Contact:
Kelly Stephens/Judith Brower
Brower, Miller & Cole
(949) 509-6551
kstephens@browermillercole.com

GEORGE SMITH PARTNERS EXECUTIVE CALLS BOTTOM TO SOUTHERN CALIFORNIA COMMERCIAL REAL ESTATE VALUES

LOS ANGELES, Calif., March 18, 2009 -- George Smith Partners’ Co-Managing Director David Rifkind has pronounced that commercial real estate values in Southern California have reached their bottom and will begin a slow upward climb. George Smith Partners is a leading national real estate investment banking firm that specializes in arranging financing for commercial properties.

“George Smith Partners has seen several meaningful signs that Southern California’s commercial real estate has, indeed reached the bottom of the market for this cycle,” Rifkind announced. “Last week, we identified several specific factors which lead us to this conclusion.”

First, Rifkind points to the bankruptcy sale of Wilshire-Bundy Plaza, a 290,000 square- foot, Class-A office building in West Los Angeles which drew 40 bids and a sale price reported to be over $350 per square foot. “The sheer lack of transactions over the past 18-months has made any statement of market value purely notional. This sale sets a floor for asset values. What is significant is the high level of competition for this asset, 40 bids near $100,000,000 demonstrates a high level of pent up investment demand.”

Second, Rifkind found light in the retail sector. “Just a few blocks down Wilshire Blvd. from the Wilshire-Bundy Plaza, a transaction is taking place on a 7,700 square-foot retail space in Santa Monica that, without marketing, drew three offers from national and regional tenants at strong rent levels. In stark comparison to the doom and gloom reports that have been rampant regarding retail, this is a major step forward in our market for that sector,” Rifkind points out.

Third, Rifkind sees the market for investment grade assets stabilizing. “I had a meeting with several large owners of Class-A office properties in Los Angeles. Each group has cash and is focused on finding new acquisitions. One CEO noted that they do not expect to see a purchase cap rate lower higher than 7.5% in this round.”

“What each of these events have in common is asset quality and location. Consistent with prior cycles, the first transactions reflect a flight to quality. It will be some time before the vast majority of lesser assets begin to recover. Some, deservedly, may never recover,” he added.

Another significant recovery sign according to Rifkind is the return of risk capital. “Equity and debt capital is flowing back into the market, a major shift to the capital conditions we experienced this time last year. Capital is switching from a defensive state to opportunistic, fueling demand for new investments,” Rifkind noted.

Rifkind cautions that there is still plenty of distress to be worked out of the system. “It is true that thousands of commercial loans must be worked out and some of these properties will enter the market in 2010.” Rifkind views this as a positive sign stating: “Without transactions, there is no reliable metric with which to measure value. Everyone has been waiting for a catalyst to restart the market. While we have hit a bottom, an accelerating flow of transactions coupled with improving fundamentals put the dot on the exclamation point. Welcome to the new cycle.”

About George Smith Partners
Founded in 1992, George Smith Partners is a leading national real estate investment banking firm that specializes in arranging financing for commercial and residential properties, including acquisition, construction, bridge and permanent loans, as well as mezzanine loans, highly leveraged participating loans and joint venture equity. George Smith Partners’ Lender Services, Asset Sales and Advisory Group offers clients full service solutions to manage both performing and non-performing loans including consulting, asset restructures, asset sales and discounted pay-off negotiations. George Smith Partners also provides litigation support, serving as a financial advisor and expert witness in diverse real estate litigation matters. The firm’s Principals and Senior Associates offer extensive expertise in the legal matters affecting real estate financing, real estate bankruptcy and mortgage brokerage issues. Information about George Smith Partners is located on the company Web site, www.gspartners.com.