underwriting by the 1st Quarter of 2003 with this borrower. Property Specs: Building #1: 95% occupied, Class "A", 209 unit apartment building in Dana Point, CA. Property located 1/2 mile from the Ocean and adjacent to a public park. Amenities include: controlled gated access, swimming pool, two spas, fitness center, tennis court, clubhouse with kitchen, laundry facilities and a business center. Building #2: 98% occupied, Class "A", 140 Unit Apartment Building in Burbank, CA. The property was developed by the borrower in 1988 and repositioned in 2002 with renovation of interior and exterior. Amenities include: a fitness center, pool, laundry, and gated garage. Building #3: 96% occupied Class "A" 84 unit apartment building in West Los Angeles, CA. Borrower built the property in 1988. It consists of 16 studio units, 44 one-bedroom, and 24 two-bedroom units. DMBS Program Description: DMBS (Discounted Mortgage Backed Security) is a 10 year adjustable rate credit facility with a 30 year amortization. It was formerly only available for cross-collateralized mortgage pools in excess of $100.0 million. The lender will now fund individual loans in excess of $20.0 million. The borrower may add subsequent loans of smaller size to the mortgage pool with each loan being a stand-alone facility. The DMBS discount rate is re-priced every 90 days. The spread remains constant for the term of loan. The rate generally trades slightly inside of the 90 day LIBOR rate because of the AAA credit enhancement. Additional terms are described below: Financing Terms DMBS (Bldgs 1 & 2): (1) Initial Interest Rate: 2.465% (discount rate of 1.265% plus servicing spread of .90%, plus .30% for interest rate cap escrow); (2) Term/Amort: 10/30; (3) LTV: 75%; (4) Gross Loan Multiplier: 11.4x the net underwritable cash flow; (5) Interest Rate Cap Escrow: 120 bps. to purchase the initial 5 year LIBOR cap based on a strike rate of 6.70%, translating to 30 bps per year in rate. (6) Non-recourse. Financing Terms Fixed Rate (Bldg 3): (1) Interest Rate: 4.11% (2) Term/Amort: 5/30 (3) LTV: 55% (4) DCR: 1.55 (5) Prepayment: yield maintenance (6) Non-recourse. (George Smith, Joel Simaie)

$6,900,000 Acquisition Financing (6.51% fixed) for 103,247 s.f. Kash N Karry Anchored Shopping Center in Orlando, Florida: This 20 tenant, grocery anchored, late 80's vintage shopping center is 93% occupied. Issues: 35,000 s.f. anchor with lease expiration in 2009. Store was profitable at this location prior to a WalMart grocery store opening 1/2 mile away in 2001. Sales dropped to well below break-even initially, but have steadily increased since then. Store is now "almost break-even" with profitability projected in mid-2003. Just 4 days prior to loan closing, Kash N Karry announced 42 store closures (1/3 of the chain). Lender required verification that subject store was not on the closure list. Terms: (1) Rate: T + 2.50%; (2) Term/Amort: 10/30; (3) LTV: 75%; (4) DCR: 1.30; (5) TI/LC reserves capped at $250,000 despite rollover risk during loan term; (6) Non-recourse; (7) Lender Fee: Par. (Michael Schwartz)

GSP President, Steve Bram, attended a presentation by Jim Thomas of Maguire-Thomas fame: Mr. Thomas has been instrumental in much of downtown's development over the past 20 years. Highlights: (1) Disney Hall, Staples, Cathedral, City Hall represent billions of dollars in downtown LA investment; (2) Downtown LA is the largest employment location in all of Southern California- more people employed than Century City, Santa Monica and downtown San Diego combined; (3) Downtown LA contains 22,000 government workers, second largest hub of government employees to Washington D.C; (4) Downtown LA continues to be a major transportation hub with the new "Gold Line" (light rail to Pasadena), opening in July 2003 at a cost of $250,000,000; (5) Downtown LA boasts 41,000 residents today, projection for 2 years from now: 60,000 residents; (6) Thomas, Eli Broad and an array of state, county and local officials are working on a redesign of Grand Avenue and construction of a major park in front of City Hall. Vision is for a central gathering place in Downtown LA. Project includes the redesign of garage entrances and new park opening creating a central courtyard plaza type of area. Further plans include improvement of Grand Avenue north of the Dorothy Chandler Pavilion up to the new Performing Arts School located across the 101 freeway.

CMBS Update! Report from January 2003 CMSA (Major Annual Investor Conference for CMBS Industry): These comments are from the head of CMBS at a Major Investment Bank. (1) Mood is positive; (2) Real Estate performed well in 2002, expectations are that it will perform well in 2003; (3) Spreads: No expectation of tightening as consensus is that property fundamentals will weaken in 2003 and investors are looking for higher returns as they rotate back into corporate bonds. The recent stigma on corporate bonds (Enron, etc) is starting to fade as investors feel the bad news has been "flushed out"; (4) Huge supply coming onto market in early 2003 due to very busy end of year 2002, spreads are going to have to stay up to clear product; (5) Interest rates are expected to stay low, "Not enough oomph in the economy to push rates up. No inflation. No job growth." (6) Fiscal Stimulus: On the way, but it takes a long time to "factor in"; (7) Main message: "Get your properties leased... there is not an abundance of tenants in most markets... lease your properties and tie up your interest rates."