Institutional Mezzanine Loans As Low as $2,000,000

TRANSACTION OF THE WEEK!

$17,640,000 Bridge Financing for Entitled Land (Two Separate Loans). GSP arranged financing with a regional commercial bank for two land parcels that have been up- zoned and entitled for low and mid-rise condominiums in a Southern California urban redevelopment area. Projects need some predevelopment work before construction starts. Developers added significant value during the entitlement process over the last few years. This refinancing: (1) Recapitalizes the properties; (2) Provides predevelopment funding to prepare for construction; and (3) Reduces higher interest rate acquisition financing. Terms: (1) Rate: Prime + 1.25%; (2) Term: 6 months; (3) Amort: none, fully funded interest reserve; (4) LTV: 50%; (5) Full Recourse; (6) Lender Fee: 1%. (Mike Gottlieb, Henry Bryan, Chad Coluccio, Dale Holzer)

$15,500,000 Fixed Rate, Non-Recourse Permanent Financing for a 186-Unit Multifamily Property in Indio, CA. GSP arranged financing for the acquisition of a 186-unit multifamily property located in Indio, CA. The borrower is acquiring the subject property with an anticipated 3-5 year hold. Borrower intends to raise rents up to market through aggressive management and the elimination of operational inefficiencies to reduce expenses. They also anticipate significant annual market growth as the region continues to see an enormous influx of residents. While this strategy and anticipated three year holding period have “bridge qualities”, the asset currently generates cash flow and GSP was able to secure fixed rate conduit financing with five years interest only with a flexible prepayment option. Terms: (1) Rate: 5 Yr T +1.45%; all in rate of 6.50%; (2) Term: 5 yrs; (3) Amort: Interest Only; (4) LTV: 80%; (5) Non-Recourse; (6)Prepayment: Locked out until earlier of two years after securitization or three years after closing, yield maintenance thereafter; or for a 1% premium at closing greater of yield maintenance or 1% in yrs 1-3; open at Par in yrs 4-5; (7) DCR: 1.00 (in place), 1.20 (stabilized cash flow, interest only); (8) Lender Fee: Par. (Steve Bram, Steven Yazdani, David R. Pascale, Jr.)

$4,050,000 Non- Recourse, Cash-Out Refinance for an Owner-User Medical Office Building. GSP arranged a $4,050,000 refinance of a medical office building located in the San Fernando Valley. The sponsor purchased the building five years ago to house his medical practice. At acquisition, the building was not zoned for medical office, but he has since received a CUP to allow medical office tenants, which has increased cash flow significantly. Since 50% of the building is owner-user with leases extending beyond the loan term, GSP was also able to negotiate no requirements for tenant improvement or leasing reserves. The sponsor wanted to refinance to lock in low rates even though one tenant occupying 30% of the space was not going to be finished with their tenant improvements until after the loan closed. The tenant’s rent commenced prior to loan closing, so the lender was able to fund the entire loan with a $50,000 holdback to ensure the build-out would be completed. The holdback is released when the tenant takes occupancy. Terms: (1) Rate: 10 Yr T + 1.07%; (2) Term: 10 yrs; (3) Amort: 30 yrs after initial 3 yrs Interest Only; (4) Non-Recourse; (5) LTV: 65%; (6) Prepayment: Defeasance; (7) Lender Fee: Par. (Jim Smith, Allison Higgins)

HOT MONEY

Institutional Mezzanine Loans As Low as $2,000,000. This capital source typically goes up to 85% of value, 90% of cost (higher for certain transactions) nationwide. Most institutional mezz providers have a higher minimum loan amount, so smaller transactions can benefit from large loan style execution. New construction considered. Program Highlights: (1) Loan Size: $2,000,000-$20,000,000; (2) Rate: 30-Day LIBOR + 6-10%; Pay Rate / IRR look-back structures available; (3) Investment Term: 12-60 months; (4) Transaction Types: New construction, acquisition, reposition or recapitalizations of individual properties or portfolios; (5) Primary Transaction Structures: First Loss Participation in senior loan (One-note, A/B structure), Mezzanine loans secured by partnership liens, Participating loans; (6) Recourse: None, partial and full (case by case); (7) Property Types: Basic 4 plus condo and SFR; (8) Exit Strategy: Refinance with permanent loan, asset sale, NOI growth stories preferred on income properties.

INTEREST RATE UPDATE!

Bond Market Continues to Rally, Return of the “High-Fives”. Signs of a cooling economy and the release of Fed meeting notes indicating a less hawkish inflation stance contributed to bringing the Treasury down to 4.79%. Full leverage fixed rate loans are being priced in the 5.80-5.90% range. Has LIBOR peaked for now? LIBOR is finally inching downward, 30-Day LIBOR is at 5.33%, down from 5.40%. 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. Previously at the Century Plaza, the conference has been moved to Hollywood and Highland to accommodate the expected 1,500 person crowd. Steve Bram’s 2:20 PM session will include the Senior Managers at Washington Mutual, Deutsche Bank, Citibank, ARCS, KeyBank, Greystone, Imperial Bank and Fannie Mae. For information, go to www.realestateoutlook.com.

PRESS BOX

Steve Bram, GSP Principal/Senior Director, was quoted in the National Real Estate Investor, August 2006 issue. Click here to read the article titled Mesmerized by Mezzanine.