$38,900,000 (80% LTV) Forward Commitment - FINfacts

KEY RATE INDICES

FANNIE MAE RATES *

Prime Rate	7.25%
CODI*	1.693%
3 Mo. T’s (YTM)	4.44%
6 Mo. T’s (YTM)	4.54%

5 Yr. U.S. T’s	4.43%
10 Yr. US T’s	4.51%
30 Yr. US T’s	4.68%
12-MAT	3.618%

LIBOR - 1 mo.	4.56%
LIBOR - 3 mo.	4.66%
LIBOR - 6 mo.	4.79%
LIBOR - 1 yr.	4.89%

Tier 2++ (80% LTV)	5.80%
Tier 3++ (65% LTV)	5.66%
Tier 4++ (55% LTV)	5.52%
10 yr. term/30 yr. amort.

TRANSACTION OF THE WEEK!

$38,900,000 (80% LTV) Forward Commitment Financing for 175,000 SF Retail Center: GSP arranged $38,900,000 of permanent financing (80% LTV) for a 175,000 SF retail center in Southern California. The loan was a seven month forward commitment. Challenges to the transaction included funding the permanent financing before the last building was completed and structuring reserves for long-term leases to non-credit tenants. The loan also included a significant developer cash-out. Terms: (1) Rate: 10 Yr T + 0.90%; 0.15% for 7-month forward commitment, 1.05% all-in spread; (2) Loan Term: 10 years; (3) Amort: 30 yrs, with 2 yrs I/O; (4) Non-recourse; (5) Prepayment: Defeasance; (6) Lender Fee: Par. (Larry Wilemon, Gil Barkon)

$18,540,000 (85% of Total Project Cost) Non-Recourse Senior Construction Financing for a To-Be-Built 159,324 SF Self-Storage Facility: GSP arranged $18,540,000 of non-recourse senior construction financing (85% of total project cost) for the construction of a 159,324 SF self-storage facility in the Sunnyvale, CA area. The property sits on 3.38 acres. Issues: The requirement was to secure maximum leverage non-recourse construction financing. Additionally, the soil and groundwater beneath the site have existing environmental conditions as a result of on-site activities by the original owner. The Market/Location: Growth location on freeway access road in an area that has approx. 900,000 SF of self-storage facilities. Terms: (1) Pricing: 30 Day Libor + 3.45%; (2) Loan Term: 3 Yrs; (3) Non-Recourse; (4) Prepayment: Not allowed first 12 months, months 13 to 24 subject to 1% fee and no fee thereafter; (5) Lender Fee: 1% in, 1% out. (Gary E. Mozer, Lee T. Norman, Steven C. Orchard, Gil Barkon)

$13,500,000 Condo Conversion Loan for Garden Apartment Complex: 200 unit garden apartment complex purchased eight years ago. Loan amount was determined by 65% of bulk sale value, which sizes up to approximately 50% of net retail sellout based on market comparables. The loan was funded as a cash-out refinance with the cash-out being sufficient to fund the condo conversion costs. Lender is a commercial bank. This aggressive loan was given to a very experienced borrower in the local market and a long time customer of the bank. Loan Terms: (1) Pricing: Libor + 2.50%, no floor; (2) Loan Term/Amort: 24 months/Interest Only; (3) Release Provision: 80% of net sales proceeds; (4) Recourse: Full repayment guarantee; (5) No prepayment penalty; (6) Lender Fee: 1%. (Mike Gottlieb)

$7,000,000 Fixed Rate, Non-recourse Permanent Financing for 50,829 SF of a Creative Office Building in San Francisco, CA. GSP arranged permanent financing for an acquisition of a Class A, five-story creative office building located in San Francisco’s historic Jackson Square submarket. The property, constructed in 1907 but fully renovated in 1981, is currently 80% occupied. With the combined influence of a recovering office market and office inventory lost to conversion, it is anticipated that the property will experience a significant increase in rents and occupancy during the recovery and expansion portions of this economic cycle. The loan funded the acquisition including closing costs, renovations and commissions, at a price significantly below replacement costs. Terms: (1) Pricing: 7 Yr CMT + 1.75%; (2) Term: 7 Yrs; (3) Amort: 27 years; (4) LTV: 58%; (5) Non-recourse; (6) Prepayment Penalty: Full (no partial prepayment) – at anytime upon premium of 2% during term of the loan. In the event of sale or refinance, the PPP will be reduced to 1% if lender does not exercise its right of refusal to provide financing; (7) DCR: 1.02; (8) Lender Fee: 0.75%; (9) Rate Lock: Initial rate “locked” for 60 days and determined at any time following bank’s receipt of executed loan application and good faith deposit; (10) No taxes and insurance impounds; (11) Holdback/Rent Achievement: $1,575,000 will be withheld from initial funding and held in bank – controlled non-interest bearing undisbursed loan proceeds account until property reaches stabilized occupancy and provides 1.25:1 DSC. (Andrew Levant, Gilda Rivera).

$6,745,000 (10-Year CMBS) 76% Acquisition Financing for Limited Service Hotel in the Eye of Hurricane Rita. GSP placed 76% LTV, non-recourse, for the acquisition of a limited service hotel in a secondary Texas market. This loan was very attractive to our client as they were looking to maximize their cash flow with a 30 year amortization which is not readily available on limited service hotels. The leverage was also very attractive considering the asset type. Our borrower put the property under application in July, prior to Hurricane Rita which devastated the surrounding area. Fortunately, the hotel was able to whether the storm and made it through with significant, but reparable damage. The hurricane however, did deplete the housing stock which has pushed occupancy at this hotel to almost 100% every night since the storm hit. The increasing revenue pushed the borrowers cap rate to almost 14% at loan funding! Terms: (1) Pricing: T + 1.30%; (2) Term/Amort: 10/30; (3) LTV: 76%; (4) DCR: 1.30; (5) Non-Recourse; (6) Lender Fee: Par; (7) Pre-payment: Defeasance. (David Stepanchak, Allison Higgins)

$6,000,000 Acquisition Financing Request for 82 Units Apartment Building in Mid-Wilshire District (Korea town). The property is a beautiful, classic style 82 unit brick apartment building with two retail stores and two lofts located on Gramercy Drive one block south of Wilshire Boulevard. Tenants enjoy the convenient access to the community’s numerous shopping centers, business district, cultural center and museums. It was built in 1926 and has been 100% leased over the past years. The seller has renovated 41 of the 80 units and will renovate the remaining units at the close of escrow. Based on the borrowers’ experience, they expect that at least 10 of the 80 rent-controlled units will vacate during the year, allowing an average increase in rent of $300 per unit. Terms: (1) Fixed Rate: 10 year T + 1.10%; (2) Loan Term: 10 years; (3) Amort: First 3 yrs Interest Only, 30 yrs amort thereafter; (4) LTV: 73%; (5) Non-Recourse; (6) Prepayment Penalty: Defeasance; (7) Reserves: $200 per unit; (8) DCR: 1.22; (9) Lender Fee: Par. (Andrew Levant, Gilda Rivera).

$4,000,000 Permanent Loan for San Fernando Office Building Refinance. GSP arranged financing for a two-story, class A, 28,315 SF office building on Ventura Blvd between Encino and Sherman Oaks. Terms: (1) Pricing: 10 Yr T + 1.85%; (2) Loan Term: Fixed at 5.875% for 10 Yrs; (3) Amort: 30 Yrs; (4) LTV/LTC: 67% of appraised value; (5) Recourse; (6) Prepayment: 3-2-1 and open thereafter; (7) Replacement Reserves: none; (8) TI/LC Reserves: none; (9) Lender Fee: Par. (George Smith, James Smith).

PRESS BOX

Steve Bram provided keen insight about the state of the multifamily market for a story in Real Estate Southern California. The article is titled: “Musical Chairs” and appears in the January 2006 issue.

SPEAKERS CORNER

On January 17, GSP Associate Farz Emrani, JD/MBA spoke at the UCLA Undergraduate Real Estate Association event titled “So You Have a JD/MBA, Now What?” Fifty-four people attended and the event was a great success.

In Memoriam — Rebecca Smith — February 14, 1978 – January 22, 2006

It is with great sadness we announce that Rebecca Smith, George Smith’s daughter and Jim Smith’ sister, passed away on January 22 of complications due to Leukemia. Becca, 27, waged a valiant life-long battle against ataxia-telangiectasia (A-T), and in doing so became an inspiration to everyone who knew her. Our heartfelt condolences go out to her family.

As a core value, George Smith Partners remains dedicated in its support of the A-T Medical Research Foundation, which George and Pam founded, and in finding a cure for A-T. If you would like to make a contribution to the foundation in Becca’s memory, click here or go to our website. There is a link at the top of the page.