FINfacts XVI-20

GSPartners

Volume XVI | No. 20 | July 16, 2008

KEY RATE INDICES
Prime Rate	5.00%	1 Month LIBOR	2.47%	5 Yr US Treasury	3.15%	5 Yr Swaps	4.10%
12-MAT	3.08%	3 Month LIBOR	2.79%	10 Yr US Treasury	3.92%	10 Yr Swaps	4.63%
11th Dist COFI	2.92%	6 Month LIBOR	3.10%	30 Yr US Treasury	4.58%

Transactions of the Week

Transaction Description:

$10,300,000 (75% LTC, Non-Recourse Debt) and $3,750,000 (85/15 Co-Investment, “Junior Loan”) for the Acquisition and Redevelopment of a 67,070 sq. ft. Class B Office Building in Long Beach, CA. GSP secured financing for the acquisition and redevelopment of a 78% occupied, Class B office building totaling 67,070 sq. ft. in Long Beach, CA, with 60% of the existing tenants rolling over the next three years. The acquisition was purchased off-market by experienced sponsors.

Challenge: A perceived softening of the office market in Long Beach made many lenders hesitant to fund an office reposition. Additionally, a drought of equity investors following the credit crunch further inhibited interest in the transaction.

Solution: GSP identified a lender comfortable with the Long Beach office market and able to fund the full capital stack of the transaction (up to 98% LTC).

SENIOR LOAN: $10.3M
Rate: LIBOR + 300
LTC: 75%
Term: 36 mos, with 1 - 12 mo extension
Amort: Interest Only
Fee: 1%
Lender Fee: Par
Recourse: Only to Entity

JUNIOR LOAN: $3.75M (85/15 co-investment)
Rate: 85/15 Split to a 10% Preferred Return, 60/40 Thereafter
Fee: 2%

Key Players: Scott Bottles, Joshua Roseman, Kaleb Keller

Hot Money

HIGHLIGHTS

Southern California Balance Sheet Lender Offering 10 Year Fixed Rate Fully Amortizing Loans at 6.5%. Open to prepayment at any time with no fee. No loan fee. 1.30 minimum DCR. Most property types – prefer commercial but will consider multifamily.

Transaction Size: $1-10M

Rate: 6.5% fixed rate

Loan Term: 3-10 yrs (up to 3 yrs fixed, then variable)

Amort: 10 yrs

Max LTV: 55%, 80% if cross collateralized

Min DCR: 1.30

Recourse

Prepayment: Open

Fees: Par

Geography: So Cal

Interest Rate/CMBS Update

The 10 Year T yield dropped to 3.82% as economic fears and flight to quality gripped the market. The economic weakness spurred a huge drop in oil prices, which may mitigate some inflation concerns. The market is more and more convinced that the Fed will not raise rates during 2008, and may even cut rates to spur growth. LIBOR is still below 2.50% as it shadows the Fed’s short term rate. Look for LIBOR to remain steady for the next few months. Credit Markets: The recent CMBS rally has stalled amid further deterioration in the credit markets. However, some originators are quoting in the T + 3.00% range with a 7.00% floor. Bank loans: Credit is tightening, 70-75% LTV loans are being quoted and funded in the 6.00-6.75% range depending on sponsor, property quality, etc. Stay Tuned… (David R. Pascale, Jr.)

Speakers Corner

July 24, 2008
Thursday, 11:45pm - 1:00pm

Eric Better, GSP Vice President, will be a guest speaker at a Broker Forum Luncheon Presented by Sperry Van Ness / Ontario Office.

Topics:

1. Where to go for loans with the current market conditions.

2. How we got here!

3. Lender underwriting requirements

4. National interest rates by product type

5. Future marketplace conditions

6. How agents can assist a buyer in obtaining financing.

Dave & Busters (Ontario Mills)
4821 Mills Circle, Ontario, CA

Gain exposure for your listings by providing your flyers for all properties exclusively listed, priced over $1 million, investment properties only.

Personally Present Your Investment Properties.

To RSVP or to present your exclusive listing over $1 Million or have flyers at the event contact:

Eric H. Better at 310-557-8336 ext. 164 or ebetter@gspartners.com

Seating is limited, over 150 brokers expected

* * *

July 31, 2008

Thursday, 7:00 am - 5:00 pm

Christian Lawrence, GSP Vice President, will be a panelist at The Appraisal Institute’s 14th Annual Summer Conference

Panel Topic: State of the Market - Roundtable forum discussing trends and emerging valuation issues impacting Real Estate Markets.

Participants Include:

1. Greg Harris, The Harris Group/Marcus & Millichap

2. Jim Myers, Cushman Wakefield

3. David Zoraster, CB Richard Ellis

4. John Ellis, Integra Realty Resources

5. Christian Lawrence, George Smith Partners

6. Michael Warner, George Elkins Company

Cerritos Sheraton Hotel

12725 Center Court Drive

Cerritos, CA 90703

Come Grow With Us

George Smith Partners is expanding its team of top-notch mortgage brokers – originators and assistants. We offer highly competitive compensation and an excellent environment in which to work, learn and be supported. GSP provides its employees with cutting edge market information, resources for identifying the best capital sources for each transaction, training opportunities and peer support whenever it is needed.

We invite you to consider a career with George Smith Partners. Please direct confidential inquiries to Stella Debibi, Director of Business Development and Recruitment, at (310) 557-8336, Ext. 103.

FINfacts Newsletter XVI-20

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