$31,700,000 (90% LTC) Construction Financing

TRANSACTION OF THE WEEK!

$31,700,000 (90% LTC) Construction Financing for 55-Unit Luxury Loft Condominium Complex in Pasadena, California. GSP arranged $28,100,000 of senior financing (78.2% of total project cost) and $3,600,000 of mezzanine financing (to 88.2% of total project cost) to develop 55 luxury loft-style condominiums, 7,182 sq. ft. of street level restaurants and a 129 space subterranean parking garage in Pasadena, CA. Units average 1,090 sq. ft. and are projected to sell at an average price of $635 per sq. ft. The project is strategically located near Old Town Pasadena and the Metro Gold Line and will be designed with modern European styling that includes 12-foot ceilings, floor-to-ceiling windows, luxury fixtures, appliances and finishes. Challenge: The borrower typically uses non-recourse financing. However lenders recently have been applying more conservative underwriting parameters to residential condos, eliminating the possibility of non-recourse financing for this project. Solution: GSP negotiated top 25% recourse on the senior loan with a non-recourse mezzanine loan, thereby satisfying the lender’s recourse requirements while deeply subordinating the borrower’s personal repayment guaranty. Terms: (1) Senior Rate: 30 Day LIBOR + 2.15%; Mezz Rate: 18% fixed; (2) Term: 27 Months + Options; (3) Senior LTC: 78.2%; Mezz LTC: 88.2% (4) Recourse - 25% personal repayment guaranty on senior loan only, 100% completion guaranty; (5) Senior Loan Fee: 0.75%; Mezz Loan Fee: 1.00%; (6) Release Prices: The greater of net proceeds or 108.6% of allocated loan amount. (Gary E. Mozer, Lee T. Norman, Steven C. Orchard, Joshua Roseman)

$12,750,000 (85% LTV) Fixed Rate, Permanent Financing for a Single Tenant Call Center in Midland, Texas. GSP arranged financing for the acquisition of a stand alone single tenant office building located in Midland, Texas. Property is occupied by a national credit tenant rated as “A” by S&P with an absolute NNN lease with 9.5 years remaining with 2-5 year extension options. The property was built in 1995 with 130,000 net rentable sq. ft. on 11.04 acres of land. The borrower has identified future value-add opportunities that involve subdivision of the 3.15 acres parcel into 4 to 5 new building pads for a corner gas station, fast food restaurant, auto parts store and retail stores. Terms: (1) Rate: 6.9% (10 Yr T + 1.75%, locked at application); (2) Loan Term: 10 yrs; (3) Amort: 25 yrs; (4) LTV: 85%; (5) DSCR: 1.09; (6) Recourse is limited to the balloon differential between 75% and 85% LTV; (7) Lender Fee: 0.50%; (8) Prepayment: Yield Maintenance; (9) No TI/LC and replacement reserves required. (Andrew Levant, Gilda Rivera)

$6,300,000 Acquisition Financing for 46 Acres of Unentitled Land in the Inland Empire: GSP arranged a loan on 46–acres “almost zoned” for residential development. Property will eventually be entitled for 144 single family homes. Financing allowed borrower to take down land at the end of the option period, and to bridge project through remaining entitlements. Keys to transaction: No tentative tract map at closing, but entitlements 90% complete. Significant value had been added by borrower since the property was optioned. GSP made lender comfortable with the remaining entitlement process and the borrower’s commitment to build out the project. The borrower has a proven track record of successful residential developments in the same market. Terms: (1) Pricing: Prime + 1%, interest reserve included in loan amount; (2) Term: 12 months; (3) Amort: I/O; (4) LTC: 50%; (5) Lender Fee: 1% origination fee; (6) Recourse: Guaranteed by principals; (7) Prepayment: No prepayment penalty (Chad Coluccio)

HOT MONEY

Nationwide Portfolio Lender Offering Long Term, Fixed Rate Financing with No Prepayment Penalties This program is ideal for borrowers who don’t need the absolute “last dollar max proceeds” loan that CMBS may offer, and likes simplified docs and flexibility. The lender fixes the rate based upon an internal cost of funds (not Treasuries). Program Highlights: (1) Transaction Size: $2,000,000 – $20,000,000; (2) Rate: Fixed – commercial 7.0%, multifamily 6.4%; 60-day lock upon request (no lock fee), otherwise rate floats daily until approval; (3) Loan Term: up to 10 years; (4) Amort: up to 30 yrs; (5) Max LTV: commercial 75%, multifamily 80%; (6) Min DCR: commercial 1.25, multifamily 1.20; (7) Recourse; (8) Property Types: multifamily, office, industrial, retail, 4 & 5 star mobile home parks; (9) Prepayment: Zero prepay from day one; (10) Fees: Par; (11) Geography: Nationwide.

INTEREST RATE/CMBS UPDATE!

Interest Rate Update—Treasuries: A “perfect storm” rally is in progress after (1) Last week’s Fed meeting indicated an end to this round of rate hikes; (2) The Fed Rate futures market indicated 90% of traders are betting no more raises for 2006, followed by a rate cut in first quarter 2007; (3) Wholesale oil prices / retail gas prices fall; (4) Econ reports indicated a cooling economy. Today’s 10 Year is 4.54%, down 70 bps in the last three months! Also note that fixed/floating is unusually skewed as 30 day LIBOR is 80 bps above the 10 Year T. Next week’s Fin-Fax will discuss this relationship in more detail. Stay tuned…. David R. Pascale, Jr.

SPEAKERS CORNER

Steve Bram, GSP Principal/Senior Director, will be moderating the Financing Panel at the Apartments 2006 Conference on Thursday, October 5, 2006. The panel, which includes Senior Managers at Washington Mutual, Deutsche Bank, Citibank, ARCS, KeyBank, Greystone, Imperial Bank and Fannie Mae, will discuss "Getting Deals Done in the Low Cap Rate, Highly Competitive Debt & Equity Capital Markets." Previously at the Century Plaza, the conference has been moved to the Hollywood and Highland Center to accommodate the expected 1,500 person crowd. View the full agenda and register at www.realestateoutlook.com.