How Did the WSJ Economists Fare? - FINfacts

KEY RATE INDICES

FANNIE MAE RATES *

Prime Rate	7.25%
CODI*	1.693%
3 Mo. T’s (YTM)	4.46%
6 Mo. T’s (YTM)	4.60%

5 Yr. U.S. T’s	4.50%
10 Yr. US T’s	4.56%
30 Yr. US T’s	4.69%
12-MAT	3.618%

LIBOR - 1 mo.	4.57%
LIBOR - 3 mo.	4.69%
LIBOR - 6 mo.	4.82%
LIBOR - 1 yr.	4.95%

Tier 2++ (80% LTV)	5.85%
Tier 3++ (65% LTV)	5.71%
Tier 4++ (55% LTV)	5.57%
10 yr. term/30 yr. amort.

TRANSACTION OF THE WEEK!

$39,000,000 Fixed Rate CMBS Acquisition Financing For Upper Midwest Regional Power Center The borrower consists of four TIC's. Collateral consists of a 358,000 SF, 14 year old shopping center adjacent to a 1,300,000 SF regional destination center, the major retail center in the trade area. Major tenants include a Big Kmart, Dominick's Super Market, Pet Smart, Sports Authority and a dark Circuit City with four years left on its lease. Physical occupancy is 87% with a 96% economic occupancy. GSP was able to structure a loan amount that met the borrower's requirements with only a $400,000 TI/LC holdback for the re-tenanting of the Circuit City without any hold back of loan proceeds. An added feature is the ability to individually defease five pad buildings. Terms: (1) Pricing: 10 Yr T + 1.15%; (2) Term/Amort: 10/30, 3 years I/O; (3) LTV: 76%; (4) DCR: 1.23; (5) Prepayment: Defeasance; (6) Non-Recourse; (7) Lender Fee: Par. (Gary Mozer, Gene Brunkhardt)

$19,000,000 Non-Cross Collateralized Portfolio Refinance of 3-Property Portfolio Totaling 206,328 SF. Property Specs: (1) 78,204 SF, 100% occupied, Safeway/Walgreen's-anchored shopping center in Tucson, AZ; (2) 46,948 SF, 100% leased, Ross-anchored shopping center in Auburn, CA (NE Sacramento); (3) 81,176 SF, 98% leased, Basha's-anchored shopping center in Glendale, AZ. Negotiations included the right to add mezzanine financing. Terms: (1) Pricing: 10 Yr T + 1.10%; (2) Loan Term: 10 Years; (3) Amort: 30 years; (4) Non-recourse; (5) Prepayment: Yield Maintenance; (6) Lender Fee: Par. (Gary E. Mozer, Lee T. Norman, Larry Wilemon , Mike Sullivan)

$5,510,000 Permanent Loan Fixed at 5.29% for 10 Years, Recourse until Stabilized. Property: Four-story, class A, 2005 built, 24,327 SF, 15-unit condos-for lease. 6-month rate lock secured in June, 2005 at 10 Yr T + 1.46%. Challenges: Borrower requested permanent financing at 50% occupancy. Occupancy Details: Minimum 8 units leased prior to funding. Terms: (1) Pricing: 10 Year T [locked at 3.83%] + 1.46% with $400,000 of loan amount to remain in an interest bearing 'pledge account' for 12 months or until a 1.25 DCR is achieved for 90 days; (2) Loan term: 10 Yrs; (3) Amort: 30 Yrs; (4) LTV/LTC: Lesser of 75% LTV, 85% LTC, or amount that provides underwritten 1.25 DCR; (5) Recourse until 95% occupancy achieved for 90 days at which time side letter to be issued by lender confirming non-recourse terms; 6) Prepayment: Yield Maintenance, final six months open to prepay; (7) Lender Fee: Par. (James Smith)

$1,550,000 Fixed Rate Financing for Retail Building in Southern California. GSP arranged 65% LTV permanent financing for a retail building with above-market rents. GSP was able to prove to the lender that properties along the same thoroughfare as the subject commanded higher rents than other nearby retail. After working with leasing brokers, GSP was able to rent comps not found in the major rent comparable databases. The property consists of two adjacent buildings sharing a common wall and occupied by a single tenant. Terms: (1) Pricing: 7 Year T + 1.90%; (2) LTV: 65%; (3) DCR: 1.25; (4) Loan Term: 7 Years; (5) Amort: 25 years; (6) Full recourse; (7) Lender Fee: Par. (Gary M. Tenzer, Aaron Wright).

10 Year Treasury Predictions

How Did the WSJ Economists Fare with Their 2005 Interest Rate Predictions? What are They and the GSP Brokers Predicting for 2006? Every year we like to look back on the WSJ survey of leading economists, particularly regarding interest rates. Last year the 55 economists' predictions on the 10 year T rate for year end 2005 ranged from 3.80% to 5.50%, with the average at 4.60%. Actual year end close: 4.39% (due to year end rally). What's up for 2006? The WSJ economists predictions range from 4.15% to 5.60%, with a slight majority predicting 5.00% or higher, but the average prediction at 4.90%. A survey of 15 GSP brokers produced an average estimate of 4.87%. Long Bond is Back: The US Treasury stopped issuing the 30 year T in 2001 due to the budget surplus (at that time), which made the 10 year T the defacto "long bond". I believe the recent inversion of the yield curve is partially due to the limited supply of 30 year bonds which put downward pressure on both the 10 and 30 year yields. The treasury will start selling 30 year bonds again next week, which should lessen demand for the 10 year, pushing rates up. Stay tuned… (David R. Pascale, Jr.)

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

Dale Holzer
Mr. Holzer joined GSP full-time in January 2006 where he is focusing on underwriting and research. He received his Bachelors Degree in Economics with a Concentration in Real Estate Finance from the Wharton School of Business, University of Pennsylvania. In college, he played football, and participated in the Real Estate Investment Club and Trips for Kids Mountain Bike Club. Mr. Holzer can be reached at ext. 502 or (dholzer@gspartners.com).

Kaleb Keller
Mr. Keller joined GSP full-time in November 2005 after graduating with honors from USC's Marshall School of Business with a Bachelors of Science in Business Administration, and an emphasis in Real Estate Finance. Mr. Keller's varied work experience prior to joining GSP includes wild land firefighting, bartending, and construction for his family's development company in Oregon. Mr. Keller can be reached at ext. 232 or (kkeller@gspartners.com).

Jonathan Lee
Mr. Lee joined GSP full-time in January 2006. Prior to that he worked full time in acquisition and entitlement for MWH Development, a residential home builder based in Woodland Hills, CA. He received a Bachelors Degree in Political Science in 2001 from the University of California, Los Angeles. Mr. Lee can be reached at ext. 119 or (jlee@gspartners.com).