Equity Funding for Empty Office Buildings - FINfacts

KEY RATE INDICES

FANNIE MAE RATES *

Prime Rate	4.00%
11th District	1.902%
3 Mo. T’s (YTM)	0.94%
6 Mo. T’s (YTM)	1.00%

5 Yr. U.S. T’s	2.94%
10 Yr. US T’s	3.97%
30 Yr. US T’s	4.84%
12-MAT	1.234%

LIBOR - 1 mo.	1.10%
LIBOR - 3 mo.	1.12%
LIBOR - 6 mo.	1.17%
LIBOR - 1 yr.	1.37%

Tier 2+ (80% LTV)	5.39%
Tier 3+ (65% LTV)	5.21%
Tier 4+ (55% LTV)	5.01%
10 yr. term/30 yr. amort.

TRANSACTIONS OF THE WEEK!

$35,000,000 Acquisition Financing (83% Loan to Cost, Commitment in 28 days) for 492-Unit Apartment Complex in Salt Lake City: The borrower approached GSP in early December to secure financing for a year-end close. GSP was able to expedite the financing through a longstanding relationship with a lender who toured the property on 2 days notice, prior to the execution of the purchase contract. Property Specs: Class A, 1997 built; 28 acres; 21 buildings (19 of which are 3-story); 1,011 parking spaces; 470,000 net rentable s.f.; swimming/wading pool; 2 basketball courts; 5 playgrounds; resident theater. Property was 98% occupied in a submarket with 9% vacancy. Unit Mix: 164 1 BR, 244 2 BR, 84 3 BR. The property is contiguous to a river parkway—a 40 mile trail system that runs from Utah Lake to the Great Salt Lake. Financing Highlights: (1) 30 day free rate lock; (2) Lender reached 83% LTV with an internal “A/B” tranche structure; (3) GSP arranged $2,000,000 of co-terminus mezzanine financing (5% of purchase price, i.e. total financing of 88% of acquisition) that borrower elected not to take because enough equity was raised. Terms: (1) Rate: 7 year T + 1.65%; (2) Term: 7 years; (3) Amort: 3 years interest only then 30 year amort; (4) DCR: 1.20; (5) LTC: 83%; (6) Non-recourse; (7) Lender Fee: Par. (Gary M. Tenzer, Greg Walden, George Smith, Jim Neuman)

$16,000,000 Refinance for 53,000 s.f. Medical Office Building in West Los Angeles: Background: Borrower purchased this 3 story, 1986 built, vacant office building in 2002. Building was completely rehabbed and converted to medical office. Lease-up began in late 2002 and was leased up to approx. 90% occupancy by mid-2003. GSP arranged permanent financing that paid off the acquisition loan and returned 70% of the equity. Lender also structured a holdback on the initial funding for signed leases of tenants not yet in occupancy. Terms: (1) Rate: 10 year T +1.60%; (2) Term/Amort: 10/30; (3) LTV: 75%; (4) DCR: 1.35; (5) Non-Recourse; (6) Lender Fee: Par. (Gary E. Mozer, Lee Norman, Mark Wintner, Karim Mashouf)

$7,000,000 Refinance for 19,918 s.f. Shadow Anchored Retail Center in Los Angeles, CA: GSP arranged 20 year self liquidating financing for this newly built, 9 tenant shadow anchored retail center in Los Angeles. This is the in-line space in a Costco (100,000 s.f.) anchored center. The subject collateral is on its own legal parcel. Tenants include: Jamba Juice, Panda Express, Starbucks, Baja Fresh, T-Mobile. Borrower requested a self-liquidating loan, which was “taboo” for most CMBS lenders, due to difficulty in execution. Highlights: (1) No reserves for TI or LC until 2011 (At that point the lender will reserve $12,500 per month, capped at $300,000. Upon renewal or new leasing of half of the space, reserve is disbursed back to borrower); (2) Lender will allow mezzanine debt during loan term subject to overall LTV of 80%; (3) Customized non-recourse carveout provisions. Terms: (1) Rate: 12 ½ year interpolated T + 1.60%; (2) Term/Amort: 20/20; (3) LTV: 80%; (4) DCR: 1.15; (5) Non-recourse; (6) Lender Fee: Par. (Michael Schwartz)

$3,000,000 Refinance for a Skilled Nursing Facility in Orange County: Borrower purchased this 99 bed facility two years ago. Borrower did substantial rehab and stabilized the property 3 months before loan funding. Lender has committed to an unfunded (no “Dutch interest”) $800,000 earn-out based on a target NOI for the next 6 months. This will result in 9 months of stable occupancy and income history. Borrower intends to obtain HUD financing 1 year after obtaining the earn-out. Terms: (1) Rate: 6.25%; (2) Term/Amort: 5/30; (3) LTV: 75%; (4) DCR: 1.35; (5) Lender Fee: 1.25%; (6) Recourse; (7) Open to prepay at any time. (Gary E. Mozer, Lee Norman, Mark Wintner)

$575,000 Cash-Out Refinance for 5-Unit Apartment Building in San Fernando Valley: GSP has arranged non-recourse financing that allowed our borrower to consolidate existing first and second mortgages, and take some cash out. Property Specs: 5-units, built to condo specs, town-home configuration, all 2 bedroom. Terms: (1) Rate: 5.50% fixed for 5 years, then 12 MAT + 2.30% with a cap of 10.25%; (2) Term/Amort: 30/30; (3) LTV: 75%; (4) DCR: 1.20; (5) Prepayment: 3,2,1,1,1, then open to prepayment with no penalty; (6) Non-recourse; (7) Lender Fee: Par; (8) No lender legal fee; appraisal: $2,200. (Mark Wintner)

HOT MONEY!

Equity Funding for Empty Office Buildings in Recovery Markets

This equity source is targeting empty or near-empty office buildings in Seattle, Phoenix, Austin, Atlanta, Charlotte and Raleigh – markets this source anticipates will recover within three years. It will consider buildings trading at cap rates at or above market and at 65% to 70% of replacement costs. Leverage: 80-95%. Structure: 10% pref; 50/50 in 3 – 5 years. Deal size: $15 million +. Maximum size on a single asset is $60 million. Target IRR: 16%+. Portfolios welcome.

GSP Signs “Super Sponsors” for 2004 Executive Luncheon Series to Benefit the A-TMRF

The 2004 Executive Luncheon Series will consist of three high profile networking lunches and culminate in the 10th Annual GSP Real Estate Luncheon featuring speakers John Wooden (legendary UCLA Coach), and John Anderson, (Chairman of TOPA). GSP is pleased to announce that the following companies have signed up as “Super Sponsors”:

• ARCS Commercial Mortgage
• Deutsche Bank
• Fremont Financial
• Stewart Title
• Troxler Residential Ventures
• Western Financial Bank

“Super Sponsors” will have their company name and logo prominently displayed on all invitations, faxes, mailings, emails, advertising and promotional materials. These materials will be distributed to a large targeted audience of owner/developers of commercial and multi-family properties, lenders, equity sources, attorneys, management firms and other prominent real estate professionals. In addition, “Super Sponsors” will get a preferred table of ten at the annual luncheon. The cost of being a Super Sponsor is $25,000. GSP will limit our “Super Sponsors” to 15 companies. To inquire, please contact Steven Hamermesh at 310-557-8336 x123.

Speaker's Corner

George Smith will be presenting capital markets update to the following law firms:

O'Melveny & Myers on March 4, 2004
Munger, Tolles & Olson on March 9, 2004

For more information on Mr. Smith’s speaking availability, please contact Jim Neuman, Director of National Business Development at ext. 112 or jneuman@gspartners.com.