New High Leverage (up to 90%) Fixed Rate Bridge

TRANSACTION OF THE WEEK!

$18,000,000 Senior/Mezzanine Acquisition Financing (90% LTCC) for a 216,403 Sq. Ft., Four-Building Office Park. GSP arranged $16,000,000 permanent financing plus a $2,000,000 short-term mezzanine loan to facilitate the acquisition and tenant-in-common (TIC) equity syndication of this 1980’s 80% occupied office park in St. Louis, MO. The lender was willing to provide “one-stop-shop” financing for both the senior loan and the mezzanine loan. Very few lenders offer this type of execution. The mezzanine component will be paid off by the TIC sellout. Permanent Loan Terms: (1) Rate: 10 Yr T + 1.10%; (2) Loan Term: 10 yrs; (3) LTPP: 80%; (4) Non-Recourse; (5) Fees: Par; (6) Prepayment: Defeasance. Mezzanine Loan Terms: (1) Rate: 1-Month LIBOR + 3.00% (initial term), 1-Month LIBOR + 4.50% (extension term); (2) Loan Term: 90-day initial term, 90-day extension term; (3) LTPP: up to 90%; (4) Fees: 1% Lender Origination Fee, .25% Extension Fee, .5% Exit Fee; (5) Recourse; (6) Prepayment: None. (Gary E. Mozer, Lee T. Norman, Mike Sullivan)

$10,500,000 Refinance and Defeasance for Office/Industrial Warehouse Property in Alaska. GSP arranged the defeasance of existing financing and refinance of $10,500,000, with $4,000,000 cash out on a 113,000 sq. ft. fully leased property in Anchorage, Alaska. GSP negotiated a waiver of capital expense reserves and the ability to place a second deed of trust or mezzanine debt in the event of a sale, up to 80% LTV and 1.20 DCR. Terms: (1) Rate: 10 Yr T + 1.25%; (2) Term: 10 yrs; (3) Amort: 30 yrs; (4) LTV: 80%; (5) DCR: 1.20; (6) Non-Recourse; (7) Lender Fee: Par. (J.Jay Brooks)

$10,000,000 New Construction of 14 Residential and Two Office Condos in Santa Barbara. GSP arranged financing for the ground-up construction of 14 high-end and two “for sale” office condos in downtown Santa Barbara. The lender was able to provide 100% of future cost financing as the borrowing entity owned the land since 1976. While our location is A+, many lenders were unable to get comfortable with the $1,000/sq. ft. pro forma sell-out. The borrower was also seeking a lender that would allow him to self-insure for project defect liability to avoid the cost of third party insurers. GSP identified a lender that was not only comfortable with the sell-out prices, but funded a 10-year project liability fund that they will hold. If there are no claims in 10 years, the money is released to the borrower. Terms: (1) Rate: LIBOR + 2%; (2) Term: 18 months; (3) Lender Fee: .75% + extensions; (4) LTC: 100%; (5) Recourse. (David Stepanchak, Allison Higgins)

HOT MONEY

New High Leverage (up to 90%) Fixed Rate Bridge Loan Program with Flexible Prepay. This innovative nationwide lender is (1) Offering a fixed rate bridge program, eliminating rate risk for borrowers repositioning properties; and (2) Combining senior and mezzanine financing into one loan. This type of financing is attractive now due to the relationships between the fixed and floating yield curves. Highlights: (1) Transaction Size: $5,000,000-$100,000,000; (2) Rate: 5 Year Swaps + 150-200, which with swaps at .5% would currently be 5 year T + 200-300; (3) Loan Term: 5 yr fixed; (4) Amort: Interest Only; (5) Max LTV/LTC: 90%; (6) Non-Recourse; (7) Property Types: All property types; (8) Prepayment: Locked out for 2 years, then open to prepayment with “make whole” provision, which means the borrower pays the difference between the original T bill and the remaining life T bill without any premium added; (9) Fees: 1% (typical); (10) Geography: Nationwide; (11) Underwriting: Will fund below breakeven and will allow for interest reserves and hold back for TI/LC or Cap Ex if supported by the business plan.

INTEREST RATE/CMBS UPDATE!

The 10 Year Treasury has remained in the 4.78-4.80% range over the last week, all eyes are on this week’s big monthly economic reports. How will they influence the September 20 Fed Meeting? Was the last meeting’s unchanged rate stance a pause or are we at the top peak in this cycle? CMBS rates remain tight with strong transactions priced sub 1.00%, all in quotes well below 6.00%. Defeasance: Low rates and strong property dynamics are resulting in loan quotes good enough to convince several borrowers to defease existing CMBS, for refinance and acquisition. 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.