EXHIBIT B
COMMERCIAL VENTURES
GMAC COMMERCIAL MORTGAGE CORPORATION
Wall Street Plaza
88 Pine Street, 18th Floor
New York, NY 10005
April 3, 2001
Mr. Daniel Gottlieb
Mr. Steven Lebowitz
c/o G&L Realty Corp.
439 North Bedford Drive
Beverly Hills, CA 90210
Re: Medical Office Buildings listed on Schedule A
and their interests (the "MOB Portfolio")
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Dear Mr. Gottlieb and Mr. Lebowitz:
GMAC Commercial Mortgage Corporation ("GMACCM" or "Lender") is pleased
to advise you of its commitment (this letter being the "Commitment Letter") to
provide financing in an amount equal to the lesser of (i) $35,000,000 (the
"Maximum Commitment") and (ii) the amount necessary to consummate the
Transactions (as defined below) (the "Loan") secured by the MOB Portfolio and
Other Collateral, all as more particularly described below, subject to the terms
and conditions and based on the assumptions outlined below:
Loan Amount: Up to $35,000,000.
Borrower: Steve Lebowitz and Dan Gottlieb (the "Key Principals") will
form a limited liability company, corporation or other
entity ("Parent") of which they will be the sole owners.
Parent will form a limited partnership or other entity
("Acquisition Co"). Acquisition Co will be the initial
borrower. Concurrently with the Loan closing, Parent will
be merged into G&L Realty Corp. (the "REIT"), with the REIT
being the surviving entity (the "REIT Merger") and
Acquisition Co will be merged into G&L Realty Partnership,
L.P. ("G&L"), with G&L being the surviving entity (the "OP
Merger") and the ultimate borrower (the "Borrower").
Notwithstanding the foregoing, to the extent that as
provided in "Loan Purpose" below a portion of the Loan
proceeds is used by the
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Re: Medical Office Building Portfolio
Page 2
Key Principals to acquire substitute collateral or to repay
the indebtedness secured by the Pledged Interests (as
defined below), the portion of the Loan used for such
purposes may be lent directly to the Key Principals on the
same interest rate, prepayment, and maturity terms so long
as the Borrower and the REIT guarantee such portion of the
Loan. In such case, the Borrower's and the REIT's guarantees
will be secured on the same basis as the portion of the Loan
made to the Borrower directly and the Loan to the Key
Principals will be secured on the same basis as the Key
Principal Guaranties (as defined below).
Borrower's Equity: Borrower's capital structure and the use of capital and the
Loan proceeds will be subject to GMACCM's approval.
Loan Purpose: To provide financing for the REIT Merger and the OP Merger
(collectively with the Loan, the "Transactions") including
related transactions costs and costs associated with the
redemption or other acquisition of any outstanding options
to purchase common stock of the REIT. The Key Principals or
the Parent (if the relevant shares are contributed to the
Parent), will utilize any and all cash proceeds received by
them as a result of the REIT Merger and the OP Merger to
either repay the debt obligations of the Key Principals or
the Parent (if such obligations are assumed by Parent) that
are owed to Milner (as defined below) and/or secured by the
common stock of the REIT or partnership interests in G&L
(the "Pledged Interests") or to acquire substitute
collateral to secure such debt obligations in lieu of the
Pledged Interests. To the extent Pledged Interests are
cancelled without consideration in the REIT Merger or the OP
Merger, the Loan proceeds may be utilized by the Borrower or
Parent to repay any debt encumbering such Pledged Interests.
Term: 120 months.
Amortization: None scheduled, however, on a quarterly basis based upon the
approved annual Business Plan and budget, excess cash flow,
if any, will be used to amortize the Loan up to the amounts
shown under the heading "Principal Amortization" for each
year, as shown on the amortization schedule attached as
Schedule B (the "Principal Amortization"). Scheduled
Principal Amortization for each year not paid shall be
cumulative and added on to the required future amortization.
If at any time the accrued, deferred Principal Amortization
exceeds $3,000,000, then Borrower shall pay to Lender the
amount of such excess within thirty (30) days of receipt of
written demand therefor, regardless of whether there is
excess
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Re: Medical Office Building Portfolio
Page 3
cash flow available for such payment.
Interest Rate: The 30 day London Interbank Offered Rate for U.S. Dollar
Deposits ("LIBOR") plus the spread determined with reference
to the chart below. The spread will be the lowest indicated
for which the Borrower qualifies based upon the outstanding
balance of the Loan net of paid scheduled Principal
Amortization and repayments and the satisfaction of the
Combined DSC Test (as defined herein) and the Acquisition
DSC Test (as defined herein) (the Combined DSC Test and the
Acquisition DSC Test, collectively, the "DSC Ratios"), as
follows:
Combined Acquisition
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Loan Balance DSC DSC Spread
------------ --- --- ------
$31.0 million or greater or Less than 1.20x or Less than 1.50x 750 bp's
Less than $31.0 million and 1.20x or higher and 1.50x or higher 650 bp's
Less than $27.0 million and 1.25x or higher and 1.60x or higher 550 bp's
(See Minimum Debt Service Coverage Ratio for descriptions of
the Combined DSC Test, the Acquisition DSC Test and the
calculation of DSC Ratios.) The Loan balances shown above
reflect a Loan amount of $35.0 million. The Loan balances
will be proportionally adjusted based upon the final
financing amount.
Payments: The total of the interest rate, plus any amortization
payment to the extent of excess cash flow up to the annual
limits as described above, is due and payable monthly in
arrears.
Prepayment: Subject to the provisions outlined below in the MOB Capital
Transactions, Refinancing of Acquisition Financing, REIT
Equity Sale and Prepayment Rights sections, the Loan may be
prepaid in whole or in part in multiples of $100,000 on any
payment date commencing with month 7 upon 30 days prior
written notice, which notice may be given to the Lender at
any time after month 5. Any such prepayment must be
accompanied by the applicable prepayment premium, if any,
and accrued interest on the amounts so prepaid.
MOB Capital The net proceeds from the sale or refinancing of any
Transactions: individual MOB Portfolio property will be applied to reduce
the principal balance of the Loan. A MOB Capital Transaction
prepayment premium of 3.0% of the amount repaid will be due
in year 1 of the Loan, 2.0% in year 2, and 1.0% in year 3.
No MOB Capital Transaction prepayment premiums will be due
thereafter.
Minimum release prices for the sale of each of the MOB
Portfolio properties equals 125% of the allocated loan
amount as reflected on
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Re: Medical Office Building Portfolio
Page 4
Schedule C.
Notwithstanding anything to the contrary in this letter,
Borrower may refinance the Tustin MOB and Pacific Park
properties at any time prior to December 31, 2001 and
September 30, 2001, respectively, for an amount not to
exceed in the aggregate $2,000,000 more than the existing
outstanding principal balances of both such loans, and may
retain any excess refinancing proceeds or use such excess
refinancing proceeds to repay the Loan without any
prepayment premium. The refinancing of the Pacific Park
property may be effectuated by the transfer of the real
property interests in such property from G&L and its other
owners to a bankruptcy remote single purpose entity (a
"BRSPE") provided that the aggregate percentage equity
interests of G&L in such BRSPE, after giving effect to such
transfer and refinancing shall not be not less than the
greater of the aggregate percentage ownership interest of
G&L in the Pacific Park property (a) prior to such transfer
and refinancing, or (b) on the date hereof. Upon such
transfer no prepayment penalty will be due or payable.
Refinancing of The Loan may not be repaid with the proceeds of a REIT or
Acquisition G&L refinancing for two (2) years following the closing of
Financing: the Loan. The foregoing shall not apply to the refinancing
of MOB Portfolio property level mortgage debt on an
individual, non-cross defaulted, basis, the sale of
individual MOB Portfolio assets as contemplated by the
Section titled MOB Capital Transactions or for prepayment
from REIT operating cash flow as contemplated by the Section
titled Prepayment Rights. After the second anniversary of
the closing of the Loan, the Loan may be prepaid in full,
but not in part, with the proceeds of a REIT or G&L
refinancing of all or substantially all of the MOB Portfolio
and/or all or substantially all of the REIT's property other
than G&L or the MOB Portfolio, in each case, without the
payment of a prepayment penalty (other than LIBOR breakage
costs).
REIT Equity Sale: The Loan shall be prepaid in full and not in part upon the
sale of all or any portion of the Key Principals' equity
interest in the REIT. Any such prepayment occurring in the
first two (2) years of the term shall be accompanied by a
prepayment premium equal to 2.0% of the amount prepaid.
Equity in G&L may not be sold without the consent of GMACCM,
provided, that the foregoing shall not apply to transfers by
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Milner (as defined below). Milner may transfer equity
interests in G&L without ant consent from GMACCM.
Notwithstanding the foregoing, equity interests in the REIT
and G&L may be transferred to a trust which is an affiliate
of the
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Re: Medical Office Building Portfolio
Page 5
applicable transferor, or a trust for the benefit of the
family members of the applicable transferor or upon the
death of any holder thereof, subject in each case to the
Lender's lien thereon.
Prepayment Rights: Borrower has the right to prepay all or portions of the
acquisition financing from sources other than: (1) MOB
Capital Transactions; (2) a refinancing of the acquisition
financing; and (3) a REIT equity sale subject to the
following limitations and prepayment premiums:
Period Prepayment Terms
------ ----------------
Months 1 through 6 Locked out.
Months 7 through 12 The first $4.0 million in
prepayments is not subject to a
prepayment premium. Amounts above
$4.0 million carry a 3.0%
prepayment premium.
Months 13 through 24 Prepayments equal to $8.0 million
less the free prepayments made in
the previous period are not subject
to a prepayment premium. Amounts
above a cumulative prepayment
amount of $8.0 million carry a 2.0%
prepayment premium.
Months 25 through 36 Prepayments equal to $12.0 million
less the free prepayments made in
previous periods are not subject to
a prepayment premium. Amounts above
a cumulative prepayment amount of
$12.0 million carry a 1.0%
prepayment premium.
Months 37 through 120 Unlimited prepayments are allowed
with no prepayment premiums.
Scheduled amortization payments are not considered to be
prepayments with regard to both the prepayment premiums and
limits set above.
Fees: As described in the Fee Letter of even date herewith among
GMAC and the Key Principals (the "Fee Letter").
Guarantees: Subject to the exceptions set forth below, the Parent and
upon the consummation of the REIT Merger, the REIT, will
guarantee the obligations under the documents executed in
connection with the Loan (the "Loan Documents") on a secured
limited recourse basis to the extent described below (the
"REIT Guaranty"). Subject to the
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Re: Medical Office Building Portfolio
Page 6
exceptions set forth below, each of the Key Principals will
guarantee the obligations under the Loan Documents on a
secured limited recourse basis (each, a "Key Principal
Guaranty"). To the extent permitted by the terms of existing
debt of the subsidiaries of the Borrower, each such
subsidiary of the Borrower, and G&L Realty Financial II,
Inc. will guarantee the Loan on a secured basis as described
below.
In addition, at the Lender's request, the Key Principals
will execute a "bottom guaranty" in favor of the Lender in
respect of the obligations under the Loan Documents,
provided that the obligations under such guaranty shall not
--------
exceed $3,000,000 (the "Bottom Guaranty"). The Bottom
Guaranty shall (i) be reduced by one dollar for each of
principal repaid on the Loan, (ii) be secured by, and have
recourse limited to, the Key Principals' interest in G&L,
and (iii) include a provision requiring Lender to exhaust
all collateral before pursuing its rights under the Bottom
Guaranty.
LImited Recourse: Other than with respect to the exceptions listed below
under the heading "Exceptions to Limited Recourse," the REIT
Guaranty and the Key Principal Guaranties, respectively,
will be recourse solely to the REIT's and the Key
Principals' interest in G&L.
Exceptions to The obligations under the Loan Documents will be fully
Limited Recourse: recourse to the REIT and the Key Principals in the event (1)
the MOB Portfolio or any part of the collateral becomes an
asset in (i) a voluntary bankruptcy or insolvency proceeding
or (ii) any involuntary bankruptcy or insolvency proceeding
is commenced by any person or entity (other than by GMACCM)
and the Key Principals, the REIT, the Borrower or the
applicable subsidiary of the Borrower fails to use its best
efforts to obtain a dismissal of such proceedings, (2) the
REIT or the Borrower fails to comply with quarterly
reporting and annual budget approval covenants in the Loan
documents within 30 days of the REIT's and the Key
Principals' receipt from Lender of written notice of such
failure (see Borrower Reporting), (3) that the Lender incurs
any losses, costs, (which shall include Lender's costs to
enforce its rights and remedies) or expenses arising out of
the following: (A) fraud or misrepresentation, (B) gross
negligence or criminal acts resulting in forfeiture, seizure
or loss of any portion of the MOB Portfolio, (C)
misapplication or misappropriation of funds or collateral,
(D) liability arising under the Environmental Indemnity
(described below), (E) the sale or conveyance of the MOB
Portfolio without complying with any prepayment and other
obligations set forth in the Loan Documents, (F) any breach
of the BRSPE Covenants (as
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Re: Medical Office Building Portfolio
Page 7
defined below see conditions -- "BRSPE"), (G) non-disclosure
of liabilities of the REIT or the Borrower and (H) Lender's
enforcement of and collection of any amounts payable under
the Loan documents and Lender protecting its interest in
the MOB Portfolio and any other collateral, or (4) of a
breach of a covenant or representation contained in a Key
Principal Guaranty or the REIT Guaranty.
In addition, the Loan will be recourse to the REIT to the
extent any principal balance of the Loan is not repaid
because the REIT or the Borrower has insufficient cash
flows or other assets to repay the Loan resulting from the
liabilities relating to the assets and operations of the
REIT and its subsidiaries other than those relating solely
to the MOB Portfolio and its operations.
Environmental The Borrower, REIT and each Key Principal shall execute an
Indemnity: environmental indemnity in form and substance acceptable to
GMACCM, it being understood that as to the Key Principals,
such environmental indemnity shall be limited to matters
caused by the affirmative acts of the REIT, G&L or their
subsidiaries.
Security, Lien To be determined, but the final lien position and
Position and Other collateral package is subject to GMACCM's reasonable
Collateral: satisfaction, determination and consent.
The Key Principal Guaranties will be secured by the Key
Principals' common stock in the REIT and the Key Principals'
partnership interests in G&L. The REIT Guaranty will be
secured by its partnership interest in G&L, and to the
extent permitted by existing debt, its shares of G&L
Medical, Inc. and G&L Realty Financing II, Inc. Any event
of default under the Loan Documents shall permit, among
other things, the exercise of remedies in respect of the
Key Principals' and the REIT's partnership interests in G&L.
In the event that the amendments to the limited partnership
agreement of G&L Financing Partnership II, L.P. (the
"Financing LP Agreement") contemplated below under the
heading "Amendments to Financing LP Agreement" are
effectuated, G&L Realty Financing II, Inc. will pledge its
general partnership interests in G&L Financing Partnership
II, L.P. to secure the obligations under the Loan Documents.
The Borrower's obligations under the loan documents and its
subsidiaries' guarantees, if any, will be secured by,
unless prohibited by any existing 1/st/ mortgage documents,
a 2/nd/ mortgage on the real
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Re: Medical Office Building Portfolio
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properties included within the MOB Portfolio (other than
real property owned by Roxbury (as defined below)), a lien
on and assignment of the excess cash flow after 1/st/
mortgage debt service, reserves and operating expenses for
such properties a lien on all personal property, all rights
contracts and agreements, including limited partnership and
limited liability operating agreements and insurance, a lien
on and a pledge of the ownership interests of entities below
G&L in the REIT/G&L organizational chart.
It is the intent of the parties to structure the lien
position and collateral package in such a manner so to avoid
the necessity of existing 1/st/ mortgage lender or rating
agency consent.
Cash Collateral Subject to limitations contained in existing 1/st/ mortgage
Account: debt instruments on the MOB Portfolio, all after-debt
service cash flow and required reserves from the MOB
Portfolio properties will be placed in several accounts (the
"Cash Collateral Accounts") at a depository institution
acceptable to GMACCM, subject to Borrower's reasonable
approval. Borrower will be designated the owner and GMACCM
as the pledgee of the Cash Collateral Accounts.
With respect to G&L Financing Partnership II, L.P. and G&L
Medical Partnership, L.P., Irrevocable Letters of Direction
will be prepared and executed to direct surplus cash flow
from existing cash collateral accounts to the new Cash
Collateral Accounts. With respect to Roxbury, an Irrevocable
Letter of Direction will be prepared and delivered by G&L to
Roxbury directing Roxbury to deposit all dividends and
distributions payable to G&L into a Cash Collateral Account.
For all entities other than G&L Financing Partnership II,
L.P., G&L Medical Partnership, L.P. and Roxbury, Irrevocable
Letters of Direction shall either be delivered to all
tenants prior to closing directing each tenant to make
rental and all other payments to the Cash Collateral
Accounts.
To the extent not already provided for in the existing 1/st/
mortgage documents, funds in the Cash Collateral Account
will be used for property level operating expenses, real
estate taxes, necessary capital improvements, debt service
on existing first mortgage debt and debt service on the Loan
in the order set forth in the Loan Documents.
Excess cash flow after the funding of reserves deemed
appropriate by GMACCM, and the payment or interest and
amortization, will be distributed monthly to G&L or, in the
case of direct subsidiaries of the REIT only, the REIT, to
be used, in each case, for any purpose
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Re: Medical Office Building Portfolio
Page 9
not inconsistent with the Loan Documents. No such
reserves are anticipated to be in place at closing, and
no such reserves will be imposed thereafter if, as of the
end of its most recent fiscal year, G&L's performance in
such year has met its projections for such year.
The provisions of this Cash Collateral Account section
shall not apply to the portion of the cash flow to which
G&L's outside partners or outside fellow tenants-in-
common are entitled.
Letter of Credit or Until December 10, 2004, the Borrower will be required,
Cash Collateral: at the Borrower's option to (a) post a letter of credit
in favor of the Lender in an amount equal to the Adjusted
Cigna Shortfall (as defined below) or (b) post cash as
collateral (the "Cigna Cash Collateral") in an amount
equal to the Adjusted Cigna Shortfall.
An estimate of the Adjusted Cigna Shortfall at closing,
the calculation of such estimate and the assumptions upon
which such calculations are based are set forth on
Schedule D.
-
The "Cigna Shortfall" shall be equal to the difference
between the base rent due under the lease originally
entered into by Cigna Healthcare with respect to the
property located in Irwindale, California and directly or
indirectly owned by G&L (the "Cigna Lease"), and the
amount of base rent payable under the current lease of
the property subject to the Cigna Lease for the period
commencing on each determination date of such Cigna
Shortfall and ending on the expiration date of the Cigna
Lease. The "Adjusted Cigna Shortfall" shall be determined
quarterly based on the Combined DSC Ratio for the
previous twelve months calculated on the basis of the
quarterly financial statements of G&L delivered to the
Lender and shall equal the product of Cigna Shortfall, as
of the date of such financial statements and the
applicable "Cigna Multiplier" determined with reference
to the chart below.
DSC Ratio Cigna Multiplier
--------- ----------------
1.1 or less 1
Greater than 1.1 but less
than 1.2 .5
1.2 or greater .25
The Lender shall be entitled to draw on the letter of
credit or the cash
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Re: Medical Office Building Portfolio
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constituting Cigna Cash Collateral upon (a) the
occurrence of an event of default and (b) if the
amortization payments indicated on Schedule B are not
made when due, without giving effect to any deferral of
such amortization permitted by the Loan Documents.
Interest on any amounts constituting Cigna Cash
Collateral shall be released to the Borrower on the
7/th/ Business Day of each month, provided that on
--------
such date no default or event of default has occurred
and is continuing.
LIBOR Cap: Borrower shall assign all rights relating to the LIBOR
cap to Lender.
Cross- The Loan collateral shall be cross collateralized and
Collateralization: shall be subject to cross-default provisions to the
Key Principal Guaranty and any existing debt of the
REIT, G&L Realty Financing II, Inc., G&L Medical, Inc.,
G&L and any of its subsidiaries, if applicable.
Right of First The Lender shall not be permitted to cause G&L to
Offer/Pledge or Put transfer equity interests in the entity which is the
owner ("Roxbury") of 435 North Roxbury Drive, Beverly
Hills, CA 90210 unless prior to such transfer the
Lender shall have offered to Reese Milner, any members
of his family, any entity controlled by him or trusts
for the benefit of any of the foregoing (collectively,
"Milner") the opportunity to exercise any rights of
first refusal set forth in Roxbury's charter documents
in effect on the date hereof. Notwithstanding anything
herein to the contrary, nothing contained in this
Commitment Letter shall be deemed to amend or modify
the right or obligations of the parties under Roxbury's
partnership agreement.
COVENANTS:
Other Debt or The Borrower acknowledges that the MOB Portfolio is
Encumbrances: presently subject to existing 1/st/ mortgage financing
as shown in Schedule E.
There shall be no debt of the Borrower and the REIT as
of the closing, other than the Loan, the 1/st/
mortgages and in respect of the REIT only, (1) the
unsecured guarantees and account receivable lines set
forth in Schedule F and (2) additional indebtedness not
to exceed $2,000,000 in the aggregate, consisting of a
line of credit, guarantees in respect of obligations of
its direct or indirect subsidiaries or assets other
than G&L and the MOB Portfolio, or any combination of
the foregoing (clause (2) collectively, the "Line of
Credit Debt").
Other than as contemplated by "MOB Capital
Transactions," the incurrence of debt by the REIT, G&L
Realty Financing II, Inc., G&L Medical, Inc., G&L or
G&L's subsidiaries is prohibited, either on a
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Re: Medical Office Building Portfolio
Page 11
secured or unsecured basis, without the consent of
GMACCM, provided, that the REIT may incur Line of Credit
--------
Debt (to the extent not in place at Closing) with the
consent of the Lender. Neither the Tustin Guaranty nor
the Hampden Guaranty (as each such term is defined on
Schedule F) may be refinanced, extended, supplemented or
modified. The Accounts Receivable Lines (as defined on
Schedule F) may be refinanced, renewed or replaced to the
extent that the aggregate principal amount of such debt
or the amount guaranteed thereunder is not increased. The
Loan Documents will also prohibit additional encumbrances
on any property in which a security interest is granted
to the Lender. All entities owned directly or indirectly
by the REIT other than G&L and its subsidiaries will be
free to incur debt and encumber and sell their assets
without restriction.
Transfers: Other than as contemplated by the Section titled "REIT
Equity Sale", transfers of all or any portion of the MOB
Portfolio or legal or beneficial interests in REIT, the
MOB Portfolio or Borrower, without paying the agreed
release prices and partial repayment of the Loan, in the
case of the MOB Portfolio, and repayment of the Loan in
full, in the case of legal or beneficial interests, are
not permitted.
Notwithstanding the foregoing, (i) the parties hereto
understand that the property in Pacific Park may be
refinanced and, in connection with such refinancing, the
owners of the property in Pacific Park may contribute
their interest as tenants-in-common into an entity wholly
owned by them in the same relative percentages as
currently exist, provided that GMACCM's position with
regard to the collateral for the Loan, the recourse of
the Loan and the creditworthiness of the Borrower and
guarantors are not adversely affected, and (ii) G&L may
transfer some of its partnership interests in Roxbury to
Milner in connection with a transfer to G&L by Milner of
units in G&L, provided that (A) the amount of transferred
Roxbury partnership interests exchanged for the units of
G&L are approved by the Lender, such approval not to be
unreasonably withheld (it being understood that Roxbury
partnership interests are illiquid and Milner would be
purchasing a minority interest in Roxbury), and (B) G&L
continues to own not less than 24% of the equity
interests in Roxbury. A certificate of G&L certifying to
clause (B) above, and the respective values of the
Roxbury partnership interests and G&L units exchanged
shall be delivered to the Lender on the date of any such
exchange, together with calculations, in reasonable
detail, supporting such valuations.
Equity Offerings: All equity offerings with respect to the Borrower, the
REIT, G&L Realty Financing II, Inc., G&L Medical, Inc.,
G&L or any subsidiary
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Re: Medical Office Building Portfolio
Page 12
of G&L (other than issuances to Milner described above under
the heading "Transfers") must be approved by GMACCM.
Approvals: GMACCM shall have approval rights for budgets, sales,
financings, transfers, leases of space constituting 20% or
more of the space in any building in the MOB Portfolio and
the lease of any space that does not meet the minimum
standards set by G&L's manual budget as approved by the
Lender.
Management G&L currently self-manages its properties. If G&L retains
Agreement: third party management (whether an affiliate or non
affiliate of G&L), then there must be a cancelable MOB
Portfolio management agreement acceptable to GMACCM and
subordinate to GMACCM's collateral and the Loan.
Interest Rate A LIBOR cap on such terms and covering such amounts, as the
Protection: Lender shall request, will be maintained by the Borrower.
Insurance: Borrower will be required to maintain certificates and
policies evidencing adequate casualty, liability, and other
insurance, which shall be satisfactory to GMACCM. Where
applicable, GMACCM shall be named as mortgagee, loss payee
and additional insured. Lender acknowledges that G&L's
current earthquake insurance is acceptable, subject to final
view of seismis reports.
Borrower The Loan documents will require monthly, quarterly, and
Reporting: annual reporting by G&L and the REIT with respect to the MOB
Portfolio and the Borrower's Business Plan, including, but
not limited to, the types and categories of information
contained in the reports previously delivered to the Lender
and referred to by G&L or the REIT, as applicable, as the
Twelve Month Trend of Income and Expense Balances Report,
the Actual to Budget Report, the Tenant Rent Report, the
Vacancy Summary, the General Ledger Report, and the Check
Register Report. Such reports shall utilize the form of
report currently used by G&L or the REIT. Annually, the
Borrower shall promptly deliver a final copy of its
operating budget to the Lender.
Property Level GMACCM will have a right of first offer followed by a
Financing: matching right to provide any future MOB Portfolio
financings, it being understood that Borrower will first ask
GMACCM for loan terms and Borrower may then seek other bona
fide oral or written quotes and Borrower will not accept any
such bona fide quotes without first allowing GMACCM to match
or beat such quotes. Tustin MOB and Pacific Park
refinancings prior to December 31, 2001 and September
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Re: Medical Office Building Portfolio
Page 13
30, 2001, respectively, are not subject to the provisions
of this paragraph.
Loan GMACCM will close and fund the Loan with its own funds.
Transfers/Structure: Following the closing, GMACCM may sell the Loan,
interests in the Loan, issue securities backed by or
evidencing ownership of the Loan and/or further tranche
the Loan at anytime without Borrower's consent but
currently intends to retain the right to service the
Loan. Key Principals agree and agree to cause Borrower
and REIT to cooperate either before or after Loan closing
in connection with the foregoing.
Key Principal (1) Upon an event of default under the Loan
Covenants: Documents, the Key Principals will covenant to cause the
general partners of G&L Medical Partnership, L.P. and G&L
Financing Partnership II, L.P., respectively, to manage
such limited partnerships as directed by the Lender,
including using their reasonable best efforts to cause
the independent director of such general partners to take
such actions as may be necessary to manage the limited
partnerships as directed by the Lender, provided that it
--------
shall not be a breach of such covenant if one of the
partnerships does not take an action which the Lender has
directed to be taken, if such action was not taken solely
because such action requires that unanimous consent of
the board of directors of the corporation which is the
general partner of such partnership and the consent of
the independent director of such corporation was, despite
the reasonable best efforts of the Key Principals, not
obtained.
(2) Upon an event of default under the Loan
Documents, and an exercise of remedies under the security
documents, the Key Principals will take any and all
actions to facilitate the transfer of partnership of
interests of G&L owned by the Key Principals or the REIT
to the Lender or its transferee, including but not
limited to, consenting to the admission of such persons
as the general partner or, substitute limited partner of
G&L.
(3) The Key Principals shall not permit the agreement
of limited partnership of G&L to be amended, without the
consent of the Lender.
(4) The Key Principals shall cause any put of
partnership interests in G&L to G&L to be paid in shares
of the REIT, rather than in cash.
(5) At all times, the board of directors of the REIT
shall
G&L Realty Corp.
Re: Medical Office Building Portfolio
Page 14
include at least one independent director.
CONDITIONS The closing of the Loan will be subject to satisfaction of
PRECEDENT TO the conditions precedent deemed appropriate by the Lender
CLOSING: for financings generally and for this transaction in
particular, including, but not limited to, the following:
REIT and OP The REIT Merger and the OP Merger shall have been
Merger consummated on terms satisfactory to the Lender pursuant to
definitive documentation reasonably satisfactory to the
Lender. As a result of the REIT Merger all outstanding
common stock of the REIT will be held by the Key Principals.
After giving effect to the OP Merger, the general partner of
G&L will be the REIT and no more than 5% of the total
partnership interests of G&L will be owned by individuals or
entities other than the Key Principals or the REIT.
Capitalization: After giving effect to the Transactions, the Lender shall be
reasonably satisfied that the corporate, capital and
ownership structure, management of and charter documents of,
the REIT, the Borrower and their subsidiaries are consistent
with the descriptions set forth in this Commitment Letter.
BRSPE: Immediately prior to closing, the REIT shall have converted
G&L into a BRSPE that will own and operate the MOB Portfolio
and shall be prohibited from engaging in any other business
activity or incurring any other liability other than the
Loan, existing debt associated with the MOB Portfolio and
those liabilities associated with routine MOB Portfolio
operating expenses and required capital improvements to the
MOB Portfolio (the "BRSPE Covenants").
To accomplish this conversion, the REIT shall have created a
new operating partnership and shall have transferred into
the new partnership, the ownership interests of all of G&L's
assets and accompanying liabilities except for the MOB
Portfolio.
Key Principal Debt: All debt secured by the Pledged Interests prior to the
closing shall either be repaid simultaneously with or prior
to the closing of the Loan or shall be secured by collateral
other than the common stock of the REIT.
Pledged Interests: Other than liens granted to the Lender, the common shares of
the REIT owned by the Key Principals and the G&L interests
owned by either the REIT or the Key Principals shall not be
subject to any liens
G&L Realty Corp.
Re: Medical Office Building Portfolio
Page 15
or encumbrances.
Subordination The debt evidenced by Hampden Guaranty shall be subordinated
Agreement: to the Loans on terms and conditions, and pursuant to,
documentation acceptable to the Lender in its sole and
absolute discretion.
Consents: All governmental, shareholder and third-party consents and
approvals necessary or desirable in connection with the
Transaction and the other transactions contemplated hereby
shall have been obtained; all such consents and approvals
shall be satisfactory to GMACCM and in full force and
effect; and all applicable waiting periods shall have
expired without any action being taken by any authority that
could retrain, prevent or impose any material adverse
conditions on the Transaction or such other transactions or
that could seek to threaten any of the foregoing.
In its sole and absolute discretion, GMACCM may conclude
that various approvals are required for the Loan and/or the
contemplated merger and G&L restructuring.
Amendment of The Key Principals shall have utilized commercially
Financing LP reasonable efforts to amend the Financing LP Agreement to
Agreement: allow a pledge by G&L Realty Financing II, Inc. of its
general partnership interest in G&L Realty Financing II,
L.P. to the Lender, including but not limiting obtaining the
consent of the independent director of G&L Realty Financing
II, Inc. to such amendment.
Business Plan: As of the closing date, there shall be no material change as
determined in the sole and absolute discretion of the Lender
to the Business Plan from the Business Plan delivered to the
Lender, prior to the date hereof. The Borrower's "Business
Plan," is the Borrower's financial and operating projections
and business objectives for the MOB Portfolio during the
term of the Loan from the Business Plan. The Business Plan
includes three years of historical operating statements and
rent rolls, the most recent operating statement and rent
roll, and an operating statement and rent roll at the time
of projected stabilization. The Business Plan also includes
the Borrower's proposed budget for tenant improvements,
leasing commissions, and interior and exterior capital
improvements including, if applicable, any proposed
expansion of, or addition to, the MOB Portfolio.
Minimum Debt At closing, the MOB Portfolio shall satisfy the following
Service Coverage DSC Ratios: (1) 1.07x pursuant to the Acquisition DSC Test;
and
G&L Realty Corp.
Re: Medical Office Building Portfolio
Page 16
Ratio: (2) 1.02x pursuant to the Combined DSC Test.
The DSC Ratios will be based upon (1) net operating income
of the MOB Portfolio after deduction of replacement
reserves, tenant improvement reserves and leasing
commissions reserves and if actual occupancy is greater than
95%, a vacancy loss factor necessary to bring the MOB
Portfolio to 95% occupancy (collectively, the "MOB Portfolio
Cash Flow"), (2) the existing 1/st/ mortgage debt service,
including amortization and (3) (x) for purposes of
determining the DSC Ratios at closing, and the Adjusted
Cigna Shortfall, debt service on the Loan other than
amortization payments and (y) for purposes of determining
DSC Ratios in connection with the calculation of the
interest rate applicable to the Loans, debt service on the
Loan including amortization payments. For the purpose of
calculating DSC Ratios, (1) net operating income is based on
(i) the projected 12 month forward income of the MOB
Portfolio net of all distributions to outside investors and
(ii) the assumption that all rent due and owing pursuant to
the Cigna Lease has been paid in full, (2) the deduction of
replacement reserves, tenant improvement reserves and
leasing commissions reserves will be the greater of the
current budget year for those items or the average of the
current year budget and the actual costs of the two
preceding years for those items, and (3) the LIBOR rate will
be (x) when utilized to determine the Adjusted Cigna
Shortfall, 7% and (y) for all other purposes the interest
rate cap (if applicable) or the greater of 7% or the actual
LIBOR rate in effect at the time the DSC Ratios are
calculated.
For the purpose of any interest rate step down (see Interest
Rate) and at closing, the DSC Ratios will be calculated as
follows: (1) the "Combined DSC Test" is equal to the total
MOB Portfolio Cash Flow divided by the sum of the existing
1/st/ mortgage debt service payments and the Loan debt
service payments; and (2) the "Acquisition DSC Test" is
equal to the MOB Portfolio Cash Flow less 1/st/ mortgage
debt service payments divided by the Loan debt service
payments.
Loan to Value: At closing, the combined loan to value (the sum of the
existing 1st mortgage debt and the Loan) shall not exceed
75% as determined by GMACCM.
Solvency: The Lender shall have received certification from the chief
financial officer of the Borrower as to the financial
condition and solvency of the Borrower and its subsidiaries
on a consolidated basis after giving effect to the
Transaction.
G&L Realty Corp.
Re: Medical Office Building Portfolio
Page 17
Appraisal: GMACCM shall have received an "as is" and "as stabilized"
appraisal of the MOB Portfolio prepared by an appraiser
acceptable to GMACCM containing market demonstrated support
for capitalization and/or yield rates and for comparable
sale and rental properties. The Lender acknowledges receipt
of acceptable appraisals as indicated on Schedule F.
A&E Report/ GMACCM shall have received an architectural and engineering
Environmental: report as well as a Phase I environmental report (including
wetlands, asbestos and radon), in form and substance, and
prepared by a firm acceptable to GMACCM. The Lender
acknowledges receipt of acceptable reports as indicated on
Schedule F.
Seismic: GMACCM must receive a seismic report prepared by a firm
acceptable to GMACCM. The Lender acknowledges receipt of
acceptable reports as indicated on Schedule F.
Judgments, Etc.: There shall not exist (1) any order, decree, judgment,
ruling or injunction which restrains the consummation of the
Transactions in the manner contemplated by the transaction
documents and (2) any pending or threatened (in writing)
action, suit, investigation or proceeding which, if
adversely determined, could materially adversely affect the
ability of the Borrower or the guarantors to perform any of
their respective obligations under the Loan Documents or the
ability of the Lender to exercise its rights thereunder.
Disclosure: GMACCM not becoming aware after the date hereof of any
information or other matter which in its judgment is
inconsistent in a material and adverse manner with any
information or other matter disclosed to it prior to the
date hereof (in which case it may, in its reasonable
discretion, suggest alternative financing amounts or
structures that ensure adequate protection for the Lender or
terminate this letter and any commitment or undertaking
hereunder).
Other Obligations: On or prior to closing all fees and expenses due and payable
to Lender pursuant to the Commitment Letter or the Fee
Letter shall have been paid in full.
Documentation: The Borrower and the guarantors shall have entered into loan
and security documentation in form and substance reasonably
satisfactory to the Lender, and all conditions precedent
shall have been satisfied.
Opinions: The Lender shall have received (1) satisfactory opinions of
counsel to the Borrower and the guarantors (which shall
cover, among other
G&L Realty Corp.
Re. Medical Office Building Portfolio
Page 18
things, authority, legality, validity, binding effect,
enforceability and no conflict of the Loan Documents,
subject in the case of the no conflict opinion to carve outs
reasonably acceptable to the Lender) and such resolutions,
certificates, and other documents as the Lender shall
reasonably require and (2) satisfactory evidence that the
Lender holds a perfected lien in all collateral for the
Loan, subject to no other liens except for permitted liens
to be determined.
The terms and conditions outlined above are not all inclusive, and are
intended as an outline of certain of the material terms of the Loan and the
Transactions and do not purport to summarize all of the conditions, covenants,
representations, warranties and other provisions which would be contained in
definitive Loan documentation for the Loan contemplated hereby.
Key Principals shall pay, or cause to be paid, all of GMACCM's
out-of-pocket expenses in connection with the Loan whether or not the Loan
closes. Such expenses include, but are not limited to, the cost of title
insurance, survey, legal fees, appraisal, seismic report, architectural and
engineering report, environmental report and third party due diligence. GMACCM
shall bill the Key Principals for such expenses on a regular basis and the Key
Principals shall promptly pay, or cause to be paid, such expenses. In addition,
Borrower shall pay all closing costs customary to a transaction of this nature,
including, recording fees and taxes and intangible taxes on the note or the debt
evidenced by the Loan.
A $200,000 expense deposit is due within two (2) business days of the
issuance of this Commitment Letter to cover expenses associated with third-party
reports and fees, legal fees, and other closing costs. This deposit and an
amount of $50,000 deposited on January 2, 2001, less costs incurred, will be
refunded to the undersigned. In addition to the $50,000 deposit, an
underwriting fee in the amount of $50,000 was also received on January 2, 2001.
The underwriting fee is non-refundable and will not be returned in the event
that the Loan is not consummated. Upon acceptance hereof, Key Principals will
or will cause the REIT, G&L, the Parent and Acquisition Co. to promptly deliver
to GMACCM and its legal counsel all materials reasonably requested by GMACCM.
GMACCM will order Third Party Reports from its customary vendors.
The contents hereof are confidential and are intended for use
exclusively by the parties, the Parent, the REIT, G&L, the Borrower, Milner and
their respective directors, shareholders, partners, employees and officers, as
well as the advisors and legal counsel of each of the foregoing in connection
with the Loan from GMACCM and may not be disclosed to any third party by any of
the foregoing except (a) upon the order of any court or administrative agency,
(b) upon the request or demand of any regulatory agency or authority, or (c)
otherwise as required by law or any rules of any applicable stock exchange.
You hereby represent, warrant and covenant that (1) all material
information, other than the Projections (defined below), which has been or is
hereafter made available to the Lender by you or any of your representatives in
connection with the Transactions (as
G&L Realty Corp.
Re. Medical Office Building Portfolio
Page 19
supplemented from time to time, the "Information") is and will be complete and
correct in all material respects and does not and will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements contained therein not materially misleading in light of the
circumstances under which such statements are made and (2) all financial
projections concerning the REIT and G&L and their respective subsidiaries that
have been or are hereafter made available to us by you or any of your
representatives (the "Projections") have been or will be prepared in good faith
based upon assumptions you believe to be reasonable. You agree to furnish us
with such Information and Projections as we may reasonably request and to
supplement the Information and Projections form time to time until closing so
that the representation, warranty and covenant in the preceding sentence is
correct in all material respects on such date.
You agree to indemnify and hold harmless the Lender and each of its
affiliates and directors, officers, employees, advisors and agents (each, an
"Indemnified Party") from and against (and will reimburse each Indemnified Party
as the same are incurred) any and all losses, claims, damages, liabilities, and
expenses (including, without limitation, the reasonable fees and expenses of
counsel) that may be incurred by or asserted or awarded against any Indemnified
Party, in each case arising out of or in connection with or by reason of
(including, without limitation, in connection with any investigation, litigation
or proceeding or preparation of a defense in connection therewith) (1) the
Transactions or any similar transaction and any of the other transactions
contemplated thereby, or (2) the Loan, or any use made or proposed to be made
with the proceeds thereof, unless and only to the extent that, as to any
Indemnified Party, it shall be determined in a final, nonappealable judgment by
a court of competent jurisdiction that such losses, claims, damages, liabilities
or expenses resulted primarily from the gross negligence or willful misconduct
of such Indemnified Party. In the case of any investigation, litigation or
proceeding to which the indemnity in this paragraph applies, such indemnity
shall be effective whether or not such investigation, litigation or proceeding
is brought by you, your shareholders or creditors or an Indemnified Party and
whether or not the Transactions are consummated. You agree that no Indemnified
Party shall have any liability to you or your subsidiaries or affiliates or to
your or their respective security holders or creditors for any indirect or
consequential damages arising out of, related to or in connection with the
Transactions or the financing.
The Key Principals shall be automatically released from all their
obligations and liabilities under this letter upon the consummation of the REIT
Merger, and the OP Merger, the payment of all fees and other amounts owing at
closing to the Lender, the execution of definitive loan documentation and the
making of the initial Loan. If all of the foregoing do not occur, the
provisions of the immediately preceding paragraph shall remain in full force and
effect notwithstanding the termination of this Commitment Letter or any
commitment or undertaking hereunder.
The Commitment Letter and the Fee Letter shall be governed by laws of
the State of New York. The parties hereto hereby irrevocably waive all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or
G&L Realty Corp.
Re. Medical Office Building Portfolio
Page 20
relating to this Commitment Letter, the Fee Letter, the transactions
contemplated hereby and thereby or the actions of the Lender in the negotiation,
performance or enforcement hereof.
The letter may be modified or amended only by the written agreement of
each party hereto. This letter is not assignable by you without GMACCM's prior
written consent and is intended to be solely for the benefit of the parties
hereto and the Indemnified Parties.
By the terms of the application letter, dated as of December 27, 2000,
you are obligated to, among other things, accept and execute this Commitment
Letter, pay a $200,000 Loan Expense deposit within 2 days of the execution of
the Commitment Letter and close the Loan with GMACCM. Accordingly please sign a
counterpart of this letter by 5:00 PM on April 8, 2001 and send your check for
the $200,000 Loan Expense Deposit by 5:00 PM Eastern time on April 9, 2001.
Your countersignature to this Commitment Letter may be sent via facsimile to
212.269.5286, provided the original is received the next business day. This
Commitment on the part of the Lender shall expire if the Loan is not closed by
August 15, 2001 (the "Expiration Date"), provided that upon payment of the
-------- ----
Extension Fees specified in the Fee Letter, the Key Principals, on behalf of the
Borrower, may extend the Expiration Date for up to two additional 30-day
periods. Upon receipt of the Extension Fee by the Lender the Expiration Date
shall automatically and without other action be extended 30 days from the
Expiration Date in effect immediately prior to such payment, provided that the
-------- ----
Expiration Date shall not be extended beyond the date that is 60 days after the
Expiration Date in effect on the date hereof.
We are pleased to have the opportunity to work with you in connection
with this important financing.
[The remainder of this page is intentionally left blank]
G&L Realty Corp.
Re: Medical Office Building Portfolio
Page 21
By their respective executions hereof, GMACCM agrees to lend and
Daniel Gottlieb and Steven Lebowitz agree to cause Acquisition Co. to borrow
from GMACCM the Loan, on the terms and conditions set forth herein.
GMAC Commercial Mortgage Corporation
By: /s/ Scott Liebman
---------------------------
Scott Liebman
Senior Vice President
cc: D. Driscoll
G. Luboff
AGREED TO AND ACCEPTED THIS
10/th/ DAY OF April, 2001.
/s/ Daniel M. Gottlieb /s/ Steven D. Lebowitz
- ------------------------ ---------------------------
Daniel M. Gottlieb Steven D. Lebowitz
Schedule A - Medical Office Building ("MOB") Portfolio
Property Address
-------- -------
405 Bedford 405 N. Bedford Drive, Beverly Hills, CA 90210
415 Bedford 415 N. Bedford Drive, Beverly Hills, CA 90210
416 Bedford 416 N. Bedford Drive, Beverly Hills, CA 90210
435 Bedford 435 N. Bedford Drive, Beverly Hills, CA 90210
435 Roxbury (1) 435 N. Roxbury Drive, Beverly Hills, CA 90210
436 Bedford 436 N. Bedford Drive, Beverly Hills, CA 90210
Sherman Oaks Medical Plaza 4955 Van Nuys Blvd, Sherman Oaks, CA 91403
Holy Cross Medical Plaza 11550 Indian Hills Road, Mission Hills, CA 91345
St. Joseph's Medical Plaza 2031 W. Alameda Ave, Burbank, CA 91506
Regents Medical Center 4150 Regents Park Row, La Jolla, CA 92037
Coronado Plaza 1330 Orange Ave, Coronado, CA 92118
Cigna Healthcare Building 12701 Schabarum Ave, Irwindale, CA 91706
Lyon Building 24355 Lyons Ave, Santa Clarita, CA 91355
Tustin Medical Office Building I 14591 Newport Ave, Tustin, CA 92780
Tustin Medical Office Building II 14642 Newport Ave, Tustin, CA 92780
St. Joseph's of Tustin 1095 Irvine Blvd, Tustin, CA 92780
Pacific Park (Aliso Viejo II) 5 Journey Road, Aliso Viejo, CA
Pier One Retail Center 26771 Aliso Creek Road, Aliso Viejo, CA
San Pedro Medical Office Buildings 1360 West 6th Street, San Pedro, CA 90732
Valencia Medical Office Buildings 23861 McBean Parkway, Santa Clarita, CA 91355
(1) Borrower may sell a portion of this property and reduce any lien
proportionately provided that Borrower continues to own at least 24% of the
property, subject to the conditions in the Transfers section above.
Schedule B - Amortization Schedule
Year Principal Amortization Outstanding Year-end Balance
---- ---------------------- ----------------------------
1 1,635,482 33,364,518
2 1,898,394 31,466,124
3 2,203,569 29,262,555
4 2,557,803 26,704,753
5 2,968,981 23,735,772
6 3,446,258 20,289,514
7 4,000,260 16,289,254
8 4,643,319 11,645,935
9 5,389,754 6,256,181
10 6,256,181 0
The amortization schedule assumes an initial acquisition financing
balance of $35,000,000. Principal prepayments shall cause the amortization
schedule to be readjusted based on the remaining principal and the remaining
term.
Schedule C
G&L Realty MOB Portfolio (1)
Property Loan Allocation Release Price
1 405 Bedford 2,179,476 2,724,345
2 415 Bedford 1,342,238 1,677,797
3 416 Bedford 2,853,861 3,567,326
4 435 Bedford 2,423,577 3,029,471
5 435 Roxbury 1,131,285 1,414,106
6 436 Bedford 8,550,326 10,687,907
7 Sherman Oaks Medical Plaza 2,891,825 3,614,781
8 Holy Cross Medical Plaza 1,211,701 1,514,626
9 St. Joseph's Medical Plaza 516,951 646,188
10 Regents Medical Center 3,490,797 4,363,496
11 Coronado Plaza 1,330,084 1,662,605
12 Cigna Healthcare Building 69,611 87,014
13 Lyons Building 2,023,314 2,529,143
14 Tustin Medical Office Building II 1,141,306 1,426,633
15 Tustin Medical Office Building I 184,523 230,653
16 St. Joseph's of Tustin 147,040 183,800
17 Pacific Park (Aliso Viejo II) 441,487 551,859
18 Pier One Retail Center 376,231 470,289
19 San Pedro Medical Office Bldgs 288,625 360,781
20 Valencia MOB / A-E 953,301 1,191,626
21 Valencia MOB / F 1,452,441 1,815,551
----------
35,000,000
(1) If the ownership of Roxbury changes, the Loan Allocations and the Release
Prices will be adjusted pro rata to reflect the actual equity interests and loan
amounts.
SCHEDULE D
- ----------
G&L Realty MOB Portfolio: Cigna Shortfall Calculation
CIGNA Lease AUTRONICS Lease
----------- ---------------
Commence 11/01/1992 Commence 07/01/2001
Expire 11/30/2004 Expire 07/01/2008
SF 47.604 SF 47.604
per SF $ 1.92 per SF $ 1.00
per Month $ 91,399.68 per Month $ 47,604.00
per Year $1,096,796.16 per Year $ 571,248.00
Date Cigna Lease Pmt. Date Autronics Lease Pmt. Difference
1 05/01/2001 $ 91,399.68 05/01/2001 $ - $ 91,399.68
2 06/01/2001 $ 91,399.68 06/01/2001 $ - $ 91,399.68
3 07/01/2001 $ 91,399.68 07/01/2001 $ 47,604.00 $ 43,795.68
4 08/01/2001 $ 91,399.68 08/08/2001 $ 47,604.00 $ 43,795.68
5 09/01/2001 $ 91,399.68 09/01/2001 $ 47,604.00 $ 43,795.68
6 10/01/2001 $ 91,399.68 10/01/2001 $ 47,604.00 $ 43,795.68
7 11/01/2001 $ 91,399.68 11/01/2001 $ 47,604.00 $ 43,795.68
8 12/01/2001 $ 91,399.68 12/01/2001 $ - free rent $ 91,399.68
9 01/01/2002 $ 91,399.68 01/01/2002 $ 47,604.00 $ 43,795.68
10 02/01/2002 $ 91,399.68 02/01/2002 $ - free rent $ 91,399.68
11 03/01/2002 $ 91,399.68 03/01/2002 $ 47,604.00 $ 43,795.68
12 04/01/2002 $ 91,399.68 04/01/2002 $ - free rent $ 91,399.68
13 05/01/2002 $ 91,399.68 05/01/2002 $ 47,604.00 $ 43,795.68
14 06/01/2002 $ 91,399.68 06/01/2002 $ - free rent $ 91,399.68
15 07/01/2002 $ 91,399.68 07/01/2002 $ 52,364.40 $ 39,035.28
16 08/01/2002 $ 91,399.68 08/01/2002 $ 52,364.40 $ 39,035.28
17 09/01/2002 $ 91,399.68 09/01/2002 $ 52,364.40 $ 39,035.28
18 10/01/2002 $ 91,399.68 10/01/2002 $ 52,364.40 $ 39,035.28
19 11/01/2002 $ 91,399.68 11/01/2002 $ 52,364.40 $ 39,035.28
20 12/01/2002 $ 91,399.68 12/01/2002 $ 52,364.40 $ 39,035.28
21 01/01/2003 $ 91,399.68 01/01/2003 $ 52,364.40 $ 39,035.28
22 02/01/2003 $ 91,399.68 02/01/2003 $ 52,364.40 $ 39,035.28
23 03/01/2003 $ 91,399.68 03/01/2003 $ 52,364.40 $ 39,035.28
24 04/01/2003 $ 91,399.68 04/01/2003 $ 52,364.40 $ 39,035.28
25 05/01/2003 $ 91,399.68 05/01/2003 $ 52,364.40 $ 39,035.28
26 06/01/2003 $ 91,399.68 06/01/2003 $ 52,364.40 $ 39,035.28
27 07/01/2003 $ 91,399.68 07/01/2003 $ 57,124.80 $ 34,274.88
28 08/01/2003 $ 91,399.68 08/01/2003 $ 57,124.80 $ 34,274.88
29 09/01/2003 $ 91,399.68 09/01/2003 $ 57,124.80 $ 34,274.88
30 10/01/2003 $ 91,399.68 10/01/2003 $ 57,124.80 $ 34,274.88
31 11/01/2003 $ 91,399.68 11/01/2003 $ 57,124.80 $ 34,274.88
32 12/01/2003 $ 91,399.68 12/01/2003 $ 57,124.80 $ 34,274.88
33 01/01/2004 $ 91,399.68 01/01/2004 $ 57,124.80 $ 34,274.88
34 02/01/2004 $ 91,399.68 02/01/2004 $ 57,124.80 $ 34,274.88
35 03/01/2004 $ 91,399.68 03/01/2004 $ 57,124.80 $ 34,274.88
36 04/01/2004 $ 91,399.68 04/01/2004 $ 57,124.80 $ 34,274.88
37 05/01/2004 $ 91,399.68 05/01/2004 $ 57,124.80 $ 34,274.88
38 06/01/2004 $ 91,399.68 06/01/2004 $ 57,124.80 $ 34,274.88
39 07/01/2004 $ 91,399.68 07/01/2004 $ 59,505.00 $ 31,894.68
40 08/01/2004 $ 91,399.68 08/01/2004 $ 59,505.00 $ 31,894.68
41 09/01/2004 $ 91,399.68 09/01/2004 $ 59,505.00 $ 31,894.68
42 10/01/2004 $ 91,399.68 10/01/2004 $ 59,505.00 $ 31,894.68
43 11/01/2004 $ 91,399.68 11/01/2004 $ 59,505.00 $ 31,894.68
-----------------------------------------------------
SUM OF DIFFERENCE as of 5/1/01 $1,937,958.84
SUM OF DIFFERENCE as of 8/1/01 $1,711,363.80
-----------------------------------------------------
DSC Calculation assuming loan closes 8/1/01
-------------------------------------------
2001 G&L Budgeted Net Cash Flow $ 18,233,148
-less Cigna Shortfall 711,204 based on next 12 months
--------------
Adjusted G&L Net Cash Flow 17,521,944
-------------------------------------
1st Mortgage Debt Service 10,667,540 Assumed GMACCM loan $ 35,000,000
GMACCM Interest 5,075,000 Libor 7.00%
--------------
Total Debt Service/Interest 15,742,540 Spread 750
All-in Rate 14.50%
-------------------------------------
DSC Coverage 1.11
Total Shortfall as of 8/1/01 $ 1,711,364
DSC Cigna Multiplier
--- ----------------
Less than 1.10 100%
Between 1.10 and 1.20 50%
Greater than 1.20 25%
--------------------------------------------------
Multiplier Used 50%
Cigna Cash Collateral Required $ 855,682
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Schedule E - Existing 1/st/ Mortgage Debt
Asset Description/Property Balance at Lender Comments
No. ------------------- 2/28/01 ------ --------
--- -------
5 435 N. Roxbury $ 7,475,766 Tokai Bank
1,2,3,4 Financing Partnership (1) 27,600,777 Nomura
6,7,10,12 Medical Partnership (2) 33,054,401 Nomura crossed with 9 & 16
8 Holy Cross Medical Plaza (5) 7,733,550 Tokai Bank crossed with 8 & 16
9 St. Joseph's of Burbank (5) 3,119,199 Tokai Bank
16 St. Joseph's of Tustin (5) 1,272,813 Tokai Bank crossed with 8 & 9
19 San Pedro (5) 4,713,986
13 Lyon Building 4,939,856 Life In CO of VA
11 Coronado 7,326,043 GMAC P+75-Co GTY
14,15 Tustin Portfolio (3) 5,100,000* Chinatrust Bank HOLDBACK/
LEASEUP
20 Valencia Portfolio (4) 9,669,649 Ohio National
18 Pier One Building 1,404,477 Am Untd Life L+340-CO GTY
17 Pacific Park Building 4,135,520* Chinatrust Bank
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Total Existing 1/st/ Mortgage
Debt:$117,546,037
(1) Financing Partnership consists of 405,415,416 and 435 N. Bedford.
(2) Medical Partnership consists of 436 N. Bedford, Cigna Healthcare Bldg.,
Regent Medical Center and Sherman Oaks Medical Plaza.
(3) Includes two medical office buildings and one hospital located in Tustin.
(4) Includes six medical office buildings located on the Henry Mayo Newhall
Hospital Campus in Valencia.
(5) Single crossed loan. Amounts shown are allocated amounts.
____________________________
* The outstanding aggregate principal amount of debt related to such
properties, collectively, may increase such that the ratable increase in such
debt allocable to G&L based on its equity ownership is not more than
$2,000,000 and only if such additional debt is incurred with respect to
Pacific Park, on prior to September 30, 2001, and with respect to the Tustin
Portfolio, December 31, 2001.