Portfolio Lender Offering 10 Year Fixed Rate Non-CMBS

TRANSACTION OF THE WEEK!

$13,000,000 Non-Recourse Bridge Financing ($84,967/unit) at LIBOR + 1.20% for a 153 Unit Apartment Complex. GSP secured a bridge loan to facilitate the acquisition and reposition of a 17 building, 153 unit apartment complex on 5.47 acres in Norwalk California. Terms: (1) Rate: LIBOR + 1.20%, with LIBOR capped at 5.00%; (2) LTP: 71.43%; (3) LTC: 64.10%; (4) Amort: Interest Only; (5) Term: 3 yrs + 1 yr extension option; (6) Non-Recourse; (7) Lender Fee: 0.50%; (8) Reserves: Standard impounds for taxes & insurance only, all other reserves waived. (Gary E. Mozer, Lee T. Norman, Steven C. Orchard, Joshua M. Roseman)

$8,000,000 Cash Out Refinance for 73,900 Sq. Ft. Jacksonville, FL Retail Center. This Bailey’s Gym anchored center (Bailey’s is a local fitness center with 9 locations) had historically been 100% occupied and anchored by Food Lion. Food Lion, which went dark in 2004, remains on the lease through 2015 and has subleased their space to Bailey’s Gym. Challenges: (1) Food Lion is a wholly owned subsidiary of Delhaize, America Inc., which has a sub-investment grade debt rating; (2) Two tenant spaces recently became vacant, totaling 10% of the net rentable area; (3) The center had some lender perceived deferred maintenance which the borrower thought was not a problem. Solutions: (1) A springing cash flow sweep was structured, which would go into effect if Bailey’s goes dark. GSP searched far and wide for a lender willing to take Delhaize credit risk without requiring an ongoing TI reserve; (2) GSP explained the circumstances surrounding the two tenants who vacated their spaces to demonstrate that this short term vacancy is not a bad reflection on the property. The borrower was in discussion with replacement tenants during the application process, and GSP negotiated a spread of 1.06% if the economic occupancy (based on signed leases) a time of funding was 95%, or 1.10% no additional leases were signed prior to closing; (3) with respect to the deferred maintenance, the lender reluctantly agreed to require a cure of only the deferred maintenance visible from the frontage road. Terms: (1) Rate: 10 Yr T + 110; (2) Loan Term: 10 yrs; (3) LTC: 75%; (5) Amort: 30 yrs; (6) Lender Fee: Par. (Michael Schwartz, Thomas Falbo).

$6,975,000 Condo Conversion Loan for the Acquisition of a 16 Unit Apartment Building in Los Angeles. Subject property is a 25,000 Sq. Ft. apartment building built in the late 1980s. The building was delivered with an approved tentative tract map. Challenges: 1) borrower’s lack of experience in condo conversions; 2) perceived softening of prices and absorption in the condo market. The loan amount was 83% of bulk sale value, which sized up to approximately 72% of net retail sellout based on market comparables. The loan closed exactly on the terms of the loan application. Terms: (1) Rate: LIBOR + 2.50%; (2) Term: 15 months; (3) Amort: Interest Only; (4) Release Provision: 100% of net sales proceeds; (5) Recourse: Full repayment guarantee; (6) No prepayment penalty; (7) Lender Fee: 1%. (Farzin Emrani, Steve Bram)

$2,343,000 Acquisition Financing Request for an Owner-User Industrial Building in Valencia, CA. The collateral is a single tenant owner-user comprised of two stories (with mezzanine level), flex building located in the City of Valencia (Santa Clarita). The property was built in 1987 with 23,146 Sq. Ft. net rentable area and 46 parking spaces. It consists of 5,476 Sq. Ft. finished office and 17,670 Sq. Ft. warehouse/industrial. The borrower bought it as a vacant building as the former tenant outgrew the space and moved out. The buyer entered into a new 10 year lease on a pocket to pocket basis. The company manufactures aerospace parts for commercial and military prime contractors. The facility will also be used for storage and work on NASCAR, movies and run stuntman operations. Terms: (1) Rate: 6.625%; (2) Index: 1 yr. CMT; (3) Term: 10 yrs; (4) Amort: 25 years; (5) LTV: 75%; (6) Recourse; (7) Lender Fee: Par; (8) Prepayment: 4, 3, 2, 2, 1 and none thereafter; (9) Rate Lock: No premium required, rate is locked upon acceptance of the loan application; (10) No impounds required. (Andrew Levant, Gilda Rivera)

$1,950,000 Fixed Rate, Non-Recourse Financing for 10,479 Sq. Ft., Retail Center in Ogden, UT. GSP arranged $1,950,000 in fixed-rate permanent debt for a recently renovated 6-unit strip retail center built in 1985. The property is 100% leased by six tenants and will become 100% occupied upon the completion of tenant improvements for three of the tenants. The borrower took advantage of early interest rate-lock, locking a rate 40 basis points lower than the 10-Year Treasury at funding. Terms: (1) Pricing: 10 Yr T + 1.35%; (2) LTV: 74%; (3) DCR: 1.20; (4) Loan Term: 10 yrs; (5) Amort: 30 yrs; (6) Non-recourse; (7) Lender Fee: Par. (Larry Wilemon, David Bierman)

GSP Obtains $615,000 Refinance for Rabbi Dovid Weiss and Chabad of Topanga Canyon. Chabad of Topanga Canyon is currently run in a school building that the Rabbi purchased nine months ago. During the week, the Rabbi and his wife operate a Montessori Preschool, where they combine Montessori educational practice with Hebrew instruction. In the evenings and weekends, they run the Chabad for adults. Chabad of Topanga Canyon is located at 1459 Old Topanga Canyon Road, Topanga, CA 90290. The rabbi invites all of the Fin-Fax readers to his Saturday morning prayer services. Terms: (1) Rate: 5-Year CMT + 350; (2) Term: 12 yrs; (3) Amort: 25 yrs; (4) LTV: 75%; (6) Prepayment Penalty: None; (7) Lender Fee: Par. (Michael Schwartz, Kaleb Keller)

HOT MONEY

Portfolio Lender Offering 10 Year Fixed Rate Non-CMBS Loans. Program is ideal for Western states borrowers looking for long term fixed rate without CMBS documentation and special requirements (such as SPE’s). Loans also feature flexible prepayment schedules and streamlined processing (“easy” documentation). Program Highlights: Deal Size: $1-50M; (2) Rate: 10 Year CMT + 1.30-1.50; (3) Loan Term: 10 yrs; (4) Amort: 25 yrs (can be longer for certain deals); (5) LTV: 75%; (6) LTC: 85%; (7) Guarantee: Construction: recourse, Term: non-recourse; (8) Property Types: Apartments, Retail, Office, Industrial, Owner User, Self Storage, Single Family Tract, Entitled Land, Medical Office, Auto Center; (9) Prepayment: No defeasance, flexible prepayment; (10) Lender Fee: up to 1%, can do par for extra spread; (11) Geography: California, Arizona, Nevada; (12) Appraisal and Phase I only, legal over $5,000,000.

SPEAKERS CORNER

GSP President Steve Bram will be speaking at the UCLA Anderson Graduate School of Management on Wednesday, May 31, 2006. He will be discussing real estate and entrepreneurship and providing insight into how to build a career in the business.

INTEREST RATE/CMBS UPDATE

Treasuries have rallied lately, closing today at 5.07%. Is this a temporary lull in the “march to 5.25% or 5.50%” that so many prognosticators have predicted? Or are rates stabilizing for now? CMBS: A major originator speaking at ICSC indicated that his shop doubled volume in 2005, but profit dropped 5%. Bottom line: margins are getting thinner. Competition is fierce for transactions, 1.15 DCR underwriting, “A note/B note” structures are pushing proceeds to “the limit”. We never hear the words “stress constant” anymore! Stay tuned… (David R. Pascale, Jr.)

GSP PROFILE

(Part of our continuing series profiling GSP's "Next Generation" of Brokers)

Joshua Roseman: Mr. Roseman joined GSP full-time in May 2006. He works on a broad array of transactions with an emphasis on structured bridge, construction, and permanent lending. His clients are predominantly middle-market real estate entrepreneurs seeking to reduce their total cost of capital and financial exposure. Before joining George Smith Partners, Josh worked for Stonewater Partners, a real estate investment firm focused on the acquisition and repositioning of “value-add” transactions. At Stonewater, Mr. Roseman was responsible for identifying and analyzing office, industrial, retail and hotel properties for acquisition, as well as conducting due diligence and asset management of the properties post-close.

Prior to business school, Josh spent two years working for Leonard Green & Partners, a leveraged buyout company with approximately $3.7 billion under management. He also worked in investment banking at Bear Stearns for two years, focusing on Media & Entertainment companies. Josh holds an MBA from UCLA’s Anderson School of Management (emphasis in Real Estate Finance), and a Bachelor’s degree from Cornell University. Mr. Roseman can be reached at ext. 141 or (jroseman@gspartners.com).