Part 1 - East Palo Alto Affordable Housing Crisis and Page Mill ...

Document6
DOCUMENT PRODUCTION
(NON-PRTVTLEGED)
Part 1
PRODUCED 9/30 I2O1O

From:
Sent:
To:
Subject:
Sharon Simonson [ssimonson@bizjournals'com]
Monday, Decernber 31,2007 1 1:20 AM
Plasencia, Javier
Re: Public Records Act - Page Mill Properties
you can send it to 96 N. Third St. Suite 100, San Jose, 95112. Please direct it to my
attention.
On t2l3¡l17 Ll:17 AM, "Plasencia, Javier" wrote:
Dear Ms. Simonson:
This responds to your Public Records Act request dated December 20,20A7- ln your emailyou
requested information pertaining to the following:
,,a copy of any documents presented to CaIPERS staff or board members by Page Mill
eropårties an-d ¡ts founder and chief executive David Taran explaining the investment
strategy for the company's page Mill Properties ll LP lnvestment fund."
The appropriate real estate program staff is currently reviewing your request-to determine
which'docurnents are subject to disclosure under the Public Records Act. We estimate
that this reviewwill be completed in approximately two to three weeks. Once this review is
òompleted and we have deiermined to what extent the documents will be made available,
we will provide you with,copies and an accounting of the copying charges'
We don't have a street address for you and would appreciate an address where we can
send qur next resPonse.
please feel free to contact me via email or at (916) 795-3673 if you have any questions or
concerns regarding this matter. Although I will be on vacation most of this week, I will be
back the following week.
Regards,
F. JAVIER PLASENCIA
Senior Staff Counsel
PM-1833

Plasencia, Javier
From: Taran, David [DTaran@PageMill.com]
Sent: FridaY, August 25,200610:25 AM
To: Plasencia, Javier
Cc: rnlewis@emmetmarvin.com;Pottle, Randy
Subject: RE: CaIPERS legalOPinion
lmportance: High
Attachments: imageOO'liPg
Javier,
Thank you so much for all your help in getting CaIPERS opinion signed and to us before noon today. Mr. Lewis'email, fax,
and phone number are (1) mlewis@emmetmarvin.com , (2) 212-238-3100, and (31 212-238'31521 212'653'1771
respectively.
Thanks,
David
David A. Taran
cEo
Page Mill Properties, LLC
1900 University Avenue, Suite 201
East Palo Alto, CA 94303
650/833-3888 - direct
650/833-3988 - direct fax
dtaran@pagemíll.com
www.paqemill.com
PM-1834

image001.jp
s (4 KB)
From: Plasencia, Javier Imaifto:Javier-Plasencia@CaIPERS.CA.GOVI
Sent: Friday, August 25,2006 10:244M
To: Taran, David
Cc: mlewis@emmetmaruin.com; Pottle, Randy
Subjech CaIPERS legal Opinion
David, as per our conversation, I will try to have the signed CaIPERS opinion before noon. You provided me with Mr.
Lewis; email, however, I don't have his fax nurnber which is what I will need to fax the opinion (if signed before noon). lf
you have any other questions, I may be reached at (916) 795-3673.
(l am also using this to confirm that I have the correct email addresses.)
Javier Piasencia
Senior Staff Counsel
Plasencia Javier
From:
Sent:
To:
Gc:
Subject:
Attachments:
You have my correct e-mail address. My other contact information is set forth below.
M
200years.gif
(s KB)
LEWIS, Marc [mlewis@EMMETMARVIN,COM]
Friday, August 25, 2006 1 0:25 AM
Plasencia, Javier
Pottle, Randy; Dtaran@pagemill.com
RE: CaIPERS legal Opinion
200years.gif
Marc C. Lewis
Emmet, Marvin & Martin, LLP
120 Broadway 32nd Floor
NewYork, NY 10271
Tel:212-238-3152
212-65T1771
Fax:212-238-3100
Em ai I : m lewis@em m etm arvin
Ttre inforrnation in this email and in attachments ís confidential and intended solely for the attention and use of the named
addressee(s). This information may be subject to legal professional or other privilege or may otherwise be protected by
work producl immunity or other legal rules. lt must not be disclosed to any person without our authoriÇ. lf you are. not the
intended recípient, or a person responsible for delivering it to the intended recipient, you are not authorized to and must not
disclose, copy, distribute, or retain this message or any part of it.
PM-1835

Circular 230 Disclosure Notice. To insure compliance with requirements imposed by the lnternal Revenue Service, we
inform you that any tax advice that may be contained in this communication (including any attachments) is-not intended or
written io be used, and cannot be used, for the purpose of avoiding penalties under the lnternal Revenue Code or any
state or local tax law to which a governmental requirement similar to Circular 230 applies.
From: Plasencia, Javier lmailto:Javier-Plasencia@CaIPERS.CA.GOV]
Sent: Friday, August 25,2006 l=24 PM
To: Dta ran@pagemill.com
Cc: LEMS, Marc; Pottle, RandY
Subjech CaIPERS legal Opinion
David, as per our conversation, I will try to have the signed CaIPERS opinion before noon.- You provided me with Mr.
Lew¡s; emäil, however, I don't have his-fax number whlch is what I will need to fax the opinion (if signed before noon)' lf
you have any other questions, I may be reached at (916) 795-3673.
(l am also using this to confirm that I have the correct email addresses')
Javier Plasencia
Senior Staff Counsel
PM-1836

[-Í""p*tyTyp;;
I
I
:
I
I
¡____-_
Page Mill Properties - Investment Criteda Sheet
The Fund may also acquire unimproved land for the
purposes of developing the foregoing types of properties,
subject to the limitations described below in
Nothern Califomia Bay Area
IJp to 20o/o of the fund's Commitnents (í.e., portfolio
equity of $255 mitüon) may be invested jn other
technology-led markets including:
o Boston/Route 128
r Seattle
o Los Angeles
i . Dulles Corridor/\X/ashington, T)'C' i
ia'__l
---i TË F "d-i*#G; ."*p-""td;ã-'"""ãt nn ""*"ä;ãã"Ï
I
t_
capitalinexcess of.2\o/o- i
¡
-l T'lr-. iåø .q*ty itt;;t*er'¡ to one asset ot company
i
^oy -t
i (."ch. a:r Investment) may not exceed 20o/o of i
i \"---t -- -/ ---J -- - i
i Commitments.
i No mot. r}ran2}o/o of Committnents may be in-vest¡{in i
! ptoperties located outside of the Nothern CalifomiaBay i
iÀt"". i
i!
l! t-
I No t rot. than2}o/o of Commitments mây be used to i
i ,.qoir. ot develop land that is less than i5o/o pre-Ieased
I
i ot Pre-sold i
t^
i
ir lr-ttrd." -i rrt" r"".irþtãtto it-"ãtã *.*a eo;l' "i-th. r^o
--J
I market value of the Fund's Investrnents (determined as i
i of the date such ro1þ-t-e!¡egs-ll-:ggggf4),..---._---. i
-l
i
!
PM-1837

EXECUTIVE SUMMARY OF KEY TERMS
The followin¿ inþrmation it' prennted aÍ a sammaîJ of ærtain princþal tem¡ and is qaalfæd þ referenæ to the more d¿tailed
"Sømmary of Pnncipal Tenn¡" in the Priaate Plaæment Memorandaø, the Partnrshiþ .Agreennt atd aryt olher rubsctiptiott
doømefirforPøge Mitl PrEertiet II, LP. (cEitali7.ed tems ara defned in lhe morà deraiÌed "Sammatl of PrintþalTernt").
The Fund
Initial Offering Size
General Pattnet
Commitment
Term
Fund Strategy
Divetsification
Distributions
Clawback
Management Fee
Key Man
LO5A2]¿93402.2
Page Mill Ptoperties II, L.P., a Delav¡ate limited pârhershiP.
$300 million, subject to increase in the sole arrã absolute discretion of the General
Partner.
3o/o of the aggregate Commitrnents of the limited partrrers (not to exceed $10 million).
Eþht yeats, with up to two consecutive one yeaf extensíons by the General Pattner,
with the approval of the LP Âdvisory Committee.
To make long-term investr¡rents ("qoitf and possibly debt) in value-enhanced cote,
challenged core and development assets located in the United States targeted to
achieve (a) a leveraged 60/o to 87o current ferum at stabilization and þ) a leveraged
t3o/o ro 14% IRR (compounded annually) ovet the life of the investment. Thete can
be no assurafice that such tatgeted retums will be achieved.
No more than 20ok of aggregate maximum Comrnitments may be invested in any one
Fund investment.
All distributable proceeds attributabie to an Investment will be initially apportioned
among the Partners (including the General Partner) pro rate- in accotdance with theit
respective Petcentage Intetests (as defined herein). The amount appottioned to the
General Pz.rtnef will be distributed to the General Pa¡tner. The amount apportioned
to each Limited Partner generally will be distributed as follows:
(a) First, 100%o to such Lirnited Partner, until.such Limited Pa¡tr¡er has ¡eceived a 80/o
annually compounded cumulative annual retum on its Capital Contributions telating
to such Investrnent;
þ)
Second, 100% to such Limited Partner until such Limited Partner has teceived a
return of ali of its Capital Contributions relating to such Investment;
(c) Third, 100%o to such Limited Partner undL such Limited Partner has teceived any
unpaid âmounts described in clauses (a) and þ) relatiag to Closed Investments (as
defi.ned herein) (in the priority described in (a) and þ));
(Q Fouith, (1) 48% ro such Limited Partner and (ü) 52o/o to the Genetal Partner untl
tlle General Pattner has received 20o/o of all amounts apportioned to such Limited
Partner (othet than amounts representing â return of capital distributed Pursuant to
clause þ) or þ)) telating to such Investment or any Closed Investments; and
(e) Fifth, (Ð 80% to such Limited Partner and (if 20o/o to the General Pattner-
Yes, with 50%o of the carried interest defer:red.
l.5o/o of unfunded Commitrnents during the Investment Pedod (subject to reduction
to 1.25o/o for Limited Parthers ma-king Commitments in excess of $75 million) or 1.5o/o
of capial called.
During the Investment Period, David Taran shall devote a substanrial and apptopriate
portion of his business time and atteotion to the Pattnetship and existing Investrnents
(including Page Mill), provided in all cases David devotes the necessary time to the
Pattnership as is tequired to satisfy its stated objectives'
PM-1838

VII. SUMMARY OF PRINCIPAL TERMS
The following is not a complete sumrnary of the tetms of the Fund. To understand the Fund more fully,
prospective investors should read this Private Placement Memorandum in its entirety, as well as the
Partnership Agteement and subscription documents.
The Fund
The Genetal Partnet
The Investment Advisor
Fund Strategy
Fund Investrnents
Investment Limitations
Initial Capitalization of
the Fund
Minimum Commitment
Page Mll Properties II, L.P., a Delawate limited parmetship (togethet with
any AJ.tetnative Investment Vehicles and Parallel Investment Vehides, the
"Fund).
Page Mill Properties II GP, LLC, a Delawate limited liability comPany, serves
as the General Partnet of the Fund (the "Genetal Partnet'). David A. Tamn
(the "Principali) controls the General Parto.et.
Page Mill Advisors, I r .C, aDelaware limited.liability company and an affiIiate
of the General Partner (the "Investment Advisot'), will serve as the Fund's
investment advisor Pursuant to an investment advisory agreement (the
"Advisory .Agreement') with the Fund.
The Fund's strategy is to make long-term investrnents in value-enhanced
core, challenged core, and development âssets located in the United States
targeted to achieve (a) a leverageð' 6o/o to 8olo curtent return ât 5gþilization
and þ) a levetaged l3o/o to 14% IRR (compounded annually) ovet the life of
the investment (each, a "Core-Plus Investrnent').
The Fund intends to invest in and to acquire direct ot inditect interests in a
range of ptopefty types, induding residential industrial, retail, hospitality,
office and othet properúes. The Fund is permitted to invest in properties at
various stages of development and lease-up, ìncluding improved propenies
@oth leased alnd vacant propeties), development and redeveloPment
ptopetties, and unimptoved land for the Pu{poses of development. The Fund
may acquire such ptoperties ditectly or indirectly tfuough ioint ventures' The
Fund may also make loans to entities that either dLectly ot indkectly'own
such properties. In addition, the Fund may co-invest with othet funds and
acquire equity, debt, or other interests in, secuted by ot related to real est¿tg
including interests in companies that invest in, manage ot develop, or make
Ioans in respect of real estate. Each Fund investrneng tegardless of how
stnrctured, is refered to herein as an "Ifrvestment."
The Fund will not invest mote rhan 20o/o of its Comrnitrnents in any one
Investment unless otherwise approved i¡ the discretion of the LP A.dvisory
Committee (each individual asset in a portfolio acquisition u'ill constitute a
sepa.rate Investment fot all pu¡poses).
The General Partner, on behalf of the Fund, is currently seeking
commitments (the "Commitments") to the Fund aggegating $300 million,
subject to inctease in the sole and absolute disctedon of the General Partner.
The rninimum Comrnitrnent from an investor (once admitted, a "Limited
Partner" and coilectively with the General Partner and the othet Limited
Pattners, the '?artnets') is $10 million; Prel4dcd, b¡ævel, that the General
PM-1839

General Partnet Co-
Investment
Initial Closing
Capital Contributions
Subsequent Closings
P¿rtners ParticiPating in
Subsequent Closings
Partner reserves the dght to accept Commitments of lesset amounts'
The General Partner's Commitrnent is the lesser of (ø,)3"/o of the aggtegate
Commitments of the Limited Pattners (thtough and jnduding the Final
Closing) or @) $10 million'
The initial closing of the Fund (the "Initial Closing ) u¡ill occut as of a date
determined by rhe Genetal Patnet.
From and after the Initial closing, the Fund u,ill make capital calls on
Pattners (including the General Pârtnef oî a pra raTø basis) as arld
_v¡hen
needed to acquire Investments, satisfi other obligations of the Fund, and
establish resefr¡es. Commitrnents vtill be drawn downpro røta on an as-needed
basis i¡ an amount not to exceed each Parmer's unfunded Commitment, with
2 mifrilIlum of 10 busi¡ess days prior nodce to each Partner (the "Due
Date,). Contributions of capital ('Capital Conttibutions') will be made in
cash in US dollars. For pwposes of determining a Limited Partner's retufn on
czpiøl: (a) Capital Contdbutions with resPect to Investments or telated
,"i.*., *iU Uã deemed made upon the l¿ter of (i) the Fund's receipt of the
Capiral Contdbutions or (ü) the Fund's date o[ closing of the acquisition of
thË subject Investment, and þ) Capitat ContributionS with respect to Fund
expenses or related feserves wilt be deemed made on the later of (i) the
Fund,s receipt of the Capital Contributions ot (ü) the Due Date fot such
Capitai Contributions.
Subsequent closings (eactr, if any, a "subsequent Closing" and collectively
u¡ith the Initial Closing, the '"Closings" or individually, a "Closing') may
occur, in the sole and absolute discretion of the Genetal Pattner; P@de-{
however, that the frnal ctosing will occut no latet than t year aftet the Initial
Ctosing (the "Final Closing'), q¡hich date r.nay be extended by 6 months
súth the approval of the LP Âdvrsory Committee.
If Limited Partnets are admitted to the Fund in a Subsequent Closing, each
such Limited Partner *tll (") contribute to the Fund ân amount equal to its
prt rata share of all Capital Contributions previously made by the Pattnets
rhose used t; ñrnd fees payable ro the Investrnent Advisor) from
lexcluding
the date ðf tn. Ittitl¿ Closing to the date such Limited Partnets ate admitted
to the Fund, Iess any distributions previously made to ttre Patmers, and
(b) p^y to the Fund, as agent for the previously admitted Partnets,. interest
theteón ^t a rate equal to 8%o per annum, comPounded annually. Such
amounrs contributeð or paid to the Fund will be paid to the previously
admitted Limlted Parurrets, pro rala, in proportion to theif capital
Contributions, and the previously adrnrtted Limited Pattners' unfunded
Commitments will be increased to teflect the amount of such Payfnents
(excluding the interest portion paid to them). The interest poniol paid to the
Èurrd, "r ãg*t for the previously admitted Limited Parrners, will be deemed
paid to such Lrmited Partners by the new Limited Pattnets outside the Fund
andwill not constitute aCapitaL Contribution by the newLimited Pattners (or
reduce their Comrnitments). In addition, each Limited Pattnet admitted in a
Subsequent Closing will be required to Pay to the Fund (y) its shate of fees,
or incr-ease in fees, that would have been payable to the Investment Advisor
ftom the Initial Closing, as if such l-¡srited Partner had been admitted at such
Initial Closing and (z) jnterest thereon ^t ^ y^te equal to 8o/o pet aûnum,
PM-1840

Investment Pedod
Term
compounded annually, from the date of the Iniúal Closing. Such amounts will
be paid to the Fund (as açnt and for Pâyment to the pteviously admitted
Limited Partners and the Investment Advisor in such amourits as they each
would have teceived had the new Limited Pattnet been admitted at the Ininal
Closing). The interest portion of such pâyments ryill not constitutè a Capital
Contribution by the nev¡ Limited Partnets (or reduce their Commitments)'
The foregoing conuibutions, distributions and pâyments will be üeated for
tåx pu{poses as a sale of zþro rata portior' of each such previously admitted
Pattner's intetest to the newly admitted Limited Partners so that all Pattners
u¡ill be treated as if they v/efe admitted at the Initial Closing. If a pteviously
ad.mitted Llrnited Parlnef increases its Commitment in a Subsequent Closing,
analogous provisions shatt apply with tespect the increase in such Limited
Partnet's Commitment-
The Fund will generaliy identifr and fund any investments duting the period
comrnencing on the date of rhe Initiat Closing and ending on a date that is 3
yexs after the Final Closing (the "Investment Pedod'). Following the
Investment Period, all Partners will be released from any further obligation
with respect to their unfunded Cornmitrnents, excePt to the extent necessafy
to (a) covet Fund expenses, þ) repay any amouûts owing undet any Credit
Facility (as hereinaftet defined), (c) enable the Fund to make "Follow-on
Investments" (def,rred below) (which arnounts' in the case of this clause (c),
will be @ timited to 75o/o of Commrtments and (if called within 6 rnohths
after the end of the Investrnent Period, unless such follow-on Investrnent
was previously disclosed to the Paftners in a detailed wtitten notice, in which
case such follow-on Investment will be completed.ûithin 7 year af,ter the date
of such written notice), (d) complete any Investment that is the subject of a
defrnitive agreement, option, or letter of intent priot to the end of the
Investrnent Pedod þrovided that the acquisition of. any such Investrnent is
completed within 6 months aftet the end of the Investment Petiod) and
(e) piovide fot teasonalrle obligations, commitrnents or contingencies relating
to the Fund and Investments. Notu¡ithstanding the foregoing, the General
Partner will have the nght to extend the time for calling contributions ftom
Commitments after the Investment Petiod to call for additional contdbutions
in ordet to fund construction andf or development proiects with tespect to
which the General Partner has obtained plans and specifications and
established a budget as of the end of the Investment Period (ot the 6-month
extension thereo$ by giving notice thereof to the Limited Patmers at the end
of fhe Investment Pedod.
"Follow-on Investment'' means any additional investrnent by the Fund in
(a) any Investment and þ) any ProPerty adjacent to ot associated with any
properry that ditectly or inditectly constitutes an Investment
Notrvithstanding t}le foregoing, a Partner will be required to recontribute any
distribution made to such Pattnet in erot at any dme, arrd to the extent
necessafy to pay Fund expenses until the expfuation of the l-yeat period aftet
liqurdation of the Fund.
The Fund will dissolve on the eighth annivercary of the date of the Final
Closìne; orovided, however, that the General Pattner may extend the term of
the Fund for up to 2 additional l-year periods, with the approval of the LP
Advisory Committee. The General Parmer .¡¡ill have the tight to elect to
PM-1841

Disttibutions
dissolve the Fund at any brne prior to the termination date'
EXcept as provided in'"Tax Distributions" and "Permitted ReinvestmenÇ"
distritutable proceeds generated by the Fund generally will be distributed
not less frequentþ than quarterþ; plevidçd, however, that the Fund may
retain any reserves that the General Partner deems prudent to defray future
.*p"nr"r or liabilities of the Fund. All distributable proceeds attributable
to an Investment will be initially apportioned among the Parbners
(including the General Partner) pro rata in accordance with their
respective Percentage Interests (us defured below). The amount
apiortioned to the General Partner will be distributed to the General
Pãrfner. The amount âpportioned to each Limited Parther will be
dístributed as follows;
(a) First, 100% to such Limited Partner, until such Limited Fartner
has received an 8%o annually compounded cumulative annual return on its
Capital Contributions relating to suoh Investment;
(b) second, 100% to such Limited Partner until such Limited Partner
has received a return of all of its capital contributions relating to such
lnvestment;
(c) Third, 100% to such Limited Partner until such Limited Parbrer
has received any unpaid amounts described in clauses (a) and (b) relating
to Closed Investments (as defined below) (in the priority described in (a)
and (b));
(d) Fourth, (i) 48% to such Limited Parbrer and (ii) 52Yo to the
General Parhrer until the General Parbrer has received 20/o of a71 amounts
apportioned'to such Limited Partnçf (other than amounts representing a
tåtu* of capiøl distributed pursuant to clause (b) or (c)) relating to such
Investment or any Closed Investments; and
(e) Fifth, (Ð 80% to such Limited Partrer and (ir) 20%o to the General
Parhrer.
If, at the tirne of any dislribution to such Limited Partner of distributable
proceeds from operations attributable to an Investment with respect to
which such Limiied Parbner has not received a retum of all of its Capital
Conkibutions, such Limited Partner (i) has received ãggregate
disü.ibutions from all IirvesÍnents equal to an ïYo annually compounded
cumulative annual retum cornputed on an overall portfolio basis and
(ii) such aggregate disûrbutions and the distribution that such Limited
Èarürer would receive on such date assuming that each of the Fund's
Investments were sold in connection with a liquidation of the Fund at the
most recent value (as defined below) of such Investment would be equal
to or greatef than such Limited Partner's Aggregate Preferred Retum" (as
defrned below), then such Limited Partner's share of distributable proceeds
from operations attributable to such Investment will be distributed in the
priority described in clause (a) above followed by clause (d) above
followed by clause (e) above.
Pf\A-1842

If at the time of any distribution to such Limited Partner of distributable
proceeds, such Limited Partner has not received aggregate dishibutions
equal to its total Capital Contributions plus an 8% annually compounded
cumulative annual return computed on an overall portfolio basis
("Aggregate Preferred Return"), 50Yo of the General Partner's share of
any distributions apportioned to zuch Limited Parhrer from such
Investment will instead be distributed to such Limited Parher. In addition,
if at the time of such distribution such Limited Partner's Aggregate
Prefered Return exceeds the sum of (i) the aggregate distributions
previously received by such Limited Partner and (ii) the distribution that
such Limited Parbrer would receive on such date assuming that each of the
Fund's Investments were sold in connection with a liquidation of the Fund
at the most recent Value (as defined below) of such Investr'nent, the
remaining 50o/o of the General Partner's share of distributions from such
Limited Partner will instead be dishibuted (to the extent of such shortfall)
to such Limited Partner. To the extent the General Parfner's share of
distributions apportioned to any Limited Parhrer are instead distributed to
such Limited Parbrer, such amount will be credited to a notional
memorandum account ("Deferred Distribution Account") which will
accrue interest at a rate of 8o/o, compounded annually, from the date of
such credit. At such time as a Limited Parbrer has received its Aggregate
Preferred Distribution, such Limited Parfner's share of any distributions
will instead be distibuted to the General Parbrer until the General Parfner
has received an amount equal to the balance in such Deferred Distribution
Aocount (including accrued interest thereon).
Distributable proceeds that are not allocable to a specific Investment will,
for purposes of the distribution provisions, be allocated among all
Investments outstanding at the time such distribut¿ble proceeds are
distributed pro rata based upon the most recentþ determined respective
Values (as defined below) of such Investments at such iime. The
determination of the amounts distributable at any time pursuant to clause
(c) above in respect of any "Closed Investuent" (i.e., any Investment or a
portion of an Investment that has been the subject of a disposition) will be
made by calculating the amoun! if any, of the accrued and unpaid 8%
annually compounded cumulative annual return and the amount of the
Capital Contributions that would then exist with respect to the portion(s) of
such Investment, and such determination will take into account the Capital
Contributions and cash distributions allocable thereto.
"Value" means the gross fair market value (unreduced by leverage) of an
asset, as determined in good faith by the General Partner or an independent
appraiser of recognized standing (if an appraisal was in fact made by or for
the Fund)- See "Valuation" below.
"Carried Interest" means the distributions made to the General Parhrer
pursuant to clauses (dXii) and (e)(ii) above
"Percentage fnterest" means, with respect to any Partner, a percentage
determined by dividing such Partner's Commitments by the aggregate
Cornmitments of all Parfirers (as such percentage may be from time to time
PM-1843

Tax Distributions
Time and Attention
adjusted, with respect to any Investment for Limited Part¡rers that are
excluded or excused from an Invesünent or are in default with respect to
any required Capital Conkibutions). Fo¡ the avoidance of doubt, any
Limited Partner that has been excused or excluded from an Investment will
have a Percentage Interest equal to 0% with respect to such Investment and
will not be entitled to receive any distributions of distributable proceeds in
respect of such Investment.
To the extent that the distribution priorities described above do not provide
cumulative distributions of Carried lnterest to the General Partner as of the
end of any calendar quarter equal to the federal and state taxes that would
(based on the assumptions below) be deemed to be payable by the General
Parhrer on the cumulative taxable income of the Fund allocated to the
General Parher with respect to its Carried Interest as of the end of such
quarter (determined by assuming the General Partner is an individual
subject to the highest rate of federal and state taxation applicable to
individuals residing in California and taking into account the character of
income allocated to the General Parûrer and the deductibility of state taxes
for federal tax purposes) (the "Carried Interest Tax Liability"), then the
General Partner has the right to elect to cause a distribution to be made to
the General Partner for such quarter equal to the Carried Interest Tax
Liability (the "Carried fnterest Tax Distribution")' Carried Interest Tax
Distributions will be treated as advance payments of the Carried úrterest
and reduce future payments thereof (but will not be repayable by the
General Partner).
The General Partner will devote so much of its time to the conduct of the
affaks of the Fund as is appropriate to manage effectively the affairs of the
Fund. Further, the Principal, so long as he remains affiliated with the General
Partner, u¡ill devote a substandal and apptopriate portion of his business time
and attention to (a) the affatrs of tle Fund (and any of its co-investrnent
opporrunides), þ) existing Investments, (c) the zffatts of Page Mill
Properties, L.P., (d) prior real estate investments in which the Pdncþal has an
interest, (e) co-investment opportunities v.ith Page Mill Properties, L-P.,
(f) fundraising and matketing acúvities with respect to, and the affairs of, any
other real estate fund that is not a "Core-Plus Fund' (and any of its coinvestment
oppottunities), and (g) ftom a¡d after the termination of the
Investrnent Period, the affairs of any othet Core-Plus Fund, provided in all
cases that the Princþal devotes the necessary time to the Fund as is tequired
to satisSr its stated objecflves
"Cote-Plus Fund" means any irivestment fund with the primary pu¡pose of
acquiring Core-Plus f nvestments.
"substantially Invested Date" means the eatlier to occur of (a) the date of
termination of the Investment Period or þ) the date ât least 75Vo of the
agteg te Commitrnents have been (i) invested in Investments, (ü) resewed
fox (x) zny Investment that is the subject of a definitive agreement' option ot
letter of rntent or (y) ptopetty-development activities in respect of any
""y
Investment made pwsuant to a business plan or budget in place at the tjme
rnoneys are reserved, or (Ð set aside in good faith by the General Partner to
provide for reseles and to enable the Fund to make Follow-on Investrnents.
Pl\A-1844

Leverage
until the Substantially Invested Date, the General Partrrer will not be
permitted to sponsor or form any additional Core-Plus Fund, except as
otherr¡¿ise approved in the sole discretion of the Lp Advisory committee.
Notwithstanding the foregoing, the General Pattner r¡¡ill have the authority
without the approval of the LP ,A.dvisory Committee ro sponsor funds other
than Core-Plus Funds at any d.me.
The Genetal Partner u¡ill be under no obligation to provide co-investment
oppottunities (or provide any concessions granted to ^rLy other Limited
Partner upon admission) to any Limited Partnet by reason of the fact that
such opportuniry was made available to any other Limited partner ot
investor.
The Genetal Partner iotends to cause the Fund to obtain financing secu¡ed
by its Investrnents, with such financing to be on such terms ând .o.rditiot. u,
the General Partner deems apptopriate in its sole and absolute disc¡etion.
The General Partner may refinance any asset of the Fund at a',y time in its
sole and absolute discretion.
The Fund may moreage its properties, acqufue properties subject to debt or
otherwise incut secued or unsecured indebtedness (including short-tem
ctedit f¿cilities and construction financing, as necessary) ^t "ty-ti-e a¡d on
such terrns as are deternined by the General Partner, including indebtedness
secured by the Limited Partners' commitments (see "credit Facility" below).
The Fund rlrill employ leverage ftom debt sources to reduce its equity
investmentjn properties and seek to maximize its long-term ren'.n on eq"ity.
The use of leverage wrll permit the acquisition of mo¡e properdes than if
leverage is not used, thereby increasing the diversification of the Fund's
pottfolio.
Unless otherwise approved by the LP ,\dvisory Committee, the Fund may
only incur debt or otherrvise leverage its "stabilízed Âssets,' (or acquire
stabilized Âssets with existing debt in place) it as a resulr thereof, the
aggfegâre amount of all of its asset-secuted motgage financing does not
exceed 50o/o of the aggregate fai¡ ma¡ket vaiue of all of its stabitjzed -A.ssets
(detetrnined at the time of each assumption of debt, financing or refinancing
as applicable, based on the most recent quartedy asset valuations).
"stabilized Asset''means an Investment that the Genetal partner expects to
generate a current dividend or yield of at least 8o/o at stabiszation, without
sigrr.ihcant appreciation thereafter being projected dur-ìng the Fund's intended
fun:te hold period of such asset. unless an Investment later becomes a
stabilized rA.sset, "stabilized Âsset" does not include an Investment that
either (a) has been acquited for, or whose business plans initially include or
l^ter changed to include, 'þound
^re
up" development or substantial
development, tedevelopmen! renovaúon, or repositioning (inclurling lease
restruc-tudngs), (b) is less than 75o/o leaseð, and tequfues significant capitøJ
expenditures (defined as at least 70o/o of the gross contrâct purchase pdce of
such Investment unless otherwise apptoved by the LP Âdvisory committee)
to (i) bring it up to operating stândards and achieve stabilization (defined as at
least 95%o occupancy) or f.i) otherrvise resrrucrure leases, reposition ot
reriovate the Investment as part of its initial or later modified business plan,
PM-1845

Credit Facility
Investment Structure
or (c) although acquired when it \ras at least 750Å leased, (r) is no longer at
least759/o leased or (ù) is subject to a business plan at acquisition or thereafter
to festfuctufe its then existing leases or other\¡/ise reposition, renovate, of
tedevelop the Investment to bring the Investment uP to new operating
standatdi and achieve stabilization (e¿', lease terms, tental mtes, tenant mix,
rollover mix, e/e).
The Fund'øill not be tequired to limit its mdebtedness levels for assets othet
than Stabilized Assets; ptovided that Fund will not incur debt or otherwise
leverage and asset (or acquite an asset with existing debt in place) iÇ as a
result thereo f, the aggregate amount of all of its asset-secuted urortgage
financing exceeds 75o/o of the aggregate fai¡ matket value of all of its assets
(detetmined at the time of each assumption of debt, financing ot rehnancing
as apPlicâble, based on the most recent quârtedy asset valuations)' In
addition, the Fund will not be required to teduce outstanding irrdebtedness
levels because of reductions in tlle market value of one of mote of its assets.
The Fund may incur asset sesuted mortgage Enancing regarding any asset in
excess. of such limit for limited periods of time if the General Pãrtnet
determines that such action is apptopdate for strategic or othet appropriate
business teasons.
The Fund of one of more of its subsidiaries may enter into credit facilities
(each, a "Credit Facility') from time to time in order to enable the Fund to
iay.op"tating "*p".r.* or to provide for interim acquisition financing in
ñoth"rro.. of the Fund's business. In connecúon v¡ith any Credit Facility,
the General Partner will be authorjzed to pledge, mortgage, assigtt, transfer
and gmnt securiry inrerests in the right to issue funding notices and collect
Capital Contributions from the Limited Pattnets. The Credit Facility may be
secured by assignment of the obligations of the Limited Partners to make
Capital Contributions to the Fund. The Limited Partnets v¡ill be tequired to
cofrsefìt to the security intetest gtanted to the lender and to ptovide
information as requested by the lender. Interim acquisition financing under
the Credit FaciJity must be repaid wrthin L2 months of such financing.
The Fund may acquite and hold Investments ditectly ot indirectly through
subsidiaries, tmsts, partnerships, lirnited liability companies, ioint ventues,
joint investrnent entities ot othet entities.
The General Partner may (but is not requùed to) conduct certain of its
"REIT qualifying investrnents" through a subsidiary (the "Subsidiary
R-EIT') of the Fund that r¡¡ill elect to be taxed ^s a teal estate investment
trust (a "REIT') fo¡ federal income tax Pu{Poses andtnay take such acdons
as are fiecessary to avoid the Subsidiary REIT being treated as a pension-held
REIT (and thereby potentially causing tax allocations to tax-exemPt investors
attributable to invèstments owned directly or indirectly by the Subsidiary
R-EIT to be umelated business taxable income (tIBTI') under the Intemal
Revenue Code of 1986, as amended (the "Code')). The Subsidiary REIT will
be wholly-owned by the Fund except for preferred shares ftaving a $1,000
liquidation preference, and bearing a cumulative preferred returr\ payable and
compounded annually, at a 12.5o/o annual fate subiect to il¡ctease if the rate
charged therefore by REIT Funding, LLC (or its successor) is increased) held
by investots to meet the 100 shateholdet tequirement to qualiff as a REIT
under the Code. -Any investments (such as investments in dealet ProPerty)
PM-1846

Alternative Investm e nt
Vehicles; Parallel
Investment Vehicles
Excuse and Exclusion
that would cause the Subsidiary REIT to jeopardize its REIT stetus ot be
subject to fedetal income tax. m^y be owned (a) by the Subsidiary REIT
thtough a taxable REIT subsidi^ty, ot (b) by the Fund directly or inditectly
thtough one or mote subsidiary T 'T f,5, rathet than through the Subsidiary
REIT (even though such ownetship outside of the Subsidiary REIT would
Iikely cause tax-exempt i¡vestots' share of any such investments to be UBTI
for fedetal tax purposes (see "Untelated Business Taxable Income" below))'
The General Partner may also cause the Subsidiary REIT to fotm an
operating ({IPREIÐ pattnetship controlled by itmd/or form one or more
subsidiades (which may include othet REITs, taxable subsidiaries, nontaxable
subsidiaries, trusts, limited liabiìity cornpanies and othet entities) if the
General Partner determines the same to be beneficial to the Fund ot orÌe ot
more of its Partners.
Subject to certarn excepdons, the Subsidiary REIT (and any REIT subsidiary
theteof) genetally will not be subject to federal income tax on its taxable
income if it distributes on an annual basis an amount equal to or gteater than
its taxable income fo¡ such yeat. Thê Fund q¡ill be classified as a partnetship
for federel income tax purposes, and therefore, generally u¡ill not be subject
to federal income tax at t}le Fund level. Taxable income and loss of the Fund
(including dividends from the Subsidiary REIÐ *dl genetally be passedthrough
and allocated to the Partners in accordance v¡ith their inte¡ests in the
Fund. In some cfucumstances, the Fund and the Subsidiary REIT (and any
REIT subsidiary thereof), and other entities in "vhich the Fund or the
Subsidiary REIT invest, may be subject to certain federal income ot excise
taxes and cettain stâte and local incorne and.propety taxes.
The General Partner rnay organize additional investrnent vehicles to Facilitate,
ftom a legal, tax or regulatory standpoint, (a) Investr.nents by the Fund
('Alternative Investment Vehicles') or þ) investrnent in the Fund by
certain classes of investots (?atallel Investment Vehicles').
A I¡mited Partner may be excused or excluded ftom participaring in an
Investment if the Genetal Pattner makes a good farth determination that:
(a) such Limited Partner's particþation in such Investment is teasonably
likely to result in a matetial adverse effect on the Fund or. arry of its affiliates,
any portfolio company or properry in which the Fund has ot may have an
Investrnent, due to any law or goveflrmental regulation to which the Fund is
subject;
"r þ) based upon advice of counsel, such Limited Pattner's
participation in such Investrnent may be teasonably likely to cause â
substantial risk of noncompliance r¡¡ith xty law or govefnmental regulation to
which such Lirnited Partner is subject or otherutise is not a permitted
investment for such Lrmited Pattnet because of a conflict of interest ot
contractual obligations to which such Limited Paftnef is subject. If Lirnited
Partnets tepresenting 25ok of the Commitrnents are to be excused or
exduded" the Gene¡al Partner wjll not proceed v¡ith the Investment v¡ithout
the approval of the LP Advisory Cornmittee.
Âny determination to excuse or exclude a Limited Pattner ftom participating
in an Investrnent u'ill be communicated to all Limited Partners at or prior to
the making of the Investrnent and fuodi"g notices will inform such members
of the contributions they are required to make to the Fund. No Limited
Partnet will be tequited to contribute an amount in excess of its unfunded
PM-1847

Co-Investment;
Allocation of Investment
Opportunities
Pennitted Reinvestment
Transactions with
Affiliates
Commitment plus, in certain circumstances, distrìbutions received by it (see
"Investrnent Þenod' above). The unfunded Commitmcnt of a Limited
Partnet excused ot excluded from participaung in an Investment will not be
reduced as a resulg anà any Capital Contdbution made by such Limited
Partner with respect such InvesLment will be refunded to such Limited
Partnet. ,{ppropriate âdjustments wrll be made to distributions (and to t]re
Fund structure, if n.cessary) in the event that all Limited Partnets do not
participate in all Investments.
During the Investment Pedod, the General Partner will offer to the Fund all
investments that consútute Cote-Plus Investrnents; p¡gvtdcd' however, that
tlre General Partnff mzy, lor stmtegic or other apptopriate business ¡easons
çurcluding, v¡ithout limitation, the suitabrlity of the investment for the Fund,
ttunsactiðn size, d.iversifrcation, Ieverage, geographic locaúon, income mix,
product mix, tenant roll-over, capital expenditure requirements, opetatìng
ir.o-. to capital income mix, fevenue timing and othet dsk or stfategic
business feasons), offer Lirnited Partne¡s o¡ other strategic investors
opportufiities to co-invest with the Fund in Core-Plus Investments, including,
wiihout limitation, othet funds controlled by third patties or the Principal-
Neither the Fund tllof atry Limited Partnet will be entided to teceive any fees
or Payments based on amounts teceived by the Genetal ?atmer, the
Invãstment Advisor or any of their afFrliates in connecdon with the Fund, any
co-investment by any third-party with the Fund ot any non-Fund investrnenq
transaction, serr¡ice or actrvity (all of 'vhich may be retained by such perties
v¡ithout reduction of any amounts payable to such parties by the Fund).
Subject to the foregoing, the Partnets (including the General Partner) and
thei¡ afEliates may engage in or possess an interest in other business ventures
of every ûature and dãs-ription for their own account, independently ot with
others, including reâl estate business ventures, whether or not such other
enterprises witl be in competition with any activities of the Fund; and neithef
the Find nor rhe other Limited Pattnets v¡ill have any tight by virtue of this
Agreement in and to such independent ventures or to the income or Pfofi.ts
derived theteftom.
The General Partner may þut is not required to). cause the Fund to engage in
code section. 1031 like-kind exchanges whereby the Fund teinvests
disposition proceeds in new Inveslments (instead of distributing the
proceeds). The Geneml Partnet aiso has the right to feirvest the Portion of
the proceeds of any sale made during the Investment Period that fepfesent
the ieturn of capital in transactions that ate not like-kind exchanges (ot to
distdbute such þtoceeds and add the amount that reptesents a teturn of
capital therefrom to each Pattner's unfunded Comrnitments)-
The Fund, and the Genetal Partner on behalf of the Fund, may from time to
time engage other sersice providers, rncluding a custodian, a úaûSfef agent'
indepenãent real estate appraisets, pfoPefty managefs, constnrcúon and
deválopment managefs, leasing fnanagefs, contfâctofs, legal and accounting
fi.rms, -tax advisOts and envirOnmental consuitants and other consultants'
Each of these service providers will be comPensated by the Fund on such
terms and at such rarei as managemenr of the Fund deems appropriate in
light of the services provided. If any of the Management Companies ptovides
PM-1848

Removal of Genetal
Partner
any such service in place of a third party, such Management Compan; rvill be
entitled to additional compensation for providing such services. The
additional coûlpensadofr pryable to such Management Company will be on
terms at least as favotable to the Fund as the terms tlren reasonably expected
by the General Pa¡tnet to be available in an atm's length üansaction with an
independent third party providing the same first-class services in the same
location, The fees uflder such agfeement will be subject to tevie's¡ and
reduction by the LP Advisory Committee at the next meeting thereof if and
to the extent that the LP Advisory Committee deter¡nines that the amount
charged for such sewices exceeded such market rates therefore.
To facilitate acquisiúons by the Fund, the General Pattner (or an affiliate)
may putchase investrnents for the Fund and üansfet such investments to the
Fund at the General Partner's (or such affiliate's) Adjusted Cost' "Adjusted
Cost" fot any investrnent means the sum of the original cost to acquire and
then to own such investment, including (without limitation) external
borrowings and botrowing costs (deemed to be 8%o Per annum, comPounded
annuall¡ ãr ".y portion of such otiginal cost that dre General .Partnef does
not boffow from tkri¡d parties), other zllocable expenses and capitalized
acquisition costs.
If the Genetal Partnef determines that a short-term loan wouid be in the best
interests of the Fund (in advance of.acapital call of so as to avoid Ptemahilre
disposition of Fund assets to meet t¡e Fund's oblþtions), then the General
Part¡rer may make (or cause its affiLiates to make) such a loan to the Fund,
which loan v¡ill bear intetest ^t a nate equal to the General Pattner's most
fecefrt unsecured borrowing tate, ot if none, 8% per annum' compounded
annually (and irrclude othet market terms).
The Genetal Partner may be removed as generâI partner of the Fund, by a
75o/ovote of the Limited Partners, at any dme aftet the Pdncþal has engdged
i¡ conduct constituting gtoss negligence, uncured v¡illful and material breach
of the Fund,s Païtnefship Agreement, u¡illful misconduct or fraud, felony
cofi¡icdon involving veracity of permanent injuncúon that advetseþ affects
the Fund, or if dre Pdncipal is either dead or adjudicated incompetent, or
peffnânently incapacitated. Upon any such temoval, (a) the General Partner's
Lterest in the Fund will be cònverted to a Limited Pattr¡er's interest and the
General Partnelwill conti¡ue to be entided to receive distributions with
fespect to the Fund and þ) any contfacts r¡¡ith the Genetal Pattner or any of
its ãffiliates will be tetmiûated u¡ithout penalty ot arLy other payment other
than for arsounts eamed prior to the date of termination and reasonable outof-pocket
costs and related thefeto. IÉ General Partner is removed
"*penses
th" Limited Partners elect a successot general partner to tbe Fund and
"od
elect to condflue the Fund's business, then General Partner wül receive 7570
of any future Carned Intetest.
Wirlrin 90 days after the date the General Pætner receives vøj.tten notice of
its remova! a75o/o vote of Limited Partnets may (a) elect and admit, effective
es of the date of such temoval, a successof general Partfìef (the "SucCessor
General Pattnet') and elect to continue the Fund's business ot þ) elect a
liquidatot to liquidate the assets of the Fund. Any Successor General Pa¡tner
will have an of tne management powers and obligations of the former
PM-1849

Asset Management Fee
Ttansaction, Advisory or
Other Fees
Broken Deal Expenses
Otgatúzationa,l
Expenses
Fund Expenses
General Partner as the general paftnef of the Fund under this ,\greement.
,ts consideration for the investment advisory services to be provided
pufsuanr to the ,\dvisory ,tgreement, , the Limited Partners shall pay to the
investment ,\dvisor, quarterþ in advance in each Fiscal Yeat, an asset
manâgement fee equi to (a) 7.5Y0 pet annurn of theit unfunded
ComÃit*ents, except that any Limited Pattner cornmitting at least $75
million d poy 1.25o/o pet rorr*o, during the Commitment Period or þ)
7.5ok per ânnum of thei¡ Funded Commitments-
..Funded commitment" means, with respect to a L.imited Partnet, the
amount of Capitat Contribuúons made by such Limited Partner, whether or
not returned to such Limited Pattnet'
Eighty percefrt of all advisory difectors" transaction, toppinS break-up, or
rñil; i.es earned in respect of the Investments will be applied to-teduce
subsequent installments oi the asset mânâgement fee payable by the Fund to
the Investment Âdvisot.
The Fund will bear all third-parry expenses incured in connection v¡ith a
proposed Investment that is nót ultimateljr consum¡nated by the Fund
The Fund v¡ill bcat the expenses, costs and liabilities incwred i¡ connection
the orqanization of the
wirh (a) the offenng and iale of the fnterests, þ)
Frrnd,'the General Þartner and the Investment Advisor and their respective
affiliaies, and (c) the negotiation, execution and delivery of the Fund
Àgreemárrt (deirn.d belãw), the Âdvisory Á.greement,
.the -goveming
däuments for the Genetal Partner, and any telated or similat documents;
p!r:4dçd, however, that the total reimbursable expenses under c]1uses (r), (b),
ila-q.¡ ,tãr. u¡ill not enceed g1 million. The Fund d pul all amounts in
excess- of such amounts as well as plâcement fees; P¡ovided, however, that
(i) the asset management fee payable to the Investment Âdvisor will be
.á¿rr..a on a dollar-fot-dollat bãsis in ¿n amount equal to such excess as well
any placement fees paid by the Fund and (ü)to the,extent that, upon
liquid.uon
^s of the Fund, such ieductions do not equal such excess as well as
urry pl"""m.nt fees paid by the Fund, the General Partner will pay to the
Fund an amount equal to such deficit'
Except as ptovided herein, the Fund v¡ill bear all costs and expenses incurred
ln m"i"t¡"i"g the operations of the Fund, induding the cost of organLing
any parallel ot= Alternadrre Investment Vehicle, legal and accounting- exPenses'
mo¡tl.rg and úavel exPenses, tax advice, tax projections, the cost of prepanng
the Frind,s financial statements, tax fetufns and K-l's, the cost of annual
audits, custodial fees, insurance, litigation and indemnification expenses' taxes
and othet govemmental fees and charges, exPenses incutted_in connecd.on
with any inãebtedness or Credit Facility entefed into by the Fund, exPenses
of the annual informational meeting of Limited Partners, exPenses of the LP
,Adr.isory Committee and othet exPenses associated with identifrTing, IocaUng,
.rrulo"titg pursuing (including v¡ithout limitation all due r{iligence and other
pursuit .ãriq, ,tori,*i"g, negotiating, acqrriring and closing âny potentiâl
investment (whether or ìot consummated) and the acquisition, financing,
ownership, holding, sale, ptoposed sale, management, leasing, construction'
other disiosition Jt vahaúon-of any Investment Except as provided herein,
PM-1850

Distributions in Kind
Risk Factors and
Conflicts of Interest
Annual Meetings
LP Advisory Committee
the General Pattner n'ill be responsible for the exPenses of its own
operadons, including rent, salaties, fumitue, fixtures, ofEce equipment and
oYethead.
The General Partner intends to make dist¡ibuüons in cash to the extent
reasonably possible ,¡¡ithout ieopardizing the potential fetufn to the Limited
Panners it*o ,try asset owned by the Fund. ¿tt no time vill direct interests in
real properry b. dist ibnt d to a Limited Pattner n¡ithout such Limited
P^.t r.r', consent. Further, securities that ate not publicly traded rvi-ll not be
distributed to a Limited Pa¡tnet without such Limited Partner's consent,
unless such distdbution is made in connection s¡ith the liquidation of the
Fund, the General Partner has used its reasonable commercial efforts to
liquidate such securities and the General Pattner has developed a.reasonable
pün of liquidation of such securities. The fair market value of such securities
-ill ¡. determined by the General Partner, subject to the approva-l by a
majoriry of the LP Ádvisory Committee. Distributions of publicly traded
r"á¡ai.. may be rnade to thé Partners ât any time if the Gene¡al Partner has
determined that an in-kind distibution is likely to result in a grc tet tetufn to
the Limited Pattrrers than selling the Fund's assets for cash'
,\ny in-kind disttibuúons would be made in proportions computed by
assuming that the Fund sold the diseibuted assets for cash in an arnount
to theit fair market value as determinecl in the ttansaction pursuant to
"qual
which such assets wefe acquited, and then distributed such cash to the
Parmers as described in 'DisfnbuUons" above. If the General Partner in
good faith determi¡es that, because of spe.ial cifcumstarÌces, the established
îalrrution methods do not fafuly detetmine the value of a securify or othet
asset of the Fund, the General Paftnef may make such adjusûnents of use
such alternative valu¿tion method as it reasonably deems aPPropriate. The
General Parmer rvill notify the Limited Partners ol any such in-kind
disribution, and each Limited Paftnef will haveT calendar days from the date
the General Pattnet sends such notification to elect to have the Fund be its
sales agent for the assets that otherurise would have been distributed to such
f,imited Partner in the in-kind distribution (in lieu of receiving such assets in
the in-kind distribution). Any assets that ate selected by the General Partner
to be distributed in-kind ,will, fot pufposes of the drstdbution provisions
above, be deerned to have been distributed to all Patmers on the date that is 7
çfs¡rlat days from the d¿te the General Partner sends the notificadon to the
Limited Partnets (the "Record Date'). If the Fund acts as sales ^gerrt fot ^îy
Lirnited Partner, any expenses of such sale and any increase or decrease in
value of the assets after the Record Date will be paid or teceived by such
Limited Paftnef (and any taxable incorne of loss attributable to such expenses
or change in value will be deemed to be tecognized by such Limited Pattner
dnectly, and not through the Fund)-
This offering involves various risk factors and potential conflicts of interest
arnong the Genetal Partnet, the Investrnent Adr¡isor and the Fund'
The Fund v¡ill hold annual meetings whete Partners will have the oppornrnity
to review and discuss the business and affairs of the Fund'
On or before the Final Closing the Genetal Patmet q¡ill establish an advisory
committee for tåe Fund composed of fePtesentatives of certain of the
PM-1851

Fiduciary Duty
Liability Standatd;
Exculpation and
Indemnification
Limited Pattners (the "LP Advisory Comrrrittee'), which Lirnited Pa¡tners
taken together u,ill o'ü/n ât least half of ail Interests owned by Limited
Partnets.-Each Limited Partner having a Commitment oF at least $50 million
v¡ill be offered representation on the LP Advisory Comrnittee. The Genetal
Partner may also offer representation to one of more Limited Pattners having
Cornmitments of less than $50 million in the Genet¿l Partner's sole and
absolute discreúon. The General Partnet will meet with the LP .Advisory
Committee not iess often than semi-¿nnually to obtain its approval on dle
mafters conceming the Fund tequiring its approval as set forth in this
Summary, hcluding, u¡ithout limitation, the valuation of Investments, âny
changes to leverage-limitations on the Fund, distdbutions in kind, apptoval of
conúcts between the Fund and affiliates of the General Pattnet other tJran
as provided above, and âny other matters as the Geneml Parmer may
determine from time to tirne. Unless otheru¡ise indicated, âny mattefs
requrdng approval of the LP .A.dvisory cornmittee vill ue considered
approveã onty if a maionty of the representatives þ
numbet) vote to
rþþroo. such matter (in their reasonable discredon unless otherwise expressly
indicated hetein).
The General Partner will at all times act in good faith and in the best interests
of the Partners and the Fund. In rnanaging the affairs of the Fund and in its
dealings with the Limited Partners, the General Partner utill o'u¡e a hduciary
duty io the Paftners as set forth for a "general partner" of a li¡nited
partriership undet Delawa¡e law, inciuding: (a) a duty of loyaþ, which
iequire, the General Partnet to ceurrt¡ out its responsibilities wn¡! loyalty,
honesty, good faith and faimess toward the Fund and the Limited Partners,
and þ) " aoty of cate, which requires the General Partner to discharge its
duties u'ith the diligence, care and skill, including, but not limited to, the
safekeeping ofand use ofall funds, assets and records ofthe Fund'
The General Pattner, the Investment -Advisor, the Principal, theit affiliates
and their tespective officets, shareholdets, directors, managers, members,
partr¡€rs, and employees, including, rvithout limitadon, any Person or entity
that is an offi.cet, shareholder, director, member, managing membet' managet'
parrnef of employee in any such pafiy, of afly Pefson or entity that directly or
indtectly, thtough one or mofe limíted liability companies, paftnefships of
other entities, is an officet, shateholdet, director, member' managing member'
marrageÍ, partner ot employee in any such patty, and as determined by the
Geneial Partner, consultants of agents (the "Indernnified Patties') will not
be Liable to the Fund of to the Lrmited Partners, or. any of. their afFrliates, and
the Fund will indemni$', defend and hold hatmless all Indemnified Parties
frorn and agâinst ^fly arrd all claims, liabilities, costs ând exPenses, i?cluding
legal fees, except with respect to (i) any act or omission which was not taken
Uy tfre Inaernnined Party in the good faith belief that such act ot omission (r\)
was consistent v¡ith its fiduciary doty, (B,) was within the scope of authoriry
granted to the Indemnitred Patty by the Fund Âgteemenl and (C)-was in or
iot opposed to the Funds bist interest, (Ð ^"y material bteach of the Fund
,tgteement by the Indemnified Party or (rri) fraud, u¡illfirl misconduct, bad
fairh, breach of any fiduciary duty owed by the Indemnified Patty to the Fund
or the Limited Pattnets, gross negligence or reckless disregard of duty on the
part of the Indemnified Parfy in connecdon u¡ith the business of the Fund.
Ñotv¡ithstanding the foregoing, no Indemnif,ied Party who is an individual
PM-1852

Transfers and
Withdraurals
Default Provision
Amendments
u,ill have any personal liabiliry to the Fund, to any entity in which the Fund
holds dfuect or indit..t investments (induding any Subsidiary REIT and any
other subsidiaty of the Fund), or to tlre investors ot any of theìr affiliates
except to t̡e extent the loss ot damage is attdbutable to such individual's
actual and intentional ft¿ud.
A Limited Partner may not sell, assign, ttansfer, pledge or hypothecate any
portion of its Interesi *ithout the prior .¡¡ritten consent of th9 Genetal
Þ^tt t.r (which consent, in the case of a transferee that is an affiliate of the
transferor oi , Partn.r, may not be unreasonably withheld (e.3, it would not
be unreasonable to withhold consent to a üansfer if the ttansferee (a) has a
reputation for litig,iousness or discord, þ) has used any business stfâtegy that
iniohed extortioã, a[eged exrortion or disruptive activity within a fund
designed to obtâin ..ooã*i" benefits at the expense of the other participants
it .,i.tt fund, (c) lacked cteditworthiness, (d) has violated ot allegedly violated
the USA Patrioi ,A.cg (e) has a reputauon that could have a material adverse
impact on t}le Fund or any o[ its Partfiers, (f) is another real estate fund or a
hedge fund (debt ot equity), (g) is a pefson or an entiry that sponsors, acts as
advi"sot to, ii an emplóyee of, or is part of the conttol group of anothet real
estate fund ot a hedge fund (debt or eqruty), þ) has a business that competes
with the Fund, (i) ii a lendet (or any affúate of a lender) to the Fund,
f) might, in the good faith belief of the General Pattnet, use its Interest or
uny ittfotto^tion with fespect to the Fund, any Investment, of such lnterest to
t atrn tfre Fund, the othãr Parrners or thei¡ respective reputadons, G) *tghC
in the good faith belief of the General Partner, attemPt to obtain an
economi-c benefit at the expense of the other Pattners, inCluding the use of
strategies of attemptìng ã hostile takeover, apptopdating any business
oppoirunities of thi nund, causing liquidation of the Fund (ot any of its
ot forcing so-called "greenmail payments" or the like from the Fund,
"rr.ts)
or Q would holã its Interest (ot any portion thereoÇ, directly or, indirectly,
for'the benefit of any pefson ot entity described in clauses (a) through (Ï)
above)). No such transferee v¡il become a substituted Limited Partner
without the consent of the General Pattnet, which consent may be given or
withheld in the General Partner's sole and absolute discret-ion. No Partner
may withdtaw from the Fund, except that Limited Partners that ø-r.e
goo.ro*"rrt plans, ernployee benefit plans or regulated barking entities may
irrithdt"* from the puna if their participation becomes illegal undet certain
circumstances.
Á. Limited Pa¡tner that has not been excused or excluded from all ot patt of
any requfued contribution of capital and defaults wittr tespect to such
contribution obligation may be subiect to certaifl adverse consequences,
including a reducdon of all ot a pottion of its Interest as Liquidated damages.
The limited pârtnership âgreement (or other goveming documenQ (each, an
"Entity Agåement"f for e".h entity included in the Fund (each, a "lFund
Entiq/) m"y be amended ¡16¡¡ time to ti¡ire (or any ptovisigl thetein may
be warvld) by the General Partner upon the following applicabie af6rmative
vote of the investors: (a) if the amendment (or waiver) affects more than one
Fund Entity, the affirmative vote of investors in all affected Fund Entities
collectively holding a majority of the aggtegate intetests held by all of the
investors in all of such affected Fund Entities (with voting to occut as if all of
PM-1853

Reports
such ìnvestors were parmets in a single partnership), or (t) if the amendrnent
(or vraiver) affects ánly one Fund Enrity, the affrrnative vote of investots
.ollectirr.þ holding a majonty of the aggegate interests held by ¿ll of the
investofs irr ,,r.h Fund Entity. Notwithstanding the foregoing, the Genetal
Partner, without the consent of any investor in any Fund Entity, v¡ill have the
unilatetal authodty to arnend any Entity ,\greemenÇ upon noticé to the
investors therein, so as (a) to corfect effofs, cufe ambiguities, fesPond to
changes in the la.v and make changes for the benefit of the investors and
þ) tã imptove, upon advice of counsel, the Fund's position in (i) preserving
Èfuf ,tutur, (ri) satisfying Investrnent Company Act exemptions,
.
(Ð q"^äfy"g foi ERIS¡ pLn exemptions, (iv) sustaining tax
"rs.t -the
p"riti""r-ofluch Fund Entity, any Subsidiary or aÃy investor of Partnef,
iv) avoiding publicly traded partnerstrip status or (vi) pteventng th: investors'
nrrd âcco'nts ftom deviating from the intended priod.ty cash
drstributions ""pltl des cribed above-
Each Limited.Parmer v¡ill receive audited annua-l ltnancral st¿tements and
annual tax informatiofi necessafy for the completion of income tâx feturns.
Mofeovef, within 90 days (or as soon as practicable thereafter) following the
end of each fiscal year,'the General Partner v¿ill use commercially reasonable
efforts to furnistr of cause to be furnished to each Limited Partnet a
statement of changes rn the net asset value of the Fund and a confumation
from the Fund's uoditoÏs of caiculations of distributions (if any) made during
such fiscal yeü to the Investor by the Fund and changes in such Lirnited
Partnet's capital accourìt during such fiscal year.
At the end of each quartet of each fiscal year, the Genetal Partner wjll also
use colaunercially reaionable efforts to ptovide to each Limited Partnef (a) a
balance sheet oi the Fund as of the end of such quaftet and statements of
operations and cash flows of the Fund for such quattet; (b) a_statement as to
,t. ,lro., recently determined (i) cost of each InvestmenÇ (ü) net operating
income óf "u"h Investment during such quartet, Gä) Value of each
Investrnent as of the end of such quaftef, and (iv) amount of all secured debt
and other liabilities accrued with tespect to each Investment or otherrvise
payable by the Fund; (c) a statement showing the computation of fees and
ArrrlUnti""r to the Gènetal Partner and its affiliates, which statement wi]|
separately reflect each type of tansaction v¡ith of service provided by the
Gäns"l þartnet and its ^fftli"t.t, the amount paid with fespect theteto and
tle method ot formula used f,or calculating such paymeng other than
transacrions contemplated by the Fund ,tgreement; (d) a statement of the
Limited Partner's capital account balance and a valuation of the Limited
Partner's investment in the Fund using the most recently determined Value of
the Fund's assets; (e) a Limited Pa¡tner's capital âccount transacdons report
that shows the details of all Fund üansacdons affecting the Limited Pattner's
capital accounr that occurred since the end of the preceding quarter and
p'ecedittgfiscalyeat,includrngallCapit'lContributionsanddistdbutions'
and theÈ effects at the time on the Limited Partner's annually compounded
rate of retum; (f) a statement of performance meâsufement tetufns, prepated
in a manner that is in compliance with the Associates for Investrnent
Management and Resea¡ch (AIÀiR) Performance Presentation Standards; and
G) ""i such other informarion as rhe Limited Partnets may reasonably
ì".þrt. The Genetal Pattner will use reasonable efforts to ptovide such
PM-1854

Valuation
Secutities Law Matters
ERISA
quattedy inforrnation .¡/ithin 45 days following the end of each quarter of
each fiscal year.
The General Parmer wdl also furnish of cause to be furnished to the Limited
Partners the following inforrnation w'ith respect to each month of each fiscal
year: (x) a balance sheet of the Fund as of the end of such month;
þ ,,^tl*"ots of operarions and cash flow of the Fund for such month; and
þ srr.h other infórmadon as the Limited Parmers.will reasonably reguest
r.i"ti"g to the immediately pteceding month's activity. The General Partner
-ill ,rsã commercially reasonable efforts to provide such monthly information
on or before the last day of the succeeding montÏ.
In addition to the foregoing, the General Pa¡tner u¡ill promptly ptovide to the
Lirnited Partners copies of any appmisal made v¡ith fespect to an Investment
and a notice of change in Value of such Investment.
\fithin 30 days aftet the end of each quattet of each f,tscal yeat, the General
Partner v¡ill use reasonable commercial effotts to determine the Vaiue of each
Investrnent as of the end of such quartet. In the case of âû Investment
acquired within the 1.Z-month pedod pteceding any quâftedy valuation, its
Viue will be its acquisition cost (adiudted to take into account any additional
amounts invested thetein aftet acquisition), unless the General Pafinef
determines in its disctetion to obtain an independent thfud-Parly appraisal for
such rnvestment during such 12-month period. witJr tespect to any
Investment that has been sold, its Value will be its net sales price, The Value
of money market instruments, securities and other interirn investrnents q¡ill be
thei¡ then cufrent market pdces, unless there exists no active mafket fot such
investmenrs, in which .^rã th"y will be valued in good faith by the General
Pattnet using such information as lhe General Paftnef deems relevant.
Interests in the Fund v¡ill not be registered undef the 1933 Act and must be
acquired solely fot investment PurPoses and without any view to the
dlr-t ib.rtion thereof in violation of the 1933 Offers of Interests in the
'tct.
Fund will be made solely to accredited investots within the rrreaning of the
rules promulgated under the 1933 Act, except as othefwise expressly agreed
by the Genetal Pattner.
The General Paftner anticipates tlat the Fund will be exempt from the
registration requirements of the Investrnent Company A.l o-f l94O' as
arãended lthe .;1940 Act'), by reason of the exemption specified in Section
3(c)(1) (for issuers whose securities are not beneficially owned by more than
tòó p"rsonr) andf or Section 3(c)(7) (for issuers whose securities are owned
exclusively by ,,quallFred purchasers" wrthin the meaning of secúon 2(a)(5t)
of the 1940 Act).
The Fund's counsel urill issue an opinion to the Fund at the time the Fund
acquires its initiat investrnent that the assets of the Fund will not be deemed
plan assets undet the Employee Retirement Income Security Ãct of 1974
i,enfso-1, either because rhe ownership interest in each class of equity
àterest in the Fund hetd by all private and public empþee benefit plans is
less than 25"/o of the value of such class of equity interests i¡ the Fund or
because the. Fund qualifi.es as a"rezl estate operating company'' or a "ventufe
capiøl operating .ò*pr.ty" ot satisfies anorher exemplion from plan asset
PM-1855

Tax Allocations
Unrelated Business
Tæ

E)GCUTI\IE ST,IMMARY OF KEY TERMS
ru fúouirg iîforrmtion is prøøtd. as a swwral! f @Ìuin prrruipal tmrc ard it qodúd b r{eøæ n th nme fuãild
Temt" in tlß l+irÃIe Plaryløx Mqnrarú,rn tln Pø;ruenhþ Agwvt ørd ørry úu suhuiptian
"SØ"ffiury f fual
dm,nøti ¡- Smwpase-Mi| Ptrytilà L.P. (Øpitalizd tm76 ûe Mrd in tlte nnre fuaild "Søtnwy { I+i,tipll
T*^.).
The Fund
Initial Offering Size
Genenl Partner
C-ommitnent
Terrn
Fund Støægy
Diversification
:_: .' .: ,l:,.'-' .
.
,. , tt. . -... ,,
EeÞJÞ
g#i€d
Iåseæs+DjsfdbÉisns
LOSA21s9J44?+2$4422
Strstarlagc-Iúi! PropertiesJl, L.P., a Delaware limited partnenhip.
$3OO millior\ subject to increæe in the sole a¡rd absolute discretion of the General
Partner.
3o/o oÍ the e1gregete Commiuments of the limited panne$ (not to exceed $10 million).
frnEjeht years, wiuh up ro rwo consecrnive one )æar extersions by the General
Partner, with the approval of the LP AdvisoryComminee.
To make long-term investments (equity and possibly debÛ in value-enhanced core,
challenged cori and deveþment assèts located in the United Staæs targeted to achieve
(a) a leverage d 60/o to 8olo õr¡rrent return et stabilization and (b) a leveraged 12þo/o to
14olo IRR (compounded antruellt over the life of the investment. There can be no
assur?nce that such targeted returns will be achieved
No more *pn2ú/o of aggregaæ meximum Commitmens maybe invested in anyone
Fund investmen¿
Contributions rcletins to suc
fbt Secon¿. tOO"¿ to suc=b
æceive¿ a retum of an of lts O
fct fnir¿. tOO"¿ to sucfr I-m
PM-1857

Clawback
ManagementFee
LOSi¿le,E4æ+2åi4022
Investrnents: and
f e) Fifth. f il 80% to su
Yes"-with 50% of the cartiSd inrcrc
l-Oo/s ef *re Vdue ef *æ FrxCt æsets prusl.Solo of caoital.called. and
ln¡ stqentlcÊod. 7-5o/o of unfunded C-ommitments (i@
reõæõn to t¿sp¿ tpr runtte¿ pannen mat¿ng Co
million).
PM-1858

'[ r'
U
\J
Item
Fund Name:
Fund Size:
Requestr
Glosing Tranch:
Go-lnvestment
Gommitment:
Gommitment Period:
'
I E¡rn¡l Y¡¡g Tarrrr. ¡ V¡¡¡¡¡
lnvestor Exit Rights:
Sponsor/Managen
Geographic
Diversification:
Exclusivity:
lnvestment Opportunity Summary
Sunstar Properties, L.P.
Preliminary Analysis - June 2006
Terms
S u n sta r eroþ-e rti e s, L. R.
$300 Million.
$100 Million.
$100 Million.
Generat Partner coinvestment
of lesser of 3% of
limlted partner commitments
or $10 Million.
3 Years after FinalClosing of
the lnitlalOffering.
. 10 years, with up to2
consecutive 1-year
extensions by the General
Partner, with the approvalof
the LP Advisory Committee
(subject to extension
indefinitely if a Public Vehicle
Exit occurs).
Closed end fund with Public
Vehicle Exit objective.
Sunstar Properties GP, LLC
is the general partner, and .
SunstarAdvisors, LLC is the
investment advisor. Both
entities are controlled by
David A. Taran.
United States.
All Core Plus tnvestments
offered to the Fund until
substantially invested.
Source
PM-1859

,.-J
Dedicated Team:
J Fund Objective:
Fund Strategy:
Deal Pipeline:
Asset Diversification :
Time CommÍtment:
A substantial portion of
teamb business time and
attention as is reasonably
required fsr the proper
management of the Fund.
Çò-invest¡r/tgnt
Commitment:
Management team may
invest as part of General
Partners's co-lnvestment.
ProfÍt sharins:
A promote sharing regime in
favor of management will be
implemented consistent with
the regime in place for Page
Mill Fund l.
Track Record:
Please see "Sponsor's/
Manageds Track Record"
below.
Make long-term investments
in Core-Plus assets targeted
to achieve (a) a leveraged
6o/olo 8olo curent return at
stabilization and (b) a
leveraged 12o/oto 147o IRR
(compounded annually) over
the life of the investment.
lnvest in interests in valueenhanceable
core,
challenged core and
development opportu n ity
properties.
Several transactions in
various stages of negotiation
and cclntingency.
No more lhan2Oo/o of the
Commitments may be
invested in any one
lnvestment unless approved
by the LP Advisory
PM-1860

,:: ,
\J
.l ,i
:... r
Fund Structure:
Gurrency:
Hedging:
...
Proposed Other
lnvestors:
Go-investment Rights:
Proposed Glosing/s:
Leverage:
Reinvestment:
lnvestment
Management Fee-
Organizational
Exþenses
Trustee's Fees
Third Party Gosts
Committee
Limited PartnershiP
United States dollars.
Potentially interest rate
hedging on bonowings onlY.
ln discussion with other
pension funds and qualified
investors.
None.
lnitial closing June 30, 2006;
lnitialOffering period of 12
months with possible 6 month
extension. Secondary
Offerings in discretion of
GeneralPartnqr.
Unless otherwise aPProved
by the LP Advisory
G-ommittee, no mõre than
50% leverage gn stabilized
assets,
ln orderto prePare, maintain
or size the Fund for the
Public Vehicle Exit, the Fund
may engage in 1031
exchanges and maY reinvest
sale proceeds.
1.0o/o of the Value of Fund
assets plus 1.5% of unfunded
Commitments (including
reserves).
The Fund will bear the cost of
organizational exPenses
which, with resPect to the
lnitial Offering, will not
exceed $1 million.
No trustee;s fees;
See "Organizational
Expenses" above.
PM-1861

Placement Agent Fees No ptacement agent fee load
on CaIPERS investment.
ç Initial operating Gapital or line of credit
Deficit Funding: secured by capital
commitments.
\./
Underlying Fund or JV Levered 14-16% IRR
lnvestment (compounded annually) over
Target Terms: the life of each investment.
Profit.Sharing: General Partne¡'s canied
8f#:l;ii,Ëlä,i3"ï
General Partner to canied
interest oÍ 20o/o at targeted
retums. Maximum GP
carried interest is VÙolo.
Fund Governance: The General Partner (and the
lnvestment Advisor to the
extent delegated bythe GP)
ËliL3ïiålJåT.i::Hi,:i
investment strategy and
decisions,
¿:i*ifi 3,i,'J',ff,:'ñ""
CaIPERS is a member, has
aPProval rights on certain
material matters of the Fund.
Sponsor's/Managefs Since 1993, David Taran,
Track Record. Page Milland its
afül iates/predecessors have
acquired aPProximatelY 1 3.8
million square feet of
commercial property, 700
acres of developable land
and 449 hotelrooms; with
aggregate value of
:üJ,iffi i:'ål3J,iJ'tän",
of approximately $665
million; and generating
realized and unrealized value
of aPProximatelY_$] .4 tillion
and yielding an IRR of
PM-1862

':..'1..'
''1. : Reserve Account:
J
Glawback:
Return ExPectations:
Pros:
approximatelY 35.0% or
approximatelY 2.0x invested
equity through 12131 lO5-
Predecessor and non'fund
co-investments have
achieved apProximatelY $1 .1
billion in realized and
unrealized value Yielding 91
IRR of approximatelY 34-6%
or approximatelY 2.1x
invested equrty and (ii) Page
Mill Fund I's investments
have achieved aPProximatelY
$303 million in realized and
unrealized value Yielding an
IRR of approximatelY 45.3o/o
or approximatelY 1.9x
invested equity through
1A3¡l05.
None, as distributions are
PartnershiP based.
Yes.
Leveraged:
Prooertv Level:
14-16%.
Fund Level:
Before fees and Profits.
1Ùo/o.
After fees and Profits.
14%.
lnvestor Level:
Before fees and Profits.
8o/o.
Afterfees and Profits.
12o/o.
Unleverased:
Propertv Level:
12-14o/o
Fund Level:
Before fees and Profits.
8o/o
Afterfees and Profits.
12o/o.
Follow on fund; established
PM-1863

U
\.1
Gons: .
Preliminary
Recommendation:
fund manager with successful
track record with CalPers.
Goals / strategY similarto
prior successful funds /
investment activitY.
$100 Million.
PM-1864

Triumnh
Pronerfv
Services
ÊW. Sèþ' lftçsl . ù8rjgb--å,l€el ltlrr GaflËl
August 12,2008
Athr: Stephen Ford
Rent Stabilization Program
2277 Urtlersity Avenue
E. Palo Alto,CA94303
Vi a email: sford@cit-vofepa.org CC : wli@cityofepa. org
RE: Supptemental Form Providing Rents for June 30, 2007 anð June 30, 2008
The Redwoods - 220 E. O'Keefe Street
Dear Stephen:
As requested in your form letter of July 25, 2008 we are enclosing the supplemental
informatíon requested under protest.
We received the changes to the rent control ordinance ma¡ked "7-9-08 Final Adoption" on
July 29,2008 and reviewed them. You may recall that I requested this information in an
email to you on July 8, 2008. We are a bit confused as to how the changes to the
ordinance could be implemented as of July 1, 2008 yet r¡/ere not adopted until July 9,2008.
We also do not understand how the change in calculation of maximum lègal rent can be
retroactive to July 1, 200'l . It seems to us that orce a rent ceiling is detennined, it should
be effective until a new rent ceiling is established, most often via the Costa-l.Iawkins Act.
Please have someone contact me to explain the rational and legality behind the retroactive
computations as well as address the other items of concem in this letter.
Your generic letter of July 3, 2008 included in your form letter dated July 25, 2008
referred to a revised Vacancy Registration Form. We have not received this form and
request that you immediately forward five (5) copies to us.
I am also unsuïe why neither I nor the building owner received written notification that
changes to the ordinance \pere being considered. As stakeholders in East Palo Alto, whose
contact information is in your files, we expect that we would have received some sort of
notification. Please ensure we are notified of futu¡e changes that are being reviewed or
considered, regularly scheduled meetings of the Rent Stabilization Board and any special
meetings of the Rent Søbilization Board.
Please also forward a copy of this letter to a higher up and have them contact me. Could
this person be Wayland Li who is mentioned in your fom letter dated July 25,2008?
We're not sure who he or she is.
Lastly, please check your records to confirm you have the correct address for notices for
this property. The receipt for payment of the registration fees was sent to Ely Place in Palo
3101 Middlefield Road, Unit 3, Palo Alto, CA 94306
650-813-1413 voice r 650-813-9413 facsimile
PM-1865

ïrlumoh
Pronértv
Service's
tuyr Se!. l¡rr.çl ¡f.fonpge.-S'lea¡
Alto, when it should have been sent to the Triumph Property Services office per our
constant reminders of the notification aiddress for matters pertaining to this property. Also,
some of our correspondence from you has the mistaken address of #33 as the unit number.
Please make sure ALL correspondence for the propedy is sent as follows:
The Fisher LLC
C/O Triumph Properry Services
3101 Middlefreld Road Unit 3
Palo Alto, CA94306
The contact phone number should be 650-813-1413.
Stephen, I have to go on the record here and express my disappointment in the way the
changes to the o¡dinance were handled. The long-term effect of these changes will be that
we, as somewhat philanthropic propefiy owners and managers, will no longer be able to
make special accommodations to rents for those of our residents who fall upon hard times
or whose income is insufficient to pay our typical below market rents. We will be forced
to increase rents each year to the maximum legal rent ceiling just to pay increases to the
registration fees and maintain the buildings. It appears that gone are the days where we
could reward good long-term residents with rninimal or no annual increases or temporarily
reduce a rent due to resident hardshþs.
Additionally, the changes to the ordinance have resulted in a decrease in value of the
property. The net effect of the change in the ordin¿nce is a reduction of 542,286 (forry-t ro
thousand two hundred eighty-six dollars) in the gross potential rent. This equates to a
reduction in total value of the buildings of between $5 I I ,000 and $ 1,066,500 using GRMs
(gross rent multipliers) ranging from 18 to 25. The drop in gross potential rent equates to a
loss of value of over $357,000 if we use a capitalization rate of l2%" and over $857,000 if
we use a capitalization rate of 5%to determine building value.
AII in all, we do not see how the changes to the ordinance benefit either properly owners or
renters in the long run. I am looking forward to discussing our position with someone
from your office or a member of the rent stabilization board; please make sure they receive
a copy of this letter.
Sincerely,
Katrina Edwards
Triumph Properfy Services as
Agent for The Fisher LLC
Enclosures
310f M¡ddlefield Road, Unit 3, Palo Alto, CA 94306
650-813-1413 voice r 650-813-9413 facsímile
PM-1866

!
I
I
æ
o,
!
!
I
s
I
The News srlrcoil uA[rEY t sAl{ rosE
[ea] Estate
Changes occur at
Windermere and Alain
Pìnel Realtors.
Pags 3
ffiffiffiffiffiffi
CalPEnS hacks Page Mill plan
Skeptics watch East Palo Alto initiative
sltÂR0il slM0llsot{
ssìinonson@bi¡journals.com
The C¡ lifornia P..ublic Employees' Retire'
ment System, kiiqwn for investing that
champions finânëÌat and social returns, is
a m4õr backer of,ä controversial business
plan being pu{suéd by a Silicon VaLley
ieal-estatc vèntrUe to acquire and possibly
redevelop huùdreds oi East palo ¿lto
apartments. .-:
Palo Alto-based"Page MilI Propertles has
come under harsh criticism from some
quarters of this.:tiny and relatively im'
poverished Silicon Valley community for
PEAK Surgical
rl
for free e-mail news updates at s
.ililflüJüüWilt.
DECEMBER 28,2007
vflL 25, ilf).34
$zm
96 il, Ihird St
Suit¿ 100
attempting to raise rents for househplds in
the dozens of complexes that it has bought
over the past 15 months or so. The com-
Blexes are part of a rent control district
managdil by an East Palo Alto city board,
and, according to two boarcl members, are
the community's largest source of affordable
housing.
CaIFERS has committed $100 mÍllion in
equityìto the effort, which some fear wÍll
uttimately replace standing apar'tment
stock with new ancl much'pricier units,
thus driving the existing, largely poor resi'
$ee PÀEE MlLL, Page 24
San Jose, CÀ 35112
FffiFITMü{
Êffi:l|',',ï'..,î-
É-ffiffi,tri ourWeb site,
TffiËNFItsE
Shutterfly
crealing a
culture by
CEO believes in
great company
communicating.
Fage$ 1l-12
Page Mill Properliæ LP hae rcquiled dozens ol rpartment
buildings in lhe E¡st P¡lo Ällo are¡ south ol ll.S. 101 and
adj¡cenl to Palo Allo ¡nd Me¡lo Fark,

News
ãus-tNess
lounn^. .*i-"
hI{SION:
ilssance aho offers
ancing resource
er
!R0fHÊE3
ed a budger of S350,000 and
peilstart a¡out 250 buslneses
Pa¡o Alto. Some of those h.
a nail slon, a chlld ¡ealnc
ing flrE a luury ca¡ wash,
cde ccnter, a mqid senice
ers.
e exclted about this m€rger
! our combtneal strengtbs will
n mole succ$sful new busl-
' says Greg Salds, a Start
ounds and ve¡tqe capltalr
Sutter Hlll Ventu¡æ, in a
leâsé. "Combining Stårt Up's
bs in suÞpo¡tlDg SpânlEtF
te entreI¡reneurs ânal Rehaisscæssful
progmús ùelplng
i sEall bNl¡esæs accelerate
wll¡ nake both oflheæ caparvailable
tluou8hout the Sar
æ Penirsule."
silce üalÞs about 1,200
Ér yeã ln classes that rege
tr-week introductory øumes
€ù buslnss ÞlaÐlng crus.
're excited
Ìs merger because our
:d slrengths will result in
lccessful new businesses.'
Grcg sandr
Sla¡t Up co-loundet
o Ðnual budBet of about
lfob. The Eroqp lncubated
Run, â weU-kmwn women's
)parel retailer, and ttained
lmlaga, whowôn t}leSmall
. ádEilistratioD Buslnæs
¡f lhe Year awüd l¡ San
o tbis year ln palt for the
buslness ùe incubated with
Dce, It âls offors aa¡vanced
ElDg lÀcludi¡g pær gloup
,ne.on-one conguldng, busiubator
technology clæ6es
la-month ¡etvorklng and
tung sessloN.
ræ alco offæ a finùclhg
ætrter, does los ÞackaFing
artups Bet banE loans ed
,te resources a¡d nonprofit
ls æal tlut futrds startuÞ
te nonp¡oñt is fu¡ded w¡th
ì!t conbacts aDd thtfrgh
rd donadons froh fouala.
!þÞtions and hdlvidqals
€ Eerger, the orgâr¡lzation
tûcreæ lts budg€t to 92.?
{iller says.
lllll cøør lluræ, ùllnrs renlø
tsbt ¡nd qorlr trtnr|lnril fd tlË
J. SleËn h rorhld ¡t lÍl&299-lUt.
PAGE Ml[[: Company says it has invested ffin¡ ¡n East palo Alto holdings
c0llllluE ¡noil PtÊE I
dents ffom tbel¡ homs. Such equity
f[YatE€nts æ tyÞlcslly leveråged
with substuual debt givixg muaB.
ers buy¡rg powe¡ seveÞl fl¡es thè
equity.
CaIPERS is rhe lalgst U.S. pt¡ùltc
pe!6im tund Elth hore thÐ $260 billlon
l¡ assets. It loilag$ ÞeDsl on anrl
hes¡th beneÃts îd about 1,5 miuion
exlsttn8 ud reti¡ed employm of the
ståte, schæls ùil otb€r pùticipating
publlc agencis, Its ¡eâl€tate inv€tment
rêturns æ otten double-diBil
David Taran, a teletively weU.
known Eoley manager lI the va.lley
ilho sFæializes ln æmrerctal
lcal 6tatc, founded Page Mill sever¿l
yeam ago The comlÐy issued a twopaEgÞph
statffieDt dcfendlng ¡ts
âctions in East Palo Alto, syluc ¡ts
investments "have alrady b€gun to
trilsforn alons.reslectederea i¡to e
wfe¡ more livable coÞmunlty.,'
So fål Ps€e MiU say6 it hæ i¡vesterl
Su EillloE ùo improve itr Eæt Palo Atto
holdin€s, mâÌ¡Dg not on¡y "6Eetic
dlang6" but âlso "ulEmdBE to sêcurity,
ælÐic ænæms, Itghting, dral¡agq
pavl¡c ud mfins."
Tbe coÌ¡pa¡y sys it hæ m the ?0
em¡¡loyeæ who Gide ir Eæt Pa¡o .Atb.
Skeptlclvn
Wlllleln Webster, e memb€r of thg
ciblb nqt Stabtllzåtlon Bodd since
!99?, says he ls hopetul tìat page
Mil¡'s intentions üe gooal, but he ¡e.
maiE msæ. "ÎÌe pmp*ties ae
olal, ad if Mr. TaÌÐ anil Mr. (Jues
E.) ThonÞsoÞ meân to do what they
sat - tû acquln ild r€hab üieh" - it
ls Dot a Dl0blem, he sys. "(Pâge Mil¡
deYelopment dlrector) Mn ThoEDsn
is very ¡nsislent tbat they me¡n lo
provlde a setrice to t¡e coEEuity.
gut I ab skepticâl beøuse that's not
been the lntent of mst develolrers
who come to East Pålo Alto."
r,Yebster, RÐt Stebilizâtion B@d
Cbaima¡ Lee Her¡sotr æd Stil¡ey
Y-lð, a thùd boüil member, alt sat¡
they r€Ealn opÐ.ml¡ded about paae
Mills actir¿ittes. AII say theJr æ try.
lng to gein a b€tt€r uilerstaDdi¡g of
the lnvslorrs plers md Etionâle for
bellevlng lt has the legal light to rzise
rsts æ nuch as pFposed. The b@td
is seeklb8 ¡ega¡ counsl. they note
Rent lrææes sought by Page MilI
rÐge &oB aboul 20 percent to almost
50 ¡Ercent, Hæ¡ison seyE.
The Rüt Stabilizatlo¡ BHal's rol€
ls not æ ar adv@te for the tenmts,
Hmisol Ëy6, but æ e a¡btte¡ to q.
sure that both tenæls üd lafiUords
act spproprlately ùd ate træted equitably.
But, he says, "theE is a lot
of concm tlat leplE who bave been
(llvlrg h theæ apath€nts) for generatlons
will be pushed out tf t¡ese
ki¡il of rqt i¡seæes are a.llowed to
stmd."
Eg b€lieres thât Ðme renteF have
alæady left the propertfes,
Under the Rent Stablltzation progrm,
a landlord cil reset ù aÞütmentk
rent at lhe nûket's going rate
when oDe temt leaves ùd aother
comes in, he æd Webster sy, As loDg
as â tenant æEains in a unit howeeeB
trn¡ual tent increasæ æc bæed
o¡ the qtry-level ænt plu6 the rate of
as set by tìe federal govemmÐt
'lflellon ild ¡etlJled by the Rent Stabi¡iatlon
Boatd, New deyêloÞn6t is not
suùject to reut controls. Harrlson and
Webster ey.
the crux of tàe current disagree.
ment appeæ to be so-calleil "c*.
tlfi@οs of wimu legel rcnt" that
set the Ht ælltng æuålly for Eæt
Palo Alto ¡mallo¡ds h the tent stabl.
¡lation progËE, Also at lssue ls txe
"bãking" - ol saving - of "@ual
gsnera¡ adjEtmfits" or alloHble
rent inclæ€8, Ttebster says.
H,stori@Iy, {he nax,EuE a¡lowable
rent as reflected in tle certtfi.
cat€s hæ exæeded wbat tbe Mket
rBut I am skept¡cal
because that has not been the
intent of most developers who
tome t0 East Palo Alto.'
Wllllarn Wobster
Renl SlabilÞation Board
will beû, but Ìfürlsn ud Webster
clalb tbat ludlo¡ds have not heen
dlligeDt aùout ftltng th€ prcper Þa.
perwork whe¡ e n€w tenant oæuÞl€s
a Mit and a lew bæE r€nt on which
subsequent rmt t¡seæes wou¡d bo
frgured ls establlsherl
Page Miü sys that its proDosed l¡æass
cmpv with the clB orùinilæ
mal æ beld not only ihe lesat Ublb
for tlæ ænt-øntroll€d Impcrti6 but
elso mùket len¿s. Ths €mpâny als
dalEs that ft bâd origbaüy i¡ierded to
æk "g¡ailual a¡.nu¿.Ì nrt tEreises'
to help ofset, ln !ilt, lls tll Eillton
ir proÞerty iñIWmÐG, but that a
reænt clty prct$al for Dew mt re.
stteuo¡s forced tts h&¿ City ctriclals
@uld not h€ sdred bdæ ¡ros tim
to BDonù The ænDany says that it
wiu tnåke ml allorums ffr ruldents
úith "6!ecial nerds," itrcludllc thos
llv|Ig on governneDt-sponsored fued
incomes.
!¡rgest lwnol
The Page Ml¡l fu nd oMs about 1,300
of the mol€ than 2,500 eprtments
in the Rent Stabllizatton prosrÐ,
ed tìe cornpüy is eæi¡y the l$gest
4Þrhsnl owner ln the progrm,
Ìf/ehstet says,
CaIPERS spokesDm CIrk MCKIì.
ley, queried about thet agency's reactlon
to the comhunity unrest, says,
'CaIPERS has spoken with our pairt.
!e¡, ùd we ûe saüsfreil tl¡at our
partr€ris complyl¡B with the law Ðd
foUowlDg soud buEins practiæs.',
CalPÞRS genereìIy has a l0.yw
invæboent horlzon, he sys-
Acærdi¡g to CaIPERS dæutD&ts,
the Paæ MiU fr¡¡d's 'gwl is to tar8€t
(rea¡ estate) i¡mb¡Ðts lo mte yalue
throwh fæE @ reposltioni¡g, ÞdÈ
velopmeþt or cobreBion alurg wlth ac.
tual déveloÞMt of náIestate wLs."
Mcl{i¡ley would not embelllsh on
t¡e d€grc to whid¡ CaIPERS tnvdlves
lbelt in tb lÞtbss' bEins stat8
gies ùd implementatio[ At ¡east one
developer iñilirF wlth tle businæs
relåtiobsblps, how€E, says that eù.i¡e
lllvAtîmt frEds sucb æ Pace Mi¡l,s
ere oflên ønsideì€d "dlætioury,'
iræly!¡g that the mrey ma¡acÈ hð
bmad hdependmtabl¡lty tow0k æ he
o¡ slrc ffi f il, i¡ fact C¿ÌPERS míss
æmlderable ovmÍght.
"Yes, tt is 'dlscretiona¡y,, but you
are oIÞrâUng wlthiu a lltde bo¿ ud
CalPlRS trrould ærteinly be awæ"
of Page Mill's acttvlles end plans, he
says.
He also notes ibat whtle Tfet
€florts ha?e been met wtth skepti
clsm, a valid arguænt €n be
made that they wul bsDefit thc
comunlty end ebeady have.
It is also wort¡ notlng that spårt
Eent rents across Silicon Va:lley, âftù
years offauint ad tÀen stagnat
ing, hæo 6tarted to rise across the
b@rd, driv€n by job lacasee; the
cflsls in housing finaÞ, whlch is
pushhg so¡oe folks into læta¡s who
miBht otherwlse buy; end the reglon's
chronlc fallure to build enough hox.
irg to meet demmil.
The Page Mill sFategy ap¡eæ to reJy
on what mighl be callcd BægrsÞhic übltr¿ee.
A]l of th€ apùtñent6 in queetþn
slt ln Eæt Palo Alto ln a r€latively
wow fbbon of lend fÐDting U.S.
10f. But the¡r lffit¡ons ate a stone's
throw froE the büile¡s of Palo Alto
u¿l MeIùo Pa¡*. East Palo A¡to real
estate velue8 have hiÊtorlcally beq
depressd by the tom's ¡eþutation as
b€lng crlne.rHden ed imÞovellshed.
But if the brand, at Ieæt lr thls smau
g€o8raphy, 6uld be shifled to be more
closly aligÌeil vith that sf PaIo Alto
Ðd Menlo Pùk, both of whjcÌ¡ enfoy
stat$ as wælthy enclaves, the Þæt
Palo Alto r€el estate valuæ could be
dramatlcally lnl)rcved.
Eeyonil percepllon æ othel fec.
tors. East Palò AIto ls ôtralegtcálly
located wjthin the gouth Bsy. palo
Alto i6 home to tho Sta¡füd Resøch
Pùk and is a EeEeEdous jobÉ cente¡,
me¡lng rÐby houslng, particulsrly
the ¡ss ãpeßlve housfbg tùat is l!
East PaIo Alto, atkactlee to worksrs,
lte towD, whlch meæùes on¡y 2.5
sqlæ mlles, also sits about esuidistant
froE Sù Jose to the æuth æd
San F¡ancisæ to the north, Ðd @F
næts dllectly to the Eest BAy via the
neilby DuDbartoD Brldge.
The tDm hö udùgone soÞe slg.
nlfiøt but at times conùovelslel
gentlifi@tim al¡€ady, with the øn
st¡uctioh of a new fetâìl Þower center,
lnduding a huge IKEA, and r Fou
Seæons hotel ând Datchirg Clse A
omce torers ln the Þast five yqrs.
Both developments also frcnt U.S. tol
md sit in c.lose proximlty lo page
MllJ.'s acquisitlons.
The wident fcù is that the tom's
historically minorlty population -
åìmost 25 peÌæDl Afllcü.Arer¡can
ud about 60 percÐt Hlspan¡c, ac.
cording to the U.S. CeEus Bureeu -
Elll be deprived of tìe econonlc beDefits
suc.b new genlrlficalion csutd be
exlÆted to briug.
The rent board i¡tends to æk t}le cþ
coucll for East PaIo Alto to atlot $?,S(b
for ¡egåI æmel to sduis It ø hw b
preed. WeNer and Ha¡rrffi say. Un.
til the isuæ ru be nsolved, Webstq
slE hc wÐts to ask the ffiùto a¡¡
Dre a reDt û%. Hmisn disouts
that posslbiJity, howvÈ.
"We E¡mply don't heve enoußh i!formatlon
about the þgãlity cf dotng
that," he says, 'ÌYe cån't unlleteHlly
btrilse we have æncerned clttzeDs
take sLl$ anil penauze Page Mill."
Page Mlll says it is "coE¡nitted to
seel¡g the project through not only
for t¡e berefit of Nr ræidents btÈ for
all of Eþst Pâlo Alto."
3fi1ñ!I Slf,0ÍS0l 3m¡nd sue fütlE
SqtEs.humd. Rtsó ñÈ d ({08) 23f1853.
__J
PM-1868

Page MillProperties News Clips, Jan.3-9,2007
January 9,2007
East Palo Alto freezes rents
Silicon Valley / San Jose Business Journal,
The East Palo Alto City Council passed an urgency ordinance Tuesday evening
imposíng a six-month rent freeze.
The unanimous vote was in the wake of a meeting late last week in which the
emergency measure failed because only four of the council's five members attended
the session and only three of those were in support of the measure.
About 1,300 rents were hiked by landlord Page Mill Properties on Dec. '1, ranging
between $36 and $150.
Chris Griffith of the firm Ellman, Burke, Hoffman & Johnson, represented Page Mill
Properties and said the decision puts the council in legaljeopardy. The company's
CEO, David Taran, said a lawsuit is next.
Page Mill Properties, which has acquired 1,620 apartments in the community over
the last 15 months or so, came under fire from some members of the community
after it proposed to raise rents on about 1,000 units. About 1,300 of Page Mill's units
are governed by the community's Rent Stabilization ordinance, which covers about
2,500 apartments in all.
ln general, the law allows landlords whose properties are covered by it to raise rents
annually by the rate of inflation as set by the federal government. ln question is
whether those annual inereases can be "banked" or saved from year to year when
they are not applied, and then imposed later when the market will bear.
Also in question is the setting of the base rents on which the annual increases are to
be applied.
PM-1869

January 9,2007
City freezes rent hikes
Move could land East Palo Alto in court with developer
By Banks Albach / Daily News Staff Writer
ln a bold move sure to prompt a legal challenge from the city's largest landlord,
the East Palo Alto City Council on Tuesday passed an urgency ordinance
freezing rent hikes for the next six months.
The unanimous decision, which takes effect immediately, was prompted by
roughly 1,300 rent hikes brought on by Page Mill Properties on Dec' 1 and due
on Feb. 1. Most of the increases ranged between $36 and $150. But some rents
peaked much higher: One tenant received a 47 percent increase for a twobedroom
townhouse that was severely undervalued, the company's development
director Jim Thompson said.
The council called a special meeting last Thursday to explore passing the
ordinance, but the absence of Council Member David Woods made it impossible'
Under state law, urgency ordinances need a four-fifths vote, so it was put on hold
after Council Member Peter Evans abstained last week, citing numerous
irregularities and fear of litigation.
lnstead, the council passed a normal ordinance that would have taken effect a
week after the rent increases are due.
Woods made it clear early on which way he was swayin$.
"To not pass it as an emergency ordinance would be detrimental to the tenants,"
he said before voting. "l think it's very important we treat this as an emergency."
The city is contending that the increases are illegal under East Palo Alto's longstanding
rent stabilization program, which caps rent increases at around 3-2
percent per year, a cost of living adjustment. But the city's rent control, which
regulates about 2,500 units, 1 ,600 of which are owned by Page Mill, also runs on
a system using certificates of maximum rent, which the city issues annually.
Over the last several years, the actual rent for hundreds of units has dropped,
while the city continued to adjust the certificates at a higher rate. Page Mill based
the rent increases on the higher of the two numbers, a discrepancy that has left
hundreds of tenants in a tight squeeze between an outdated city ordinance and
Page Mill.
PM-1870

"This is mOre than a legal issue, this iS a moral issue," Loma Eaves, a Page Mill
tenant, told the council. "l ask you to support this moratorium tonight."
Page Mill's attorney, Chris Griffith, of the firm Ellman, Burke, Hoffman & Johnson,
told the council it is in violation of numerous laws, and after the decision, Page
Mill's CEO David Taran said he plans to sue.
"We have no choice," Taran said. 'When we bought those properties, the city told
us the certificateS were the law," Taran Said. "lf anyone'S been tricked, ifs uS."
Griffith is claiming that the city may have acted illegally in how it passed the
ordinance, that it violated state election law by passing the moratorium, which
affects an ordinance passed by popular vote and can only be altered the same
way, and that Council Member Ruben Abrica may have a conflict of interest
because his name is on a 1O-year-old Page Mill lease.
Abrica's possible conflict of interest was one reason why Evans abstained from
last Thursday's vote.
Abrica defended his position, however, claiming he oniy moved into the unit six
months ago and pays his brother 30 percent of the rent. City Attorney Michael
Lawson told the council that Abrica's share of the 7 percent increase set to take
effect on Feb. 1 is not enough money to mark a conflict of interest.
The big question - which could be answered in court - is how much Page Mill is
allowed to raise rents. lf the certificates reflect numerous years that had no
increases, can Page Mill bank those amounts and combine them in a single
increase?
Outgoing City Attomey Michael Lawson and outside counsel Rick Jarvis are
confident the answer is no; Griffith is banking on Page Mill's right to iaise rents to
the limit on the city-issued certificates.
Uploaded: Wednesday. January 9, 2008,2:47 PM
Apartment company plans to sue East Palo Alto
by Don Kazak
Palo Alto Onl¡ne Staff
Page Mill Properties, which owns more lhan 1,600 apartments in East
palo Rlto, will sue the city for passing an urgency ord¡nance Tuesday níght I
that prohibits rent increases greater than 3.2 percent for the neK six
share: Il :Ãi # @ ç,"ã Hil
PM-1871

months, according to a company spokesman.
The moratorium on rent increases is illegal, according to Chris Giffith, an attorney for Page Mill Properties.
The city considered the rent moratorium because hundreds of East Palo Afto tenants rece¡ved rent
increases that exceed the cunently allowed 3.2 percent, with many increases 15 percent or greater.
A company spokesman, Lance lgnon, also noted, however, that several hundred Page Mill Properties
tenants did not receive any rent increase.
"By refusing Page Mill Properties' repeated offers to pursue negotiations and reach common ground, Page
Mill Properties has no alternative but to seek legal action," lgnon said.
Both the company and city fully expected to end in court. Each had its own court reporter at the last two
City Council meetings, recording every word spoken about the proposed rent rnorator¡um.
The council fa¡led to muster the necessary four votes to enact the moratorium last week as urgency.item,
with Councilman David Woods absent and Councilman Peter Evans abstaining.
But Woods voted for the moratorium Tuesday night and Evans, surprisingly, also supported it after
criticizing it last week.
The way the city enforces its rent stabilization ordinance does not conform to state law, Griffith contends,
an allegation that lawyers for the city strongly dispute.
Page Mill may also challenge Tuesday nighfs vote on the grounds that itwas not properly noticed uncjer
the state open-meeting law, which requires 72-hour advance notice of agenda items. The City Council
agenda had the rent moratorium on its agenda Tuesday night, but as a regular ordinance to go into effect
30 days later, not as an urgency ordinance.
ïhe City Council enacted the rent moratorium as an urgency ordinance so it can go into effect
immediately, before the scheduled Feb. 1 rent increases for Page Mill tenants go into effect.
Tuesday, January 8,2007
EPA counc¡l reverses itself on rent moratorium
Councilmen Peter Evans and David Woods supply votes that were missing 4ast week
å"i""',î'?JËi"?Ël,f'xÏì: îiåiff:l,liåfi:3äi:J#åi"'1i,i3,i,, snare, f
tonight (Tuesday) by the East Palo Alto City Council -- reversing a failure
to enact such a moratorium lasl week.
The action was passed 5-0 as an urgency ordinance that takes effect immediately.
*r {} Ð çå rs
The legality of the action, however, was questioned by Page Mill Properties, the company that tiggered its
consideration by notifying hundreds of tenants in its 1,600 apartments of rent increases would take effect
Feb. 1 that exceed 3.2 percent -- the current increase allowed by the city's Rent Stabilization Board. Many
of the increases were to be 15 percent or higher.
Pl//l-1872

"There is a question of sufficient notice for an urgency ordinance," Chris Griffith, attorney for Èage Mill
Properties, said.
State law requires 72-hour not¡ce of agenda items, and the rent morator¡um was listed on tonight's agenda
as a normal ordinance, to take effect in 30 days, not an urgency ordinance. The council failed to pass an
urgency rent moratorium Jan. 3 on a 3-0-1 vote, with Councilman David Woods absent and Councilman
Peter Evans abstaining. Fourvotes are required for such an ordinance.
Evans, who said he wouldnt vote for an urgency ordinance last week because it would trigger a lawsuit
from Page Mill Properties, voted for it ton¡ght, as did Woods.
The rent moratorium is almost certain to end up in court, City Attorney Michael Lawson said' "ln all
likelihood, Page Mill Properties will sue the ciÇ and we ll see them in court," he said.
Griffiths claimed last week that the proposed rent moratorium would be illegal because of the way the city
is enforcíng its rent-stabilizatìon ordinance in calculating the maximum allowed rent increases each year.
Now, the company may also challenge whether the action tonight was properly noticed under slate law.
Woods, who was absent last week, said it was critical that the ci$ take emergency action before the Page
Mill Properties Feb. I rent increases go into effect.
He said he hoped the ciÇ and Page Mill Properties will "now sit down and work it out," regarding the
different interpretations of the city's rent regulations.
Friday, January 4,2408
Push for East Palo Alto counc¡l rent
freeze fails
Silicon Valfey I San Jose Business Journal
The five-member c¡ty council for the c¡ty of East Palo Alto voted down an emergency
measure Thursday night to freeze rents in a special rent-control district.
But a lawyer working on behalf of affected tenants says a like measure can still be
approved.
'We were disappointed, but we haven't given up hope," said Daniel Harris, whO is
representing a group of affected tenants.
Only four of the council's five members attended the session, he says, and of those
in attendance, only three supported the measure, not enough to pass-
Palo Alto's Page Mill Properties, which has acquire d 1,620 apartments in the
community over the last 15 months or so, has borne the brunt of sharp critlcism from
some members of the community after it proposed to raise rents on about 1,000
PM-1873

units. The company, led by Silicon Valley real-estate developer David Taran, has
excited deep interest and Some suspicion for what some view as an attempt to
monopol¡ze the community's rental market. About 1,300 of Page Mill's units are
govemed by the community's Rent Stabilization ordinance, which covers about
2,500 apartments in all.
"l think it is in everyone's best interests to try to avoid litigation and to seek
compromise," said Lance lgnon, a spokesman for Page Mill-
ln general, the law allows landlords whose properties are covered by it to raise rents
annually by the rate of inflation as set by the federal government. ln question is
whether those annual increases can be "banked" or saved from year-to-year when
they are not applied and then imposed later, when the market will bear- Also in
question is the setting of the base rents on which the annual increases are to be
applied.
Gouncit falls 1 vote short of passing rent'freeze law
Palo Alto Daily News (paloaltodailynews.com)
By Banks Albach
Jan 5, 2008
Despite pleas from dozens of tenants facing $150-$200 per month rent
increases, the East Palo Alto City Council came up one vote short of enacting an
emergency ordinance to freeze rents.
With David Woods absent and Peter Evans abstaining, the council Thursday
night couldn't muster the four votes needed to pass the ordinance.
page Mill Properties triggered consideration of the ordinance when ii recently
raised rents at 1,300 of almost 1,600 apartment units it owns in the city from a
minimum of 7 percent to as much as 47 percent in one case.
Evans said he is concerned that a rent freeze could embroil the city in a lawsuit
and prefers that staff try to sway Page Millto voluntarily'lreeze the rent
increases, which are set to take effect on Feb. 1.
"We need a chance for these people to make uS an offer," Evans said before
abstaining.
The three other councÍl members, however, felt comfortable with staffs
recemmendation for an emergency ordinance. City Attomey Michael Lawson and
outside attorney Rick Jarvis said they are confident the rent increases are illegal
under the city's rent stabilization program because they exceed 3.2 percent, the
normal rate of inflation allowed under the ordinance, Page Mill's attorney, Chris
Griffith, contends the hikes are well within the law'
Pf\A-1874

Jim Thompson, Page Mill's development director, told the council his company
has waived or reduced the increases for tenants who are disabled, elderly, on a
fixed income or facing other challenges. He also repeatedly said his door is open
for any tenant who wants to voice concerns about the rent hikes.
lf a lawsuit eventually is filed, its focus likely will be the city's long-standing rent
stabilization program, which sets maximum rent increases based in part on a
cost-of-living formula that is supposed to be updated annually and reflected on
certificates.
But after the dot-com bust, rents dropped and the certificates stopped reflecting
actual amount paid, even though city stafl continued to sign off on them. Page
Mill used the figures on those certificates as a base for the new rent increases,
not what tenants actually were paying.
Evans blamed the predicament on the outdated program.
"These (tenants) wouldn't be burdened if the city was being run properly," he
said.
Page Mill also has fumbled along the way. The company first lobbed tenants with
a 30-day notice, though state law requires a 60-day notice for increases that
exceed 10 percent. The company also raised rents for numerous tenants with
active leases- Page Mill has since rectified both mistakes.
But a third oversight surfaced Thursday, when tenant Jamie Schiessler told the
council her maximum certificate shows $635 in rent and her Feb. 1 rent increase
would take it to $745, or $138 above the legal limit.
"We're not perfect," Page Mill CEO David Taran said. "lf that's a mistake, we'll fix
¡t."
Some of almost 100 tenants who filled the council chambers yelled when Evans
explained why he would abstain.
"l think it's a joke," said Brian Pass, whose rent is supposed to jump from $940 to
$1,375. "l think (Evans) is scared of using our tax dollars to fight this."
Numerous tenants pleaded with the council to enact a moratorium, citing not only
the steepness of the rent hikes but also noting that many units are dilapidated,
moldy and full of cockroaches.
"This is an opportunity for you to represent the people - rne and them," said
Edward Burns, an East Palo Alto resident.
PM-1875

Lawson said the council might be able to get a fourth vote for an emergency
ordinance next Tuesday if Woods shows up.
"That is definitely a possibility," he said.
Thursday. January 3, 2008
Emergency meeting to consider East
Palo Alto rent freeze
SilScon Valley I San Jose Business Journal - by Sharon Simonson
The city of F¿s1 Palo Alto has called an emergency meeting of its five-member
council to consider a six-month treeze on proposed rent increases for tenants in
nearly 1,000 apartments in a special rent-control district in the community.
The proposal is being viewed with deep concern by a Palo Alto-based developer that
has acquired in excess of 1,600 apartments in this tiny Silicon Valley town over the
last 18 months and is seeking the greater rent payments to compensate it in part for
what it says is an $11 million capital improvement plan for the properties. That's on
top of more than $100 million that Page Mill Properties has spent to acquire the
East Palo Alto apartments, according to public record.
Page Mill's activities in East Palo Alto are being backed by the California Public
Employees'Retirement System, which has given the company $100 million to
invest on its behalf. Page Mill is not limited to investing in East Palo Alto under its
agreement with CaIPERS. Any proposal that suppresses rents in the community or
changes the regulatory framework could adversely affect Page Mill's financial
returns.
Jim Thompson, chief development officer for Page Mill, says the landlord will
vigorously contest the council's proposed measure, starting with a questioning of
whether a legitimate emergency exists. Three-hundred forty Page Mill tenants have
received no rent increase, he says, and the average rent increase for the remaining
units ís less than $90 a month or about 8.5 percent, based on Page Mill's internal
records.
"As of today, we have gotten 13 (letters) from tenants giving us 30 days' notice that
they intend to move out (because of the proposed rent increases), and the city has
received 18 petitions from tenants seeking relief from" the proposed rental-rate rise,
Thompson says. That's a tiny fraction of the 1,620 units that Page Mill owns, he
says, and "shows that we don't have an emergency."
PM-1876

Twelve tenants have contacted the company to seek relief because they are
disabled or reliant on public assistance for their incomes. Page Mill has reviewed six
of those cases so far and has agreed to grant increase waivers, he says.
Page Mill has embarked on an ambitious acquisition campaign in the community,
buying up apartment homes on either side of the University Circle development over
the last 18 months. That A-grade office and hotel complex is a centerpiece of East
Palo AIto renewal efforts.
Thompson declined to say if Page Mill continues to acquire properties in the area nor
would he give statements to describe Page Mill's long-term plans for the community.
He denies that Page Mill has any sinister aims to force tenants from the complexes
to make it easier to redevelop, as some have alleged.
But an attorney representing the East Palo Alto tenants says he is deeply skeptical
of Page Mill's intentions. Daniel Harris says the city council needs to act immediately
"to avoid displacement."
"These are people who will be homeless and living on the streets," he says.
"Honestly, I think if they (Page Mill) had semi-altruistic motives, we would have
L^^-l ^L.¡. '* i* rr ha tr-f
^^.,ha.a
io ataarhr a nlan in nlano anrl fha fqnf fhal f harr
will not go public with their p¡ans is very suspicious. To me, it's clear they want to
bulldoze and rebuild. Why else try to monopolize housing in East Palo Alto?"
Pl{l-1877

Page 1 of I
Page Mill Properties Sues East Palo Alto Over Rent Control Ordinance
San Jose Business Journal
By
Thursday, t:!r.O- 77t 2OO8
Page Mill Properties said late Wednesday it filed a lawsuit in San Mateo County Superior Court to
forðe the city of East Palo Alto to rescind an urgency ordinance that retroactively freezes rents on
all rent-controlled apârtments.
The suit alleges that the City Council's action was "arbitrary and capricious, lacking in rational
basis, and contrary to law."
The lawsuit further contends that the ordinance should be rescinded because Councilman Ruben
Abrica signed a lease for one of the affected apartments and therefore "has a personal financial
interest in the decision to freeze rents," Page Mill said.
A hearing is scheduled for Feb- 21 on the issue.
Last week the City Council passed an urgency ordinance imposing a six-month rent freeze.
The unanimous vote was in the wake of a meeting a week earlier in which the emergency measure
failed because only four of the council's five members attended the session and only three of those
were in support of the measure.
About 1,000 rents were hiked by landlord Page Mill Properties on Dec. 1. About two-thirds of the
units saw rent increases ranging between $36 and $150; the remaining units saw rent increases
higher than that.
Palo Alto-based Page Mill Properties, which has acquired 1,620 apartments in the community over
the last 15 months òr so, came under fire from some members of the community after it proposed
to raise rents on about 1,000 units. About 1,300 of Page Mill's units are governed by the
community's Rent Stabilization ordinance, which covers about 2,500 apartments in all.
ln general, the law allows landlords whose properties are covered by it to raise rents annually by
the rate of inflation as set by the federal government. ln question is whether lhose annual increases
can be "banked" or saved fiom year to year when they are not applied, and then imposed later
when the market will bear.
Also in question is the setting of the base rents on which the annual increases are to be applied.
"The court agreed that we stated a legitimaie cause of action and ordered an expedited process for
reaching a cóndusion on the merits of our case, so we are very pleased with this outcome," said
Chris Griffith, a Page Mill attorney with Ellman Burke Hoffman & Johnson-
file://C:\Documents and Settings\lweir\Local Settings\Temporary Internet Files\OLKl22\a... l124/2008
PM-1878

CAA News Page 1 ofl
I .ft.. 1.Êat
l*_I.*t=
CAA ews
CAA Legal Fund Takes on East Palo Alto
Rent Gontrol Ordinance
CAA's Legal Fund Trustees and Board of Directors have voted to legally challenge East Palo Alto's rent control
ordinance, which they argue violates both local and state law.
At the heart of the matter are amendments to the local law that interfere with a rental property owner's ability to
increase the rent when there has been a change in.tenancy. This is a clear violation of the State's Costa-
Hawkins Rental Housing Act, a law sponsored by CAA in 1996, which protects property owners from rent caps
like those proposed in East Palo Alto.
East Palo Alto's Rent Stabilízation Board (RSB) proposed changes to the locaf rent control law following
concerns from renters about recent rent increases by property owners in the City. ln response, the RSB has
proposed to roll back all rents in the City.
Additionally, attorneys for CAA argue the RSB does not have the authority to amend or revise the City's
ordinance without first placing the matter before the voters. Since the East Palo Alto Rent Stabilization
Ordinance was passed by the voters, the Elections Code provides that laws enacted by the voters can only be
amended by the voters
http://caanet.informz.neUadmin3l/contenlternplate.asp?sid:10213&brandid:3136&uid=7... 8/18/2008
PM-1879

PAGEMILT
PROPERTIES
lS0rUmeden Blvd., Suite 700
SanJose, CÁ 95113
kt 408.291.9600
Fex: 408.293.9690
www.pagemill.com
Corpotate Os¡nets
RncBNtNEwS
. SanJose BusinessJoumal, "ÉfP seeking $80M fot Peninsula sitert'February 27,2003
. San Jose Business Journal, "How low can it go?" January 10,2003
- Inktomi sells its headquartets for $160 per foot, having bought it for $437 per
foot in,{.ugust to unrvind a synthed.c lease
- Qwest sells a Sunnyvale offrce/R&D building forff62 per foot, having purchased
it ftom Divco fot more than $320 pet foot
Distressed Financial Owners
'Wall StreetJoumal. "Tishrnan Tov¡er Sale: Tech Fallout?" February 70,2003
Credit Suisse Fi¡st Boston CMBS Market \üatch \feekly, "Delinquencies in CMBS:
How High?" January 24, 2003
Fitch Ratings Commercial Motgage Special RePort, "Ups and Downs of CMBS
Rating Actionsr" Decembet'16, 2002
- 2002 downgrades exceeded 2001 downgrades by a factor of more than 4 to l,
exceeding the pace of every otlet year since 1994
- Fitch expects dehnquencies to double un2003
PM-1880

FitchRatings Strucfured Finance
Commercial Mortgage
Special Report
Analysts
Karen Nelson T¡ebach
t 212908-0215
karen. trebach@f itchratings. com
Mary MacNeill
1 212908-0785
mary.macneill@fif clratings.com
Fitch Ratings would like to acknowledge
Terrence Ellison for his connibulion to lhis
rePort.
December 161 2OOZ
Ups and Downs of GMBS Rating
Actions
I Summary
Through 11 months ended Nov. 30, 2002, Fitch Ratings upgraded
352 tranches in lll deals, downgraded 126 tranches in 51 deals,
placed 115 tranches in 40 deals on Rating Watch Negative (RWN),
and affirmed the remaining tranches, which exceeded 3,400 tranches.
These actions follow 511 reviews of Fitch-rated commercial mortgagebacked
securities (CMBS) transactions totaling $16l billion. As would
be expected in a weakened economic environment, the pace of
upgrades in 2002 (21.7% of all deal reviews) fell short of 2001
(31.3yù, and the 2002 downgrades (10.0%) far exceeded the 2001
downgrades (2.3Vù.In fact, the pace of downgrades exceeded the pace
of every other year since 1994. The pace prior to 2002 averaged 4.3o/o
per year. The 2002 downgrades a¡e ín line with Fitch's predictions
earlier this year.
As in .previous yer¡rs, upgrades were mainly due to paydowns of
multiborrower transactions, specifically older deals with expired
iockouts anci fioating-rate deais with short'term maturities.
Downgrades, however, were mainly due to íncreased realized losses ærd
expected losses on defaulted loans and loans in special servicing. Types
of loans that were problematic include hotel, health care, and retail'
Although weakened economic conditions and real estate markets across
the U.S. affect CMBS fansactionsn the level of defaults is not as great as
may have been expected or a¡i compared to the real estate recession of
the early 1990s due to more stingent underwriting guidelines' Each
tansactior¡ however, must be analyzed on its own merits.
To help facilitate market liquidity, Fitch monitors every rated
transaction to ensure that current ratings accurately reflect current
credit risk. Several market situations in 2002 necessitated an increased
number of deal reviews. In fact, the number of deal reviews increased
48%o from 2001. Fitch reviewed 3l large loan transactions for
adequacy of tenorism insurance and four credit tenant lease (CTL)
transactions and 104 multiborrower transactions due to the bankruptcy
frling of a rnajor retailer, Kmart.
I Outlook íor 2OO3
Fitch continues to expect upgrades for seasoned multiborrower
transactions that experience sizable paydowns and for deals with
floating-rate loans that repay quickly. In addition, there are several
single-borrower transactions that have exhibited strong petformance
over the past few years and, due to long-term leases or strong
amortization schedules, are likely to be upgraded in 2003' Fitch
expects specially serviced loan resolutions to cause downgrades ofthe
lower rated tranches of multiborrower transactions.
www.fitcfìratings. com
PM-1881

FitchRatings
Multiborrower transactions generally are subject to
the barbell effect - the top ofthe structure becomes
better and the bottom becomes worse. As loans pay
ofl the credit enhancement levels increase on the top,
and upgrades are warranted. Often adverse selection
creates problems in the transaction, causing interest
shortfalls and realized losses to the bottom classes,
and downgrades are waranted. A sfiking example is
the Nomura Asset Securitization Corp. (NIASC)
1994-MDI transaction, which has two loans
remaining, one now real estate owned (REO) and one
a performing hotel pool loan. The bottom classes @-
34, B-38, and B-3P) are currently rated 'Þn due to
losses realized on the disposition of a retail asset. The
B-1 class and the B-2 class are rated 'CCC' and 'C',
respectively. The rcmainÍng classes, A'3 and its
corresponding interest-only class, are rated 'AAA"
Although these classes are currently on RWN due to
interest shortfalls, full recovery is expected.
According to Fitch's 2002 CMBS loss study, Iôss
severities increased to 33.8Yo in 2001 from 18.5% in
2000. Fitch expects the loss severity to increase in
2002 and 2003 to approximately 50cá, as most
estimates of market r€covery are not until late 2003'
Fitch expects delinquencies to double in 2003, as the
U,S. economy remains in a recession and commercial
real estate problems typically lag the economy (for
more information, see Fitch Research on "2002
CMBS Loss Srudy," dated Nov. 4, 2002, available on
Fitch's web sile at www.Jìtchratings.com).
For the four main properly types, Fitch is expecting
performance to deteriorate. Although hotels are
starting to show some stabilization, revenue per
available room is at a level far below what was
underwritten. Office properties with leases rolling in
the next couple of years will be faced with increased
concessions and lower rents, as almost all office
markets are -very soft. Fitch still expects more
bankruptcies and liquidations of national retailers, as
consumer spending is expected to decline in 2003'
posing additional stress on retail loans. Multifamily
delinquencies are on the rise due to increased
competition and the fact that many potential tenants
have purchased homes due to the current low interest
rate environment. Homeownership is at record levels
in the U.S. Property performance expectations would
be considerably worse with any future terrorism
attack, war with lraq, or double-dip recession.
Despite the gloomy outlook, Fitch expects upgrades
to continue to outpace downgrades, especially due to
investment-grade classes of seasoned deals-
Ups and Downs of CMBS Rating Actlons
Structured Finance
However, Fitch projects that in 2003, the ratio of
upgrades to downgrades will be similar to that of
2002, which reflects a higher number ofdowngrades
compared to historical trends, Fitch's enhanced
surveillance system, Fitch S.T-R.S., has an assigned
perspective for each deal's future rating. Based on the
perspectives assigned, Fitch predicts that for every
2.5 deals that are upgraded, Fitch will downgrade one
deal in 2003. This pace is compared to 2.2 to I for
the first I I months of 2002. The average pace for the
four years prior to 2002 was considerably highe¡
with nine deals upgraded for every one downgraded.
(Fitch S.T.R.S. surveillance information is available
on Fitch's subscriber veb site. For more ìnformalion,
see Fitch's w eb site at www.fit chratings. com.)
I 2O02 Upgrades
Most upgrades thLrough ll months ended Nov' 30,2002
a¡e due to paydowns of muìtibonower deals in
investnent-grade tranches, often in seasoned deals- A
recent increase in upgrades for less seasoned deals is
due to the floating-rate nature of the loans with shorter
loan terms, Seven ta¡rches from two 2001 vintage deals
were upgrarÍed, one of which was the GP Capiial
Frurding Corp.2001-A deal, which had one class placed
on Rating Watch Positive in December 2001, only
l0 months after the closing of the tansaction, and four
classes upgraded in August of this year after a Iarge
number of p,repayments and loan payoffs at maturity' A
totzl of 42 upgraded tranches ûom 2000 vintage deals
surpasses the number ûom 1999 and 1998 vintages due
2002" Upgrades by Rating Category and
Origination Years
30
25
20
15
10
5
0
El 1992-1994 r 1995
I 1998 B 1999
(Number of Tranches)
n1996 B1997
N2000 812001
'AA-'to 'A-'þ'A+ 'BBB-'to 'BB-'to 'CCC'b
'¡A+ 'BBB+ 'BB+ 'BC
'Actions through Nov. 30, 2002.
Pre-2002 Rating
PM-1882

FitchRatings Structured Finance
2002" Upgrades vs. Downgrades by
Orlginatlon Years
100
90
80
70
60
50
40
30
20
l0
0
@ Upgrades lDowngrades
'1992- 1995 1996 1997 1998 1399 2000
1994
*Actions through Nov. .3o,2002.
Yearc of Originafion
in part to one deal, SASCO 2Q00-Q, which was
upgraded tv'¡ice and had upgrades on all tranches.
Of the 352 tranches upgraded, 95 tranches were
previously below investrnent gtade, mainly from
seasoned deals. Of these 95 tranches, 41 were
upgraded to investment grade due to a large
percentage of the deal paying off rather quickly, as in
the case of KS Mortgage Capital 1995-1,
The 1996 vinfage deals had the most upgrades ofany
other vintage. In addition, the 1996 vintage had the
fewest downgrades, yielding the best upgradedowngrade
ratio - for every 15.5 upgrades, one
downgrade (see chart above).
I 2OO2 Downgrades
For the first 11 months of 2002, Fitch downgraded
126 tranches in 34 unique trarisactions in the course
of 5l deal reviews, including t8 CTL reviews,
20 multiborrower transaction reviews, six singleborrower
reviews, and seven large loan transaction
reviews. Again this year, the main drivers for the
downgrades were realized losses and expected losses
or poor performance of the more volatile property
types: health care; hotel; and CTL transactions with
weakened credits. A newer trend for this year's
downgrades was losses expected on or the poor
performance of retail properties, especially anchored
strips or regional malls that have lost anchors, often
intertiary locations.
Nine tranches were downgraded from investnent grade
to below invesfrnent grade mostly due to the poor
performance or expected losses on one or two
significant loans in the pool. The transactions include
fhree ìarge loan tansactions Q\,IASC 1994-MDI,
COMM 2000-FL2, and COIvOvf 2001-Il), a singleborrower
tansaction (Opryland), and a multiborrower
hansaction with a myriad of issues ranging ûom Kmart
exposure to hospital and medical offrce loan exposure
(Asset Securitization Corp. [ASC] 1997-D5). A total of
28 other inveshnent-grade banches were downgraded
mostly due to ttre downgrade of a dependent rating
(Kmart CTLs) or poorly performing hotel loans in
multiborrower and single-borrower tansactions.
The large amount of downgrades ofthe 1994 vintage
(36 tranches) is driven mainly by Kmart CTL
transactions (CNC 1994-1 and Kmart Funding) and
NASC 1994-MDl. These deals were reviewed several
times in the year. Similarly, the 1995 vintage
downgrades (18 tranches) were due to a Kmart CTL
(Kmârt Corp. 1995) reviewed several tirnes and hotel
and health care loans causing problems in
muitiborrower tarrsactions. The 1997 vin'øge
downgrades (22 tanches) were mostly in
muttiborrower transactions with poorly performing
retail and hotel loans. One 1997 transaction, RMF
1997-1, was downgraded due to its exposure to poorly
performing skilled nursing loans (see chart below)'
In addition to the Kmart CTLs, two transactions were
downgraded due to Fitoh lowering its corporate rating
2002* Downgrades by Ratlng Category and
Origination Years
, o
1ô
14
12
l0
o
4
2
0
ä 1S93 ¡ 1994
E 1998 Ñ 1ee9
(Number ofTranche-s)
ú1s95 81996 I1997
ø2000 82001
'MA' 'AA'lo 'A- to 'BBB-'þ 'BB-'to 'C'to
,AA+ 'A+ ,BBB{ 'BB+ 'B+'
'Actìons through Nov. 30, 2002.
Pre-2002 Ratlng
Ups and Downs of CMBS Rat¡ng Actions
PM-1883

FitchRatings Structured Finance
on Heilig Meyers Company and BellSouth
Telecommunications, Inc.
To date, only one multiborrower transaction was
downgraded as a direct result of Kmart exposure
(GMAC 2000-C2} Several other transactions were
downgraded due to Kmart exposure in conjunction
with other hotel or retail loans with expected or
realized losses (15 tranches). Oftrer multiborrower
downgrades were caused by the deterioration ofretail
(five tanches), health care (10 tranches), and hotel
Ioans (four tanches). Many of the lower rated classes
also experienced interest sho¡tfalls,
A total of 22 tranches in seven reviews of large loan
transactions were downgraded. These transactions
were limited to two issuers - llle¡¡¡¡¿ mid-1990s
deals (ASC 1995-MDIV, ASC 1997-MDVII, and
NASC 1994-MDI) and COMM early-2000s deals
(COMM 2000-FL2 and COMM 2001-J1). Three of
the transactions v/ere downgraded due to the
deterioration of the performance in hotel pool loans.
The sharp drop in perforrnance of a multifamily loan
caused tùe downgrade of the ciasses directiy tied to
the Whitehall loan in COMM 2000-FL2. NASC
199+MDI was reviewed three times due to the
expected loss and ultimately massive realized loss on
a regional mall loan in Ohio. The proceeds realized
on the disposjtion of the asset were insufficient to
cover seryicer advances.
Three single-borrower transactions were downgraded
due to lack of adequate terrorism insurance after being
on RWN for four months. The 'AAA' classes were
downgraded to 'AA' (280 Park Avenue, Houston
Galleri4 and German American 1996-3). Other singlebonower
transaction downgrades were due to the poor
performance of hotel loans (Opryland and EQI Series
1997-l) or multifamily loans (City of Indianapolis).
I 2OO2 Rating llYatch
Fitch uses the Rating Watch Positive or RWN
designation to indicate that Fitch is awaiting receipt
of information that would either positively or
negatively influence the ratings in the short term.
Ups and Downs of CMBS Rat¡ng Actlons
Through 1l months ended Nov. 30, 2002, Fitch
placed ll5 fanches in 40 transactions on RWN due
to exposure to bankrupt tenants, inadequate terrorism
insurance coverage, operating performance
deterioration, specially serviced loan losses, or
interest shorffalls. Of the ll5 tranches placed on
RWN tkough Nov. 30, 2002, 38 were downgraded,
34 were affirmed and removed from RWN, one paid
off, and 42 remain on RWN. Tenant exposures to
bankrupt Kmart and inadequate terrorism insurance
coverage for single-asset deals drove the increase in
frequency of RWN designations in 2002 over 2001,
during which only four deals had been placed on
RWN. No deals have been placed on Rating Watch
Positive during 2002.
In early June 2002, Fitch placed 38 tranches from
13 single-asset transactions on RWN while reviewing
the adequacy oftheir terorism insurance coverage.
Kmart's bankruptcy in first-quarter 2002 and
subsequent lease rejectionVstore closures spurred the
placement of 29 tranches on RWN in 17 deals. Of
ihese deaìs, Kmart exposure combined with other
loans of concem caused downgrades on 20 tranches
and affirmations on seven tranches.
The remaining RWN designations assigned in 2002
were largely due to collateral performance
deterioration and specially serviced loan losses.
Examples include the ASC 1995-MDIV, Opryland
Hotel Trust 2001-OPRY, and MS 1995-GALI
transactions, the last of which was put on RWN for
interest shortfalls being caused by an REO loan.
In all cases, Fitch requested additional information on
issues and loans of concem to better estimate the
amount oflosses or interest shorfalls expected. Upon
receipt of such information, deals with tranches still
on RWN will again be reviewed accordingly.
Up-to-date information on specific deals is available
on Fitch's web site at www.fitchratings.com.
PM-1884

Fitchltatings
Downgrades/Upgrades by Deal - 2OO2*
Service
Date
3t8t02
3t8102
3t8to2
318lo2
3t8t02
3t8lo2
318l02
318l02
3t8t02
Tranche
Breakdown
Downgrades
9l30lo2 280 ParkAvenue Trust, 2001-XL280
9l30l12 280 ParkAvenue Trust, 2001-XL280
9/30/02 2€0 ParkAvenue Trust, 2001-X1280
9130102 280 ParkAvenue Trust, 2001-XL280
11121102 AssetSecuritizat¡on1ggSMD|V
11121102 AssetSecurilizationl99SMD|V
11121102 AssetSecuritizationl99SMD|V
'l'1121102 AssetSecuritization 199SMDIV
7118102 AssetSecur¡tization199AD2
10118102 AssetSecuritizationl99ô.D3
Assel Securitizalion 1 997-05
Asset Securitization 1 997-D5
Asset Securit¡zat¡on 1 997-D5
Asset Securitization 1997-D5
Assel Securitization 1997-D5
Asset Securitization 1 997-D5
Asset Secur¡tizat¡on 1997-Ds
Asset Securitization 1 997-D5
Asset Securitization 1 997-05
6114102 AsselSecur¡tization1997-MDVll
6114102 AsselSecuritlzatlonl99T-MDVll
10129102 BellSouth Telecommun¡cations lnc. Sale and
7t23t02
1tst02
1t9102
'19t02
1t9to2
'U9t02
1t9t02
1t17t02
1t17lO2
1t17tO2
1t17t02
1t17toz
1t17lO2
1l23l02
1t23102
1naoz
1t23t02
1t23l02
1t23lo2
4t12lO2
4t12102
4t1AO2
11t20102
't1t20t02
11t20t02
11t20to2
4l9lo2
419102
4t9to2
3t15l02
3t15t02
7t'17t02
8t27t02
Leaseback Senior Noles
City of lnd¡anapolis, lN
CNC Pass-Through Gert¡fi cates 1 994-1
CNC Pass-Through Certificates 1994-l
CNC Pass-Through Certilicates I 99+1
cNc Pass-Through Cert¡f¡cates I 994-1
CNC Pass-Through Certilicates 1994-l
CNC Pass-Through Certificates'1994-1
GNC Pass-Through Certif¡cates 1994-1
CNC Pass-Through Certlficates 1994-1
CNC Pass-Through Certificates I 994-1
CNC Pass-Through Certilicates I 994-1
CNC Pass-Through certificates I 994-1
CNC Pass-Through Certificates 1994-1
CNC Pass-Through Certifi cates I 994-1
CNC Pass-Through Certilicates 1994-1
cNc Pass-Through Certifi cates 1 994-1
CNC Pass-Through Certlflcates 1 994-1
CNC Pass-Through Cert¡l¡cates 1994-1
CNC Pass-Through Certificates I 994-1
coMM 2000-FL2
COMM zOOGFL2
COMM 2OOGFL2
coMM 2001-J1
coMM 2001-J1
coMM 2001-J1
coMM 2001-J1
csFB 1997-C1
csFB r997-C1
csFB 1997-C1
csFB 1997-C2
csFE 1997-C2
csFB 1999-C1
DLJ 1997-CF1
Class
A-1
A-2
A-2F
x-1
B-1
B-2
B-2H
A-CS3
A-4
B-3
B-5
B-6
A-5
A-6
A-7
B-1
B-3
B-2
B-4
A-5
1'
A
B
c D
A-1
A-2
A-3
B
D
c
A-1
A-2
A-3
c D
A-1
A-2
A-3
B
G-WH
J-\ /l-l
H.WH
H
G
J
M
J
Structured Finance
Rating Before
Review
,AAA'
IAAA'
'AAA'
.AAA'
,BB'
'B'
.B'
'B'
.BBB'
'B-'
'ccc'
'ccc'
'BBB+'
,BBB-'
,BBB-'
.BB+'
,BB-'
,BB'
'B-',
'B+',
'B-'
.AA_,
.BB'
.BBB'
.BB'
'BB'
, 'AA'
'AA'
.AA'
.BB'
'B-'
'B'
'A'
'A'
'ccc'
'ccc'
.BBB-'
.BBB-'
.BBB-'
'B-'
.BBB+'
.BBB-'
,BBB'
,BBB-'
'BBB'
,BBB-'
'AA+,
'ccc'
r
,B'
'B-'
'B'
'ccc'
.BBB'
Rating as of
Service Date
,AA'
.AA'
'AA'
.AA'
'B'
'ccc'
'ccc'
'ccc'
,BBB-'
'ccc'
.BBB'
'BB+'
.BB
'B+'
'cc'
,B'
'c'
'ccc'
'ccc'
A+'
18¡
.BB'
'B'
'B-',
'A'
Þ-
'ccc'
'ccc'
,BBB_'
,BBB_'
.BBB_'
'cc'
'cc'
.BB+'
.BB+,
,BB+'
'ccc'
.BB+,
,BB-,
'BB'
.BB'
.BBB-'
,BB'
,AA'
'c'
'ccc'
'B-'
'ccc'
'ccc'
'cc'
.BBB-'
Class
Amount
31,712,339
56,344,000
73,000,000
0
67,703,006
38,686,432
1,000
0
35,178,085
7,825,869
13,',t55,117
21,925,195
39,,165,351
43,850,390
21,925,195
39,465,351
8,770,074
39,465,351
13,155,117
27,476,248
9,991,363
43,841,980
3,555,000
9,802,9ô7
7,842,374
7,842,374
38,587,925
36,539,698
33,867,670
9,802,967
7,U2,374
7,U2,î74
38,587,925
36,539,698
33,867,670
7,842,374
7,U2,374
38,587,925
36,539,698 .
33,867,670
9,802,967
1,000,000
1,500,000
1,400,000
13,604,000
13,604,000
't1,664,592
9,681,352
13,563,000
16,952,000
27,125,000
14,660,000
29,320,000
7,100,000
26,S00,000
*Actions thfough N ov.30,2OO2- Does not includê private ratings. Some deals wefe reviewed more than once and wíll have mult¡Ple seruÌcé dates.
I
H
I
H
N
B-1
Ups and Downs of CMBS Rating Actions
PM-1885

FitchRatings Strucfured Finance
Downgrades/Upgrades by Deal - 2OO2* (continued)
Service Tranche
Datê Breal(down
Downgrades (continued)
11l5lÙ2 DMARC, Series 199&C1
11l5lÙ2 DMARC, Series 1998-Cl
11l7lo2 EQI Series 1997-1
9ß0102 Gennan Amerlcan Capltal 1996-3
9f301O2 German American Capital 199ô3
9130102 German Amer¡can Capital 1996-3
10t25t02 GMAC 2000-C2
10t25to2 GMAC 200GC2
10116102 GS Mortgage Sec. Corp. ll 1998-C1
9130102 Houston Galleria
9l3ol02 Houslon Galleria
9124102 J.P. Morgan 1999-C8
9l24lo2 J.P. Morgan 1999-C8
9124102 J.P. Morgan 1999-C8
ffi102 Kmart Corporation Pass-Through Trusts 1995
1mO2 Kmart Corporation Pass-Through Trusts 1995
1116102 Kmart Corporation Pass-Through Trusts 1995
1116102 KmarlCorporationPass-ThroughTrustsl99S
1123102 Kmart Corporation Pass-Through Trusts 1995
1l73l12 Kmart Corporatlon Pass-Through Trusts 1995
9116102 Kmart Corporation Pass-Through Trusls 1995
9116102 KmartCorporal¡onPass-ThroughTrustsl99S
117102 Kmart Fund¡ng Corporation
1l7lo2 Kmart Fundlng Corporaton
1116102 Kmart Funding Corporalion
1116102 Kmart Funding Corporat¡on
11.23102 KmartFundingCorporation
1l23lÙ2 Kmart Funding Corporalion
9116102 Kmart Funding Corporation
9116102 Kmart Funding Corporalion
gtgtlz Merill Lynch 1995-C2
8l'16102 . Merrill Lynch 1996-Cl
2t11l12 Merill Lynch 1998-CÍ-CTL
2111102 MenillLynch'1998-CI-CTL
8115102 Merrill Lynch 1998-C1-CTL
8l15lÙ2 Merrill Lynch 199&C1-CTL
4l11lÙ2 Merrill Lyrnh 1999C1
4111102 Merríll Lynch 199SCl
4111102 MeÍill Lynch 1999-Cl
'l0l1lOZ Morgan Stanley 1999FNV1
916102 Mortgage Capital Funding 1997-MC1
2128102 Nomura Asset Sec. Corp. 1994-MD I
2l28lÙ2 Nomura Asset Sec. Corp. 1994-MD I
2l28lù2 Nomura Asset Sec. Corp. 1994-MD I
2l28lù2 Nomura Asset Sec. Corp. 1994-MD I
gø02 Nomura Asset Sec. Corp. 1994-MD I
8l21OZ Nomura Asset Sec. Corp. 1994-MD I
10116102 NomuraAssetsec.corp.1994-MDI
10116102 Nomura Asset Sec. Corp. 1994-MD I
10116102 NomuraAssetSec.Corp.1994-MDI
11DAO2 OPRYLAND
11122]02 OPRYLAND
7l9l02 PrudentialSecuritiesl99S-C1
719102 PrudentialSecuriliesl99S-MCF-2
719102 PrudentialSecuritiesl99S-MCF-2
K
L
c
A-1
N2
M
N
J
A
X
H
J
K
K-l
R-2
K-1
K-2
K-l
K-2
K-2
K-l
F
G
U
F
F
G
G
F
F
F
H
J
H
J
J
G
H
N
J
B-34
e3B
B-3P
B-2
B-1
B-2
B.3A
B.3B
B.3P
c
D
G
H
Rating Before Rating as of Class
Review Service Dato Amount ($)
,8,
'ccc'
.BBB'
.AAA'
,AAA'
,AAA'
'B-'
'ccc
'B-'
¡AAA'
¡AAA'
,BB'
.B'
'B-'
.BB+'
.BB+'
,B+'
'B+'
'ccc'
'ccc'
'cc'
'cc'
'BB+'
,BB+'
,BB+'
'B'
ccc'
'ccc'
'cc'
'cc'
'B'
,B:'
'ccc'
'ccc'
'cc'
'cc'
'ccc'
.BB_'
ð-
'ccc'
'ccc'
'ccc'
'ccc'
'ccc'
'BB'
.BBB+,
'B'
.BBB-'
.AA'
,BB+'
b
'B-'
'cc'
,BBB-'
,AA'
,AA'
'AA'
'c'
'c'
'ccc'
'AA'
.AA'
,BB-'
'B-'
'cc'
'B+'
'B+',
'ccc'
'ccc'
'cc'
'cc'
.D'
,D'
'B+',
'B+'
'ccc'
'ccc'
'cc'
'cc'
.D'
.D'
'B-'
'c'
'cc'
'cc'
,c,
'c'
'c'
'B+',
'ccc'
'cc'
'c'
'c'
'c'
'c'
'B'
'ccc'
'c'
'D'
'D'
,D'
,BB'
'B+',
'ccc'
22,706,000
40,872,000
1 0,000,000
4,480,068
47,609,111
0
4,836,000
4,836,000
23,269,000
't41,'t54,811
0
20,1 16,000
23,774,OOO
7,31 5,000
65,275,709
81,959,000
65,275,705
8l,959,000
65,275,709
81,959,000
81,932,674
66,843,072
96,649,926
20,926,000
20,926,000
96,649,926
96,649,926
20,926,000
20,926,000
90,439,494
13,992,501
32,36't,000
4,846,000
1,615,000
4,846,000
1,615,000
2,963,000
23,698,000
20,735,000
9,481,000
9,878,1 25
24,839,000
1,503
8,000,000
24,629,000
26,681,000
24,629,OOO
718,564
43
231,431
39,300,000
10,000,000
4,226,000
12,226,000
11,114,000
'Actions through Nov. 30, 2002. Does rct include pdvate retings. Some deâls were rev¡ewd mote than oncè and w¡ll have mult¡ple seMce dates.
Ups and Downs of CMBS Rating Actions
PM-1886

FitchHatings
Downgrades/Upgrades by Deal - 2OO2" (continued)
Service
Date
Structured Finance
Rating Before Rating as of
Class
Tranche
Breakdown Class Revlew Service Date Amount
Downgrades (continued)
9t3t02 RMF 1995-1
9t3t02 RMF 1995-1
8t15t02 RMF 1997-1
8115t02 RMF 1997-1
Upgrades
'lÙtltlz 277 Park Avenue Finance Corp', Series 1æ7-C1
1ol1t12 277 Park Avenue Finance Corp., Series 1997-C1
9n3ß2 Aetna Commercial Mtge. Trust 1995-C5
8n2ß2 Aelna Commercial Mtge. Trust 1997-ALIG
8t22lg2 Aetna Commercial Mtge. Trust 1997-ALIC
8t22l12 Aetna Commercial Mtge. Trust 1997-ALIC
8n2ß2 Aetna Commercial Mtge- Trust 1997-ALIC
819102 Allied Capital 1998-l
2t,l02 American Southwest 1995€1
A5102 American Southwest 1995-C1
2l5lo2 American Southwest 1995-C1
215102 American Southwest 1995-Ci
9117102 American Southwest 199541
9l17lo2 Amer¡canSouthwestl995-C1
9117lO2 AmericanSouthwestl99S-C1
9l12l\2 AssetSecuritizationl99S-D'l
9t12102 AssetSecurilizationl99S-Dl
9112J02 AssetSecurilizationls95-D1
318102 AssetSecuritizationl99T-D5
6123102 Banc One/FCCC 2000-C1
5l23loz Banc One/FcCC 2000-Cl
5l23l12 Banc One/FCCC 2000-C1
5l23l\2 Banc One/FCCC 2000-Cl
5123102 Banc One/FCCC 2000-Ci
9130102 BCF Ser¡es 1997-C1
9lnl02 BCF serles 1997-C1
9130102 BGF Series 1997-Cl
7123102 BTC, BTR-2 Trust 1999-51
7l23l\2 BTC, BTR-2 Trust 19S9-S1
8l29t12 BTC, BTR-2 Trust 1999-51
8l29l\2 BTC, BTR-2 Trust 1999'51
8129102 BTC, BTR-2 Trust 1999'51
2t1UO2 CDC Depositor Trust ST I, 1998-ST I
2l13to2 cDc Depositor Trust sT l, 1998-ST I
2l13t\2 CDC Depositor Trust ST l, 1998-ST I
2l13t1z CDC Depositor Trust ST l' 1998-ST I
2!1UO2 CDC Depositor Trust ST l, 1998-ST I
2l13lÙ2 CDC Depositor Trust ST l, 1998-ST I
9l3t\2 CDC Secr-¡rilization Corp. 1S99-FL1
9t3t\2 CDC Sedr¡lizat¡on Corp. 1999-FLl
913102 cDC Securilization corp' 1999-FLl
9l3lo2 CDC Securit¡zation corp. 1999-FL1
919102 Chase CMSC 199&1
919102 Chase CMSC 199Èl
919102 Chase CMSC 1996-1
1OH02 Chase CMSC 1996-2
1012102 Chase CMSC 199&2
1O12|OZ Chase CMSC 199È2
E
F
\,
H
.BB' ,BB-'
'B-' 'ccc'
,B' 'B-'
'ccc' 'cc'
10,227,OO0
7,305.000
3,970,000
3,970,000
A-1
N2
F
F
G
H
J
c
s-2
B-2
B-3
&,1
B-1
s-2
g-2
161,161,522
85,000,000
35,463,555
44,148,000
8,027,000
14,047,000
26,088,000
21,723,537
0
14,600,000
14,600,000
14,600,000
7,527,208
0
14,600,000
A-2
12.652,544
A-3
i f ,598,165
A-4
6,326,272
&3SC
17,670,271
D
8,570,000
F
8,571,000
E
c
B
E
F
E-ro
c
D
D
14,998,000
34,282,000
42,852,000
5,364,796
3,210,000
0
40,234,063
37,998,837
37,998,837
E
10,058,5'16
F
22,352,257
A-44
12,628,994
A.2A
18,352,464
A-34
38,397,954
A-4
163,238,992
A-3
163,238,992
A-2
c
D
E
195,886,791
36,533,317
43,703,000
21,851,000
9|18t02 Chase CMSC 1997-1
F
c
D
E
B
c
D
E
46,S80,000
22,157.969
15,510,578
't 1,078,984
17,027,021
15,717,250
13,097,708
10,675,500
,Actions
through Nov. 30, 2002. Does not ¡nclude private retíngs. Some deals wera reviewed more than once and w¡ll have multiple seN¡ce detes
Ups and Downs of CMBS Rating Actions
PM-1887

FitchRatings
Downgrades/Upgrades by Deal - 2OO2* (continued)
Service
Date
Tranche
Upgrades (continued)
9l18l\2 ChaseCMSC1997-1
9118102 Chase CMSC 1997-1
9118102 ChaseCMSC1997-1
sl30l02 Chase CMSC 1997-2
9130102 Chase CMSC 1997-2
1125102 Comm. Mtge. Accept. Corp., 1996-C2
1125102 Comm. lVltge. Accept. Gorp., 1996'C2
1t25t02 Comm. Mtge. Accept. Corp., 1996-C2
1125102 Comm. Mlge. Accept. Corp., 1996-C2
1125102 Comm. Mlge. Accept. Corp., 1996-C2
4116102 GreekwoodCapitalCorporationCollateralizedNotes
1Ol23lOZ CRllMl MAE Trust, Series 1996-C1
1Ol23lO2 CRllMl MAE Trust, Serles 1996-C1
1Ol28lO2 CS First Boston/Dlt 1995-T'l
10128102 CS First Boston/DU 1995-T1
8t8to2 csFB 1995-AËl /1
8l8to2 csFB 1995-AÉ1 /1
6t5t02 csFB 1995-WFl
6t5lo2 csFB1995-WFl
6t5102 csFB 1995-WF1
6t5to2 csFB 1995-WF1
7r11tÙ2 CSFB 1997-SPICE
7t't1102 csFB 1997-SPICE
7n1ta2 csFB',1997-SPICE
8t16lÙ2 CSFB1997-SPICE
8t16t02 csFB 1997-SPICE
8116t02 csFB 1997-SPICE
8t16tï2 csFB',l997-SPICE
10t17t02 csFB 1998-FL2
10t17102 csFB 1998-FL2
8128102 CSFB/First Union 1995-MF1
8l28l12 CSFB/Flrst Union 1995-MF1
1t22t02 DLJ 1993-MF17
1122102 DLJ 1993-MF17
1t22tg2 DLJ 1993-MFl7
1t22t12 DLJ 1993-MF17
lnaoz DLJ 1993-MF17
8t8t02 DLJ 1994-MF11
818102 DLJ 199+MF11
8t8t02 DLJ 1994-MF11
9t16t,2 DLJ 199ÈCF2
9t16t02 DLJ 199GCF2
9t23t02 DLJ 199&CG1
9t23lg2 DLJ 199&CG1
6118102 Fa¡lax Fund¡ng Trust 1998-1
8l21lo2 FD¡C REMIC Trust 1996-C1
8t21t\2 FDIC REMIC Trust 1996-C1
8l21l!2 ' FDIC REMIC Trust'1996.C1
8l21lÙ2 FDIC REMIC Trust'1996-C1
8121102 FDIC REMIC Trusl 1996-Cl
10l8l02 First Boslon 1993-M1
1oßl02 First Boston 1993-M1
1111102 FirstChicago/Lennar,1997-CHL1
10115102 GMAC 1998-C2
10t15102 GMAC 1998-C2
Class
B
c
D
B
c
E
G
D
c
F
A
A-2
B
D
E
E
F-1
D
E
F
c
E
F
D
E
F
H
G
F
G
SB
SC
s-2
B-3
B-1
A-2
B-2
B-1
e-2
B-3
A-3
B-1
A-2
A-3
B
l-B
il-B
t-c
il-c
l-D
2-C
1-B
B
B
c
Structured Finance
Rating Before
Review
Ratlng as of
Service Date
Amount
26,688,749
26,688,749
29,357,624
32,559,695
48,839,542
5,754,000
5,754,000
14,797,OOO
15,255,689
16,441,000
110,890,554
17,375,515
70,000,000
5,839,000
11,087,000
631,349
5,178,000
14,633,000
19,510,000
9,756,000
19,510,000
8,809,000
1ð,ru.t,éèo
24,663,000
8,809,000
18,203,383
10,570,000
13,309,922
34,564,489
112,100,000
5,523,489
10,042,704
0
4,600,000
5,600,000
10,345,481
13,100,000
7,302,893
15,000,000
8,560,000
30,600,000
25,500,000
39,106,000
78,213,000
19,000,000
31,734,345
14,529,884
26,445,769
1 1 ,301 ,156
42,313,128
1,S66,084
2,176,236
83,575,982
126,518,000
I 13,866,000
'Actions through Nov. 30, 2002. Does not include priwte ratings. Some deals were reviewed nore lhan once and will have multiP¡o serv¡c€ dates'
Ups and Downs of CMBS Rating Actions
PM-1888

FitchRatrngs
Downgrades/Upgrades by Deal - 2OO2* (continued)
Servlce
Dale
Tranche
Breakdown
Upgrades (continued)
10t151o2 GMAC 1998-C2
2t6to2 GMAC 2000-FL-A B
9t3to2 GMAC 2000-FL-A
B
10t17102 GMAC 2000-FL-B
B
1ot17to2 GMAC 2000-FL-B c
1ol17to2 GMAC 2000-FL-B
D
10t't7to2 GMAC 2000-FL-B E
10t17t02 GMAC 2000-FL-B F
9t1oto2 GMAC 2000-FL-F B
9t1oto2 GMAC 2000-FL-F
c
8116102 GP Capital Funding Corp. 2001-A B
811õ102 GP Capital Funding Corp. 2001-A
8l16to? GP Capital Funding Corp. 2001-A
8116102 GP Capital Funding Corp. 2001-A
finn2 Greenwich Capital Commercial Funding Corp.200l-FLl B
finrcz Greenwich Capital Commercial Funding Corp.2001'FL1 C
fnl,z Greenwich Cap¡tal Commercial Funding Colp.2001-FL1 D
1Ol25lO2 GS Mortgage Sec Corp ll 1996-PL
1Ol25lO2 GS Morlgage Sec Corp ll 1996-PL
10125102 GS Mortgage Sec Corp ll 1996-PL
10125102 GS Mortgage Sec Gorp ll 1996-PL
1Ol25lO2 GS Mortgage Sec Corp ll 1996-PL
11114102 GS Mortgage Sec Corp ll 1997-GL I
11114102 GS Mortgage Sec Corp ll 1997-GL I
11l14loz GS Mortgage Sec Corp ll 1997-GL I
11114102 GS Mortgage Sec Corp ll 1997-GL I
111'14102 GS Mortgage Sec Corp ll 1997-GL I
11114102 GS Mortgage Sec Corp ll 1997-GL I
11114102 GS Mortgage Sec Corp ll 1997-GL I
9l24l,2 Howard County, MD Houslng Revenue
B
c
D
E
F
B
c
D
E
F
G
H
B
9124102 Howard County, MD Housing Revenue
10t28102 lmperial Credil Comm. Mtge. lnvestment Corp., B
412102
4t2102
4t2l02
4t26t02
4t26t02
4t26t02
10t29toz
10t291o2
3t15t02
3t15102
3t15102
3t15t02
10n4t02
10t24102
11t5tO2
11t5t02
11t5t02
u28ß2
8t28t02
8t28t12
8n8102
8t28t02
Serles 1999-1
J.P. Morgan 1995-C1
J.P. Møgan 1995-C1
J.P. Morgan 1995-c1
J.P. l¡organ 1996-C3
J.P. Morgan 1996-C3
J.P. Møgan 1996-C3
J.P. Morgan 1997-C5
J.P. [¡organ 1997-C5
J.P. N¡organ 1997-SPTL-C1
J.P. Morgan 1 997-SPTL-C1
J.P. Morgan 1997-SPTL-C1
J.P. Morgan 1997-SPTL-C1
J.P. Nlorgan 199&C6
J.P. Morgan 1998-C6
J.P. Morgan 1999-PLS1
J.P. Morgan 1999PLS1
J.P. Morgan 1999-PLSI
J.P. Morgan 200GFL1
J.P. Morgan 200G.F11
J.P. Morgan 200SFL1
J.P. Morgan 2000-FL1
J.P. Morgan 2000-FL1
Class
c
D
E
D.X
D
c D
B
c
B
c F
E
D
c
c B
D
B
E
F
B
D
Structured Finance
Ratlng Beforê Ratlng as of class
Review Service Dale Amount (9)
.BBB'
.BBB'
'A/q-J
.BBB+'
¡AA+'
'A+'
,AA+'
'A+'
.BB'
,BBB-'
'AA+'
.AA'
,A
,BBB'
.AA'
.BBB-'
'BB+'
'AA'
,BBR
'A
'BBB+'
'AA+'
¡AAAI
.AAA'
¡AAA'
¡AAA'
.AA'
'BB+'
,AA+'
'A+'
.AAA'
'AA'
,BBB'
'AA+'
'A+'
.BBB+'
.AAA'
.AA'
'A'
.BBB_'
.BB_'
IAAA'
¡AA+'
.AA-'
'A+'
.BBB+'
,BBB'
,BB+'
.AA'
'AA'
.AAA'
,A-'
.AAA'
IAAA'
'AA-'
.AAA'
.AA'
.BB+'
.BBB+'
.AAA'
'A+'
'AA+'
,A+'
,BBB+'
'AA+'
.BBB'
.BBB-'
.AA+'
'BBB+'
¡A+r
164474,Oæ
18,649,026
18,649,026
6,434,857
11,735,016
3,451,475
8,628,688
9,318,983
13,077,606
13,600,710
6,700,000
7,800,000
10,000,000
5,500,000
43,015,000
32,260,000
35,846,000
19,223,227
17,550,933
17,610,092
16,386,516
19,567,083
78,160,000
14,660,000
53,750,000
14,650,000
48,960,000
58,620,000
34,208,999
4,430,000
7,565,000
1 1,631 ,000
0
6,886,000
12,051,000
14,032,000
24,056,000
26,060,000
51,687,000
56,856,000
6,092,000
't 0,153,000
10,153,000
12,184,OOO
39,820,000
47,784,000
9,535,000
10,595,000
10,595,000
8,451,294
10,563,608
25,353,883
27,ffi,197
28,523,033
'Actions through Nov. 30, 2002. Doæ not ìnclude private rat¡ngs. Some deals were reviewed more lhan mce and will have multiPle serv¡ce dâtes'
Ups and Downs of CMBS Rating Act¡ons
PM-1889

FitchRatings
Downgrades/Upgrades by Deal - 2OO2* (continued)
SErvice
Date
Tfanche
Breakdown
Upgrades (continued)
1Of25102 Kidder Peabody 1994-C3
10125102 Krauss/SchwarlzPropertiesLtd.
8127102 KS Mortgage Capital, Series 1995-'l
8127102 KS Mortgage Capital, Series 1995-1
11126102 LBCommercíalConduit',l995-C2
11126102 LBCommercialConduit.l99S-C2
1'i,126102 LB Commercial Condu¡t 1995-C2
9l13lOZ Lehman P-T Sec., 199+A
4t3oloz Lehman Structured Secur¡ties Corp., Series 1996'1
11115102 LTC Commercial 1993-1
11115102 LTC Commercial 1993-1
11115102 LTC Commercial 1994-1
2l27lÙ2 Merr¡ll Lynch 1994-C1
1116102 Menill Lynch 1995-Ci
1116102 Merrill Lynch 199S.C'l
9123102 Merrill Lynch 199SC3
9l23lOZ Merrlll Lynch 199+C3
8116102 Merr¡ll Lynch 199eC1
8116102 Merrill Lynch 199ÈC1
9l4lÙ2 Merrill Lynch 1996-C2
9l4lí2 Merrill Lynch 1996-C2
9l4lÙ2 Menill Lynch 1996-C2
9141A2 Menill Lynch 1996-C2
11l22loz Merr¡ll Lynch 1997-C'l
11122102 Merrill Lynch 1997-C1
9123102 Midland RAC 19s6-c1
9t23lo2 MidlandRAC.l9S6-Cl
9l23lÙ2 Midland RAC 1996-C1
9l23lo2 Midland RAC 1996-Cl
8121t02 Midland RAC 1996-C2
8121102 Midland RAC 1996-C2
8l21lOZ Midland RAC 1996-C2
8121lo2 Midland RAC 1996-C2
812'1102 Midland RAC 199642
8l21lo2 Mid¡and RAC 1996-C2
8l21lÙ2 Midland RAC 1996-C2
9123tO2 Morgan Stanley 1996-C1
9123102 Morgan Stanley 1996-C1
9123102 Morgan Slanley 1996-C1
9l23l12 Morgan Stanley 1996-C1
9123102 Morgan Stanley 1996-C1
8128102 Morgan Stanley 1996-WF1
8128102 Morgan Stanley 1996-WFl
8l28l12 Morgan Stanley 1996-WF1
8128102 Morgan Stanley 1996-WF1
8128102 Morgan Stanley 199&WF1
8128102 Morgan Stanley I99GWF1
919102 Morgan Stanley 19S7-C1
919102 Morgan Stanley 1997-C1
9l9l12 Morgan Stanley |997-C1
919102 Morgan Stanley 1997-C1
9l9lo2 Morgan Stanley 1997-Cl
11120102 Morgan Stanley 1997-HF1
11120102 Morgan Stanley 1997-HF1
11120102 Morgan Slanley 1997-HF1
11120102 Morgan Stanley 1997-HF1
Class
c B
E
F
c
D
E
1
E-2
c
D
E
F
D
E
c D
B
c B
c D
E
B
c E
D
c F
E
G
F
D
c B
H
c
D-1
D-2
E
F
B
E
F
u
D
B
c
D
F
B
c D
E
Structured Finance
Rating Beforê Rating as of Class
Review Service Date Amount ($)
.AAA'
'AA+'
,AAA'
.AAA'
.AAA'
'fifi.¡';
,BBB-'
,BBB+'
,AAAI
¡AAAI
.AAA'
28,896,951
7,474,892
13,655,697
8,273,4M
16,891,624
12,993,557
24,687,759
3,247,664
28,974,776
373,549
5,735,000
16,941,596
10,236,000
r7,066,000
19,199,000
32,180,000
38,616,000
38,833,000
38,833,000
68,299,000
62,607,000
56,915,000
28,458,00û
46,243,000
46,244,OOO
5,568,000
14,848,000
25,985,000
7,424,000
7,682,000
12,803,000
15,364,000
23,045,000
28,166,000
30,727,000
5,122,000
18,728,684
17,026,076
5,107,822
18,728,684
13,620,861
30,268,420
36,322,105
9,080,526
21 ,187,895
21,187,895
33,295,263
51,252,OOO
38,439,000
35,236,000
19,220,000
11,211 ,000
55,656,000
34,012,000
27,828,000
9,276,000
'Actions through Nov. 30, 2002. Does not ¡nclude prívate ratings- Some deats were reviewed more lhan once and will have mult¡ple seruiæ dâtes
Ups and Downs of CMBS Rating Actlons
PM-1890

FitchRatings
Downgrades/Upgrades by Deal 2OO2* (continued)
-
Service Tmnche
Structured Finance
Rating Before Rating as of
Dale Breakdo\ivn Class Review Servicê DatE Amount ($)
Upgrades (continued)
11l2OlO2 Morgan Stanley 1997-HF1
10115102 Morgan Stanley 1997-LB1
10i,15102 MorganSlanley'1997-LBl
1Ol15lO2 Morgan Stanley 1997-LBi
10115102 Morgan Stanley 1997-LBl
10115102 Morgan Slanley 1997-LBi
10110102 Morgan Stanley 1997-WF1
10l1OlO2 Morgan Stanley 1997-WF1
10l1OlO2 Morgan Stãnley 1997-WF1
10117102 Morgan Stanley 1997-XLl
10117102 Morgan Stanley 1997-XL1
gl23lg2 Morgan Stanley 1998-HF1
9l23lÙ2 Morgan Stanley 1998-HFl
3l27lÙ2 Morgan Stanley 1998-WF2
3l27lÙ2 Morgan Stanley 1998-WF2
3l27lo2 Morgan Stanley 1998-WF2
3l27lOZ Morgan Stanley 1998-WF2
3127102 Morgan Stanley 1998-WF2
3127|02 Morgan Stanley 1998-WF2
3127102 Morgan Stanley 1998-WF2
3127102 Morgan Stanley 1998-WF2
3l27lo2 MorganStanley1998-WF2
gl24l02 Morgan Stanley 1999-CAM1
9l24ll2 Morgan Stanley 1999-CAM1
1ol17lO2 Mortgage Capital Funding 1995-MC1
10117tO2 Mortgage Capital Funding 1995-MCl
8122102 Mortgage cap¡tal Funding 1996-MC'l
8l22l12 Mortgage Capital Fundlng 199ô-MC1
8122102 Mortgage Capital Funding 1S96-il/|C1
8l22l02 Mortgage Capital Funding 1996-MC1
9l1AO2 Mortgage Cap¡tal Fund¡ng 1996-MC2
9l12lo2 Mortgage CapitaÍ Fundlng 1996-Mc2
9l12l12 Mortgage Capital Funding 1996-MC2
8126102 NationsBanc 199$M2
9l4l12 Nat¡onslink Funding Corp. 1996-1
9l4l12 NatlonsLlnk Fundlng Corp. 1996-1
9l4l\2 Nationslink Funding Corp. 199&1
9l4lOZ NationsL¡nk Fund¡ng Corp. 1996-1
9l4l,2 Nat¡onsL¡nk Funding Corp. 1996-1
9l4l,2 Nationslink Funding Corp. 1996-1
916102 Nationslink Funding Coç. 1998-1
916102 NationsL¡nk Funding Corp. 1998'1
916102 NationsLink Funding Corp- 1998-1
10l4lÙ2 NB Commerclal Mtg. P-T, Serles FSI
9l17lÙ2 Nomura AssetSec. Corp. 1994-C3
11l12lOZ Nomura Asset Sec. Corp. 199SMDlll
11112/t02 Nomura AssetSec. Corp. 1995-MDlll
9l25l12 Penn Mulual 1996-PML
9l25l12 Penn Mutual 1996-PML
9l25lÙ2 Penn Mutual 1996-PML
9125102 Penn Mutual 1996-PML
9l25lo2 Penn Mutual 1996-PML
9l25l12 Penn Mutual 1996-PML
9/251A2 Penn Mutual 1996-PML
gn1l12 Penn Mutual 1996-PML
F
c
D
E
F
.BB'
'AA+'
'A+'
.BBB+'
.BB+'
41,742,000
7,304,000
I,130,000
3,ô52,000
6,391,000
G
'B+'
6,848,000
B
c
D
c
D
c
B
'AA+'
'A'
.BBB'
¡AA+'
'A+'
.AA'
30,754,000
33,549,000
27,958,000
22,636,000
45,271,O00
64,185,000
67,395,000
J
'B+',
7,965,000
K
H
E
'B'
.BB-'
.BBB_'
7,965,000
10,620,000
21,240,OOO
F
'BB+'
,BB'
21,240,000
23,896,000
c
D
'a'
47,790;000
53,100,000
B
53, r 00,000
Class B
26,209,000
Class C
26,210,000
N4
9,151,000
r-4 (ro)
0
c
D
31,353,000
19,294,000
E
16,882,000
F
7,235,000
B
c
27,483,332
22,902,777
D
18,322,221
UC
3,305,919
19,358,378
D
17,745,179
E
14,518,783
F.
f 0,485,788
5,646,193
H
9,ô79,189
B
53,58r,529
56,1s3,030
n
48,478,526
t-
1,472,797
M
ACS3
6,516,379
0
A-4
42,n9,925
E
11,723,OOO
F
23.M6,000
P
1,738,966
tt
19,539,000
H
23,446,000
J
r5,631,000
K
23.446,000
9l25l12 Penn Mutual 1996-PML
L
M
15,631,000
11,724,000
.Actions through Nov- 30, 2002, Does not ¡nclude prlvate ratings- Some deals were re\¡¡ewed more lhan once and will have multiPle service dates.
Ups and Downs of CMBS Rating Actions
PM-1891

FitchRatings
Down g rades/Upgrades by Deal - 2AO2* (contin ued)
Service
Date
Structured Finance
Trancho
Rating Before Ratlng as of
Class
Breakdown Class Review Service Date Amount
Upgrades (continued)
4t30to2 RTc 1994-C1
4t30t02 RTC 199+C1
10l4lo2 Salomon Brothers, Series 1997-TZH
1ol4lo2 Salomon Brothers, Series 1997-TZH
1014102 Salomon Brolhers, Ser¡es 1997-TZH
1014102 Salomon Brothers, Series 1997-TZH
1014102 Salomon Brothers, Series 1997-TZH
11l4lo2 Salomon Brothers, Ser¡es 1997-TzH
9l11lÙ2 SASCO, Series 1992-M1
gißtoz sAsco, series 1994-cl
4l1lÙ2 SASCO, Ser¡es 1995-Cí
4l1lOZ SASCO, Series 1995-C1
11118102 SASCO, Series 1995-C4
713102 SASCO, Series 1996-C3
9120102 SASCO, Series 1996-CFL
9l2oloz SASCO, Ser¡es 1996-CFL
9l2OlOZ SASCO, Series 1996-CFL
2127102 SASCO, Series 1997-LLl
218102 SASCO, Series 1998-C3
2tÙIoz SASCO, Ser¡es 1998-C3
218102 SASCO, Series 1998-C3
218102 SASCO, Series 1998-C3
218102 SASCO, Ser¡es 1998-C3
2l8lo2 SASCO, Series 1998-C3
6121lOZ SASCO, Series 1999-C3
6121102 SASCO, Sedes 1999-C3
6121102 SASCO, Series 1999-C3
6121102 SASCO, Series 1999-c3
6121102 SASCO, Series 1999-C3
6121102 SASCO, Series 1999-C3
6121lo2 SASco, Series 1999-C3
6121102 SASCo, Series 1999-C3
6121102 SASCO, Series 1999-C3
6121102 SASCO, Series 1999-C3
6121102 SASCO, Series 1999-C3
6121102 SAsco, Serles 1999-C3
6121102 SASCO, Series 1999-C3
713102 SASCO, Series 2000-C2
7l3lo2 SASCO, Series 2000-C2
7l3l12 SASCO, Serles 2000-C2
7l3l12 SASCO, Series 200042
7l3l12 SASCO, Series 2000-C2
7l3l12 SASCO, Ser¡es 2000-C2
7t3lo2 SASCO, Series 200042
7l3lo2 SASCO, Series 200042
713102 SASCO, Series 2000-C2
7l3loz SASCO, Series 2000-C2
7l3lo2 SASCO, Series 2000-C2
7l3lÙ2 SASCO, Series 2000-C2
7l3l1z SASCO, Seiles 2000-C2
f n1l02 SASCO, Series 2000-C2
11n1n2 SASCO, Series 2000-C2
11n1ß2 SASCO, Series 2000-C2
fin1102 SASCO, Series 200GC2
rn1l02 SASCo, Seríes 200GC2
11f21102 SASCO, Series 2000-C2
'Acfloß through Nov. 30,2002. Does not include pfivate ralings. Some deâls were reviewed mo¡e than once andwill hâve mult¡ple seruiæ dates.
Ups and Downs of CMBS Rating Aclions
F
E
A-1
A-2
B
c D
to
c
F
D
E
F
F
F
G
H
D
N
L
K
J
I
M
E
F
G
H
J
K
L
M
N
P
o
T
U
c
D
E
F
Lt
H
J
K
L
T/
N
P
o H
J
K
L
M
N
,BBB'
¡AAA'
¡AAA'
.AAA'
.AA'
.A
'BBB+,
IAAA'
.AAA'
'AAA'
.AAA'
'A+'
.AAA'
.AAA'
'AAA'
'BBB+'
'A-',
.BB-'
.AA'
,AAA'
,BBB-'
'AAA'
,AAA'
.AAA'
.AA+'
,AA'
'BBB+'
.BB+'
'B+',
'B'
'B-'
¡AAA'
¡AAA'
.AA'
.AA-'
'A+'
,A'
'BBB+'
.BBB-'
'BB+'
'BB'
'BB-'
'B+'
IAAA'
.AAA'
.AAA'
.AAA'
.AA'
.AA_'
24,265,292
58,823,274
29,057,707
115,000,000
23,500,000
26,000.000
21,500,000
0
23,592,522
8j95,527
5,064,004
46,085,932
11,664,755
12,632,000
57,603,397
96,005,662
48,002,831
114,137,000
67,392,000
77,019,000
77,020,000
96,274,000
131,058,129
134,785,000
11,289,165
48,592,356
53,448,485
37,016,049
62,908,537
13,694,563
53,282,615
38,449,570
36,022,553
27,381.15'l
46,218,796
29,906,063
60,254,000
31,892,065
14,496,393
15,946,532
24,644,368
17,395,672
14,496,393
20,294,950
18,M5,81 1
34,551,785
12,70't,260
14,566,514
16,431,769
14,566,514
4,888,267
20,090,297.
18,655,776
33,476,724
12,305,608
14,1 13,591
PM-1892

FitchRatings Structured Finance
Downgrades/Upgrades by Deal - 2OO2* (continued)
Servlce Tranche
Date Breakdown Class
Upgrades (continued)
fin1102 SASCO, Series 2000-c2
fin1lÙ2 SASCO,Series.2000-C2
'11f21102 SASCO, Series 2000-C2
fin1102 SASCO, Series 2000-C2
11125t02 SL, SeI¡es 1997-C1
'l'1125102 SL, Series 1997-C1
11125102 SL, Series 1997-Cl
11125102 SL, Series 1997-Ci
1l22lï2 Southern Pac¡f¡c Thrift & Loan Association, Series
1996-C1
1122102 Southem Pacific Thtift & Loan Association, Series
1996-C1
1l2uo2 Southern Pac¡fic Thr¡ft & Loan Association, Series
1996-Cl
1l22lo2 Southem Pacif¡c Thrifr & Loan Association, Series
rsg&cl
11115102 Structured Mtg. Sec. Corp., 1995-M1
11115102 Structured Mlg. Sec. Corp., 1995-Ml
'l1l13l12 Wsconsin Avenue Securities 1995-M4
1'll13l12 Wsconsin Avenue Securities 1995-M4
1116t02 Wsconsin Avenue Securities 1996-M1
11113102 Wisconsin Avenue S€curit¡es 199ÈM3
11113102 Wsconsin Avenue Securlties 1996-M3
11113102 Wsconsin Avenue Secur¡ties 1996-M3
11t6l12 Vvisconsin Avenue Securities 1996-M5
P
o
s
T
C
D
E
F
D-X
F
Rating Beforo Rating as of Class
Review Service Date Amount ($)
.BB-'
,B+'
,B-'
'ccc'
.AA'
'A'
.BBB'
.BB+'
'A+',
'B+'
.BBB-'
'A+'
'A+'
'BBB'
.BB+'
,AAA'
,AA-'
,BB+'
,AAA'
.BB+'
A'
.AAA'
15,921,574
14,113,591
't5,921,574
29,706,000
8,879,000
6,342,000
2,537,000
20,296,200
0
11,078,000
12,462,OOO
13,847,000
1116102 W¡sconsin Avenue Securities 1996-M5
B-1
oo
B
c
c
D
c
B
Þ
c
'BBB-'
'B+'
,BB'
.B'
.BB_'
.B'
'BB'
'BBB'
'BB+'
'B+'
,BB'
'BB+'
'B+'
,BB+'
'B+'
'BB+'
.BBB+,
.BBB-'
.BB-'
2,U2,000
5,562,000
2,308,435
1,373,781
5,655,965
1,891 ,309
2,836,964
2,522,022
3,348,526
9,181,443
.,qctions through Noy. 30, 2002. Doæ rct include pr¡vate ratings. Some deals were rev¡ewed more than once and will have mult¡Ple service dates.
Copyright O 2OO2 by Fitch, Inc. ùd Fiæh Rãlings. Ltd. ed i6 $bsid¡ti6 One Sbt¿ SFeel Plâz¿, l{Y, l{Y I0004
feiólã¡c: t-aoo-233¡ez+, lztz¡ loa+:oo. iu: el2) 4tù4a35. Reproducrio¡ or rerræm¡ssion in wtrolc or in pM is ptohib¡led except by pemiss¡or. A.ll righß reseMd. Al of úe
info;âtion ænþined hqein ii bæd on ¡nfomarion obrÀinêd fþm ¡$um, oùq obligoE, udeMiteF. dd orhe! sourc$ Fitch believer ro be rcliable Fitch does not aud¡r ot veriÛ the mh or
accuncy of ay sucl infomation, As a rsqlt, û¡e infomarion in this ¡.pon is p¡ovided "æ ¡s" wiùou üy tepøøtatioo or wùùty of æy lind' A f¡lch nl¡trg ¡s d opinion õ lo ùc
ey seilrÍty. ¡{ repon proviáinga Fitchãtìng is neirher a prospew norasbsdrur for the infomaúon æemblC verili€4 úd ptedtcd lo invætors by lhc isruar ad ib agcns in ønncction
*iíh to r¡i. oftú" .ouriricr ñatings may bi chuged, supcndcd, or withdram at my rimc for uy ræn at thc rclc disrcrion of filcb. Fitd¡ dG nol prov¡dê i¡vclmcnt adviø olùy soÊ
Rutin6, * nor n r"*mcndaion rõ buy, scll, o. tña *y r*u;ty. nutngs do not commenr ø thc adcqucy of muka priæ, thc süitabilìty of Ðy seorily.for l-pmiculr invesor, or the tuuøir
naw or tuability of payners madi in ræp"ctL *y écurity. Étch rccci"c fce from issucr, iruurers, guuotor, oùøobligors' ød udcmitcre for ralin¿ secuitiæ. Such fcæ
gøcåly fion US$l,Ooo io fXSZSqooo lotthc applicablá cuncncy equiwlmt) per isue ln co¡tain cæe, Fitch will róle ôil or o nùmbet of¡so* isued by o puiculu især, or ireurod or
"ary
ä*ó¿ Uí o port¡.ul. i**", * gur-r*, for r singlc m"ul fe. Such fæs *" ro wy fioñ USSlo,o0o b UStl,50o,o0o (or ttrc applicablc curocy equivdenù Tte si8nm4t,
"'p"acd
fitti."rion, á. a'l"r"rioation of a rari-ng by Fiich shall iot ørrirure a øn*nt by Fitcir to ue iE n-do s d expen in ømectio wirh my regishatiol staement f¡êd üdd thc Unitêd Sht6
Fitch r*wch may beavailabls to eleeronic sìJbscribøs up to thrædays carlicr rhæ ro print subscriber.
l3
E
D
Ups and Downs of CMBS Rating Actlons
PM-1893

F¡XED INCOME RESEARCH > STRUCTURED PRODUCTS > AMERICAS
CREDIT FIRST
SUISSE BOSTON
Contributors
Gail LeE
+1 212 325 1214
gail.lÉe@csb.com
Patricla Growell
+1 212 325 4881
paty.crowel@cslb,com
Paul FiEsimmons
+1 2125398567
paul.fi Þsimmons@csfb.com
Serif Ustun
+1 2125384582
señf uslun@æb.com
CMBS Spreads
AAA syr
AAA loyr
AA
At
BBB
BBÈ
CMBS Market Watch Weekly
24 January 2003
Chart of the Week: Tightening lOyr Triple A Spreads Kick-Off2003
EÊ
åso
É
I
itt
94s
!
ooè
.t, 40
35 +-
Jan-02
Sou@: Credil Sr¡iss Fißt Bo$on-
Delinquencies in CMBS: "How High?"
Highiighis
aÞ ¡bp
a1n3{o3 t1t16tæ 1?!26t02
85€.7
8t -2 -5
98{-8
110 .9 -12
174 4 'î
21446
syr Swap 45 +l
l0yr Swap 41t +l
SgEáds Êfl€ct per-ddlú p¡iæ bof,dssouræ:
cÉdit Suiæ tßt Boslon.
Research Commentary:
We tackle the "how high will delinquencies rise in 2003?'question by examining
loans on servicer watch lists. Our findings suggest that a 3.0olo "worst case'
boundary is perhaps reasonable.
Trading Commentary:
The rush of new supply begins, spreads tìghten and the market lone is
overwhelmingly positive-
abp ¡bp
DltBrVs 0t/16/03 12ti¿6n2
Æ
13
51
66
130
170
4
-x
-6
.10
.5
.5
-5
-1
-7
.11
'5
.t
N\Aíyrntyr
Ar6uq/A/q
ANA
A/BBB.
BBBIBB&
A/qiAJtsBB
3
11
't2
64
14
ct
¿bp ¡bp
01116rß pn6lt2
1
-3
4
5
0
.2
1
-3
I
6
0
-t
PM-1894

cREDrr lnnsr
sulssE lBosroN
Whoa,5.6%l!!
...But Don't Run
Yet!
How About 3.0%?
Research View: Commentary
Delinquencies in CMBS: "Hovv High?"
CMBS Market Walch Weckly
Research Mew Gommentary
This week, we thought we would tackJe a very popular question, "how high will delinquencies rise
in 2003"? |laving heard a broad range of estimales, we took on the challenge of trying to quantiff
the magnìtude of an expected incæase. While many (including ourselves) have construcled fancy
commercial rnortgage delinquency models, each wilh its black box features based on past crycles'
we thought we'd take.a much more practical approach this time: somelhing more real We
examined servjcer watch lists to assess the "pipeline" of delinquent loans. A loan on watch today
is likeþ to be tomorrov/s delinquenry- We think our findings are not only interesting, butwill help
set some boundaries on the expected delinquency rates cunently being bantered about'
As a start¡ng point to detennine the potential candidates for tomorrovy's delinquencies, we used
ourdatabasetoidentifyloanswithDsCRsequal loandlessthan l-00. lf weassurneall loans
were to becorne delinquent, this could serve as our Vorst" case GMBS boundary' With üris
criteríon as our screen, we identified 1,704 loans representing $8.1 billion in the fixed rate conduit
universe-1 Togetherwith the cunent 30 day + conduit delinquency rale of 1.620/o, the 1'704 ($8.1
bilfion) loans, w" "oiu. at a 5.6%'worsf case level. While a very high number indeed, it is still
less lhan the oeak 7.53% observed in 1992.2
Ok, now before uv€ all "head for the h¡lls', we emphasize a few things aboul the 5-6% rate- First'
as most investors ere eïvare, the reported DSCR numbers are often ouldated and inaccurate.3
Approximately one.third of the reported DSCRs with less than 1.0x were reported with "as of
dates in 2001 or even earlier. And, many of these numbers are sometimes inconectly reported or
recorded. Second, as loans become delinquent they are often resolved and becoming cunent (or
REO and soþ) - and so, loans roll in and out of their delinquency status. Third, many bonowers
continue lo keep their loans ctnent despite operating shortfalls. Fourth, there are chronic late
payers who always appear on üre 30-day list. ln short, this number includes a lot of "noise" we ve
wreslfed with ,in the sector regarding information and data.
That said, we set cr¡t lo refine thìs uníverse of 1,704 a litle further by examining loans found on
the service¡'s watch tisls as thes,e serve to identify potential toubled loans and provide
data/color.a For purposes of or.lr analysis, we were constrained by using servicer watch list data
that were availabþ in eleclronic format. And so, with tris criterion, of the 1,704 loans we identified
in our initial data cut, 61 I -loans appeared on servicer electronic watch lists.s We used lhls subset
to anafyze and discuss tlre potenlial delinquency "pipeline" in the remainder of this commenlary'
The 6l1loans rniverse represenis g2.9 billion. or 1.41Yo ($2.9 billion/$2O3 billion) potential
pipeEne of incrernental definquencies. This pipeline of 1-41o/o combined with fhe cunent
ffier36,l67toarrstotaling$203.2biIlion.The1,7o4loans¡defltified
with DSCR s1.0 was as of Jam¡ary 2003.
2 observation is based tn {he-ACLI data seL
3 The DSCR fg¿nes r¡r¡ere from Trepp and are based on NOI and nol t'tcF'
, S"t;á rãná¿ä warcr¡ $sts are avåiøble in etectonic format ftom Trepp. The electronic lt/ãtch lid we
received '¿ms forthe montl¡ of Decembe¡, covering approximately 64% by balance and 58% by deal count of
the conduit universe.
i õt t¡.-rãrã"øg 1,093 ûoans u/ith ÐSCR

cREDrr I nnsr
surssE I BosToN
24 January 20Q3
CMBS Market Watch WeeklY
Research View: Commentary
delinquency rate of 1.62% suggesls a projected delinquency of 3.03ô/o. We present stralificalions
on this 611-loan universe to provide some insþht on vintages, property tyPes and ma¡kets.
We begin wilh vintages. Tabte I shows the cuffent 30 day + del¡nquencies and potential pipeline
of delinquencies by vintage. The range of pþeline delinquencies is .01% (2Û02) to 3.03% (1995).
Table 1 Current and "Pipeline" Delinquencies by Mntage
(A) Potential Potenlìd (A + B)
30 Ðay+ 30 Day+ Delinq. Ddir¡q' Projected
Delinq. Ðelinq. Rate "Pipeline" "Pipdine- Deling. Rat€
\ir¡nrâoe Total ($mm) {$mrñ¡ $l $¡q¡¡I---Eegl@ (U
2s.s 0S 3.52 352
1995 r,1405 É3.9 9.99 3'1"5 3'03 13'02
1996 6,441á 3628 5,63 27.7 0.43 6.06
1997 17
lsss ¡15.982.8 96:1.7 2.09 894.2
2O0O 26,97î.r {7?-2 - !?7 365'8 r.36 3.12
tnñr 1¡ qq7 Í 7)82 0.5¡t 258.7 0.71
SourêÉ: cÉdil Sui$sê FiÉt Bctoñ. TGpp.
203.193.1 sfrLs 1.62 ¿857'3 l'4,l 3.03
Table 2 shows the similar data by property type. The top three property t¡pes with the highest
balance in the delinquency pipeline are multifamily with $810.4 million (198 loans), followed by
retait with $603.5 million (90 loans). ard lodging with $569.9 million (99 loans). Healthcare loans
conünue to have lhe hþhest projected.delinquency rate, fotlo!ì/ed very closely by CTL and
lodg¡ng.
(B)
PM-1896

CREDIT I FIRST
su¡ssE BOSTON
I
Table 2 Current and Potent¡al Delinquencies by Property Type
30 Day+
Del¡nq.
(A)
30 DaY+
Delinq. Rate
Potent¡d
Delinq.
"Pipeline"
CMBS Market Watch WeektY
Research Vìew: Gommentary
(B)
Potential (A + B)
Delinq. Proieded
"Pipeline" Delinq.Rate
Rate
3,{23.6 283.3 9.07 1x5.8 4'35 t3.12
LO 14,437.0 981.8 6¡2 569.9 3'95 l0J7
MF 54,ES1.0 536.6 0.98 810'{ l'18 2'15
RT 60,4325 797.7 l'32 603.5 J'o(l äa
lr¡U ¡,otl¡ ¿¡'o t.zt ll,Z -0'4l t'n
ss 33635 305 0.91 7'5 0'22 1'13
Total ã13.193.1 32CZS 1.ü¿ ¿857'3 l'41 3'03
Soure: Cred¡l Suíse Fßl 8o6lm. TEP9'
Table 3 provides market and property type deta¡ls for the current and proiected pipei¡ne
del¡nguency for the 25 fargest MSAs in the conduit universe. The projected delinquencies for lhe
property sector are specîFtc to the respective MSA. For example, the proiected retail delinquency
rate for New York retail is 3.6%. We have a complete breakdown for all MSAs in conduit CMBS
available upon requ€sl,
PfOS and COnS Whìle there are several c¿¡veats to our exercise, including: lhat our sample set was limited to
watchlists available eþcü.onicalV. the lack of statlst¡cal probabilities and liming for when loans
with DSCRs 1 .0) and, lest but not least,
the accuraç¡r of the data. Whle we are conssrvat¡ve in our preference for longer (and detailed)
watchlists, recognÉing the weaÍnesses, we think this analysis hetps set some boundaries on lhe
recent dellnquenc,y "gusssürnetes'. We hope this provides a better relative direction of wàere the
increases may occur by vintage, property type and market
Our tables are the fust steps towa¡d answer¡ng the "how high" question' ln closing, we don't
believe delinquencies will splke to 5.6%, but we do think the 3.0% level is perhaps a starting point
for considering wfrat might be ã worst-case scenario boundary. Remember, conduit
delinquencies are stiÍ relatirrely hw al onÍy 1.620/o (¡n Part thanks to an expanding denominator)'
Whether it is 2.5% or 3.0ûlo, r¡ihat þ most ¡mportent ¡s ident¡fying which loans are potentially
tomorrow's delinquencbs in your porfoEo. Relative value in CMBS lies in the ability to dig deeper
¡nto ¡ocal markets/copateral as efficiently as possible to determine the potential impact on a
security. \Âlhile stucü.ne proviCes an additional cushion of safety, having access to aclual
collateral performance and an&,ipaled performance should aid investors in their ¡nvestÎent
decisions.
24 January 2003
PM-1897

!
¡
@
(o
@
Table 3 Projected Property and Top 25 MSA Delinquency Rates
MsA Tlec,if-HncyRate(%lbvi",i*.y*,H€.lt+"Hp€lro")
New York, NY PMSA 3.ô 2.1 0,8 6,1 1ìl 1,8 0.0 3.4 1,6 0.0
Lß Àr¡€les{ong Bèâêh. CA PMsÀ 0.8 0.5 0,9 l4.l 2.8 ll.8 0.0 4-Z 0.0 0:0
Weshlngton, Oô+lÞVA.t¡ìò/ PMSA 1.0 1.0 0,8 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Chlcago, [- PMSA 2.5 0.1 1.5 8.3 10.2 0.0 0.0 4.S 30.8 0.0
Dâll8s, TXPMSA 0,9 3,5 4.0 x1.2 2.8 0.0 0,0 0,0 2't.5 7.6
AüËnb, GA MSA 2,8 4.2 1.0 6,8 0.5 0.0 5,2 S,9 0,0 12.3
PhllådolÞhlå, PA-NJ PMSA 'l,g 0,3 0.9 2,9 6,7 23.3 0,0 11.8 0,0 39.5
l-buslon, ÎX PMSÀ 4,1 2.0 1,0 0,0 0,6 0.0 4.6 0,0 0.0 n:t
Phoanlx.lrieea, Æ MSA 1.1 3.3 1,1 42.4 1'5 0.0 4.9 39.6 0.0 0.0
sm d€go, CA MSA 1.0 t.8 . 0.3 s,2 0.3 0,0 0.0 0.0 0.0 100.0
DÊþoll MIPMSA 1.2 l.l 1.8 49.2 6.6 0.0 0'0 33.4 100.0 3'4
8ßton, MA.NH.PI,SA 0,3 0'0 0,0 n'l 0.0 2'7 0'0 0,0 0.0 17.3
Lae Vogæ, NV.AZ MSA 2,1 0,? 1,0 0,0 0.0 0.0 0.0 ' 0,0 0.0
Oranoe CounV, CA PMSÀ 0,1 0,0 03 12,0 9.1 0.0 13,8 0.0 0.0 2,6
Sgn Jæe, öÀ ÞMSA 0,0 0,0 1,7 l,t 1,S 0,0 0'0 0.0 ' 0'0
Sån Frsncl6c0, CA PMSA 0.5 0.9 t.9 9,0 6.0 0'0 0,0 0,0 0.0 0.0
Btìlmoro, MD PMSA 1.9 0.6 Zg 4.4 3.5 0'0 0.0 ' 0.0 ¡18.5
RlveruHe'San Bemerdlnð, CA PMSA '1,6 0.0 0,0 0.0 0,0 .0'0 û0 0.0 0.0 0.0
SÈått6BèllevuÈEv6nh, WA PMSA 1,8 2,2 2,0 2,3 0'0 9,7 O0 9.4 0.0 0,0
Öatlard, 6A ÞMSA 0.0 'l.8 0.0 0.4 2'8 0,0 0,6 0.0 11.5 0.0
Fofl tåud$dälå, Ët PMSA ô.6 2'2 2.1 0.0 3,8 0,0 0,0 32.f 0.0 0.0
Mlânl, FL PMSA 1.5 2,4 6'8 1'4 9.1 0.0 0.0 0.0 6.3
Odando, FL MSA 4.6 1.ô 1.8 49'9 5.3 ' O0 ô.4 0.0 34.3
O€nvðr, CO FMSÀ 1,2 3,0 0.3 17.0 12'3 t0 0.0 2l'7 0.0 32.7
NasBåu€utulk, NY PMSA 19,6 3'8 0'g 0,0 0'0 0.Û 0'0 24.6 0.0 0.0
6oura: Gndll 6uh¡a Fhrt Eo.toñ, l¡6pp,
(B)
(A) Folgntial Potenthl
l'¡SA 30hy+ 30Day+ i/SA lìiSA (A+B)
\^/dch Llst Total I¡SA [ilSA Delhq. tÞlinq. Èoþoted Rposuro
Loân Iì/SA ekq. Dslft1q. "Plpelhe' "Hpelino" lúSA Cþli,¡q. ¡n CIVES
count (Srm) (Srrrn) Rete(%) ($rm) Rare(o/o) Râl€(%) Rank
14
1S
4
10
15
21
I
22
l3
7
16
6
I
4
ô
I
I
5
I
12
11
5
0
I
12,187.0 58,1 048
10,995.8 28.S 0.26
8,514.4 30.2 0,35
4,895.2 104.5 214
4,887.3 148.4 304
1,717.ø 60,9 r.29
4,403.1 67,6 1,53
4,031.8 21,4 0.s3
3,903.9 72.2 1.85
3,885.5 13,9 0.36
3,766.5 69,0 ,l.83
3,668.6 16,7 0,45
3,647.8 40,4 t,tl
3,384.9 28.0 0.83
3,082,5 26.9 0.07
3,048.S 36.9 1.21
a879.8 23.2 0.81
2187.3 19.2 0.77
2,4i4,? 323 r.34
2,344,9 0.0 0.00
2,158.0 51.3 2,6Ë
¿103,9 26,8 1,23
2,089.5 n3.2 10.66
l,93l.s 30,9 1.5å
1,800.8 53.3 2,90
173.4 1,42 1.90 1
fl1.6 1.02 1.28 2
31.9 0.s8 0.73 3
71.t 1.46 3,60 4
44,4 0,91 3,94 6
103.6 2,20 3,49 6
32.1 0,73 2.26 I
90.ô 2.25 2.78 I
110.5 2.83 4.68 I
47.9 1.23 1.59 10
63,5 1.69 3.52 11
30,6 0,83 r.æ 12
54.2 1,49 2,59 1g
51,0 l.5l 2.33 14
10,9 0.35 1.23 f5
33,0 1,08 2.2! 16
42.6 1.48 2.8 17
1.0 0,04 0.81 18
27,5 1.14 2.49 19
30.5 1.30 1,30 20
l8,s 0.88 3.63 21
43,0 ZU 1,27 22
16.1 0.77 il.45 23
33.6 1.71 3.29 24
140.6 7.8t 10,7t 2Ë
lnf)
cÐ
Bg
m{
Eofr
Ø.Ø
-t-l o
z
H2
ôtI]
g(,
4<
¿9 oô
1Ë
3-ä
3¿
åE

CREDIT I rrnsr
sulssE I BOSTON
Gontributors
Michael Maniott
+1 212 325 4240
mlchael.marriolt@cslb.c€m
Lou¡se Fogarty
+1 212 325 4240
Iouis€.f ogarty.z@ßf b¡om
Kin Lee
+1 212 325 4240
kln.lee@csfb,com
John McGrath
+1 212325 4?40
iohn.mcgralh@cslb.con
Albert Sohn
+1 212325 4240
dbeúsoir@cslb.com
Desk View: Trading Commentary
CMBS Market Watch WeeklY
Desk View: Trading Commentary
The tone in CMBS this past week remained overwhelmingly positive as the sector put away ¡ts
f¡rst new issue fixed-rate deal of the year. With the TOP pricing coming in at the tight end of the
underwriters' initial guidance, the deal capped a week of tighter spreads and a fattening credit
curve. Secondary flows were relatively light. The few bid lists that came out traded as if dealers
were desperate to add to their inventory, no matter what level it took to take down the bonds-
Reta¡l ¡nterest in adding paper has been fairly broad, indicating that this buy inquiry may not be
fleeting. There's been no sþn of investors rotating out of CMBS into corporates or asset-backeds.
All in all, CMBS has had a pretty good run so far in 2003.
Looking forward to the upcoming supply, certainly the next couple of deals should have no
problem being absorbed at good levels. The tesl for spreads will come further into lhe calendar.
Table 4 Benchmark Trades
BoVSotd Security Rating Size (mm$) Avg' Life (y0 Day
Sold DUCÎú 98.CF2 AtA AAArtua 5mn 3¡6 Ttur
Sold GlJlÃTgg.Cl A4 AÁAfAaa lllmm 9'82 Wed
Sold IIASC 98Ð6A18 MÂlAMlAaa 20mm 2'4¡l Tues
Souræ: Creü Suis FLsl Soslm.
53¡¡
24 January2003
PM-1899

cREDrr I nnsr
surssE lBosroN
Technical Update
CMBS Domestic Pipeline Outlook (in millions)
Conduit/
Fusion
ll. Upcoming Domestic Deals
Deâls ¡n Januery
Floating
Rate
s435
Wells, Bear, llorgan Stanley, Princ¡pã|, John Hancock
Waehovla, Art€sia, Nomura SecurÍtles
ãÉ.-
-¡u-ta
Ðuéwg¡L nuE
rÊ-.-t
ltryE ^^*^l;^l lry.ustv,
Cred¡t Su¡s-çe Fturst Boston 2002'FL2
Sdê: Cæ4 Süis F¡¡st 8GEÐ. CoñrÞEjel Mortgágê Alert
lll. Deals in lhe Market
Single
Other Sonower
$8S5
s240
Deal Type
Conduit
Gondult
Singl¿ Bor¡ours¡
Floaflng Ratc
Boro$Er
CMBS Market Watcfi WeeklY
Techn'ral USate
S¡ze (mm)
Bear Steams is markelíng a$æ4.6mil1iqn cross+ollateralized and cross-defaulted floaling+ate loan, BSCM 2tþ3-
WEST, secured by a frst mortgage lien on 11 fr¡llservice hotels. The bonower is Westbrook Hotel Partners lV LLC'
Bear Steams Corrune1:id MoJgJge originated 100% of üre pool. The top frve geogrraphical concentrat'tons are in
Virginia (15.8%|,GaÍfom¡a 1tS.õZ"l NewYork (16.1%), Miciúgan (15.60/ol and Pennsyl'ania (10'9%)' Standard 6'
poo/s anaþb determíned lhat the loan has a DSCR of t.S+i ¡ase¿ on a 1Q-5% refir¡ance constant, with a beginning
LTV of 65.50lo and an end.ng LT\/of 60.7% þased on the inútial $year loan lerm)- This deal has been rated by
Standard & Poot's, Moodfs. and Fitch.
Wacfiovia, Nomura, and Banc of AÍierba are marketing a $937.3 rnilion deal, WBGMT ãÐ3C3' collateralized by 130
frxed-rateloans on 130 multifanily and commercial properr*¡s. The loan orþinabrs a¡e Wacfiovia Bank (55-e%)'
ñomura credit & capital (?0.a%), and Artesh Mortgage Cerñilal (13:7%)- The tbp five pfoperty type composition are
retail(l4.Bo/ol,multifamfy(30-a.lj, office(13.9%), hsþl (6.370), and mixed-use(1-OVo)' Thetopfive geographical
.concentrations
are h Cagfàmi¡ di.eolol,Florida (12.6%), eeorgia (g.5qo)'Maryland Ø-onZo)'an! W¡¡!1ston (6-1010)'
Standard & poor,s analysb determined that, on a lveþhted arrerage basis, lhe pool has a DSCR of l '43r with a
¡"g¡nn¡ng L|\tr oÍ 94.|oioand ar¡ ending LTV of 80.0Yo. This deal has been rated by Standerd & Poofs and Fitcå'
24 January?Ñ3
sr,0?8
$937
$570
$135
PM-1900

cREDrr I rtnsr
surssE I BOSTON
lV. Recent Pricing
MSDWC 2003-TOP9 - $',|,077.8mm
CMBS Market Watch WeeklY
Technical Update
Priced: January 24,2003
Trarrche Size (mm) Subordination (%) Average Life Pricing Spead
A-1
A-2
I
E
F-
G
5.4
t,077.8
ss3.2
'Þeal rated by Slandard & Poo/s €nd Fitch.
Silfcæ: Credil Sul8s Fißt Bosld, MCM Slrudured Rnetræ, 1repp.
5.7
+39
24 January 20t3
PM-1901

cREDrr I nnsr
su¡ssE I BosroN
V.
2003
Supply
CMBS lssuance in Millions - Year to Date
Conduit /
Fusion
Float¡ng
Rate
Single
Other Bonower
'Tolal 'Chsege for200U qly ¡ndud6 issuanE data alÞr a mnlh has etrde{
Souræs: Credit Su'Ese Flrgl BGlon, Comrercial Morlgage Ale't MCI'I SLuctutedFlnan€ Watch-
Vl. HistoricalCMBS lssuance in Millions
Supply
2002
2000
1998
24 January 20O3
Conduit / Floating
Fusion Rate
105
026
19/,
2003
Domestic
Total
Single
Borower
2002 Change
Domestic from
Total 2002'
Domest¡c
Tolal
CMBS Market Watch WeeklY
Technical UPdate
2003
2003 Global
Non-US Tolal
6 Our tolal domestii volume is $60.3 billbn versus a total of g66-4 bitlion as indicated by CMA. The difference
of $6.1 billion represer¡t:s ofher transactions such as private resecurilizat¡ons'
PM-1902

cREDrr lrtnsr
su¡ssE lBosToN
10
Vll. CMBS lssuance in Millions
Condút / Float¡ng
2002 Supply Fusion Rate
Grand
Souræ: Cr€dlt Suþs Frsl Bßlon-
Vlll. CMBS lssuance in Millions
Corduit / Floating
2001 Supply Fusion Râte
SoqÊo: Credit Su'!g* Frsr Boekn
Sir¡gle
Oú¡er Borower
20v2 2001
Dornes{lc Domestic
Tolal Total
æ01
Domestþ
fotal
Chang€
from
2001
2000 Change
Dornes{b fiom
Total 200Û
CMBS Market Walch WeeklY
Technical UPdate
2002
2002 Global
Non-uS Tota¡
2001
Non{JS
2001
Global
Total
24 JanuarY 2Ù03
PM-1903

CREDIT
SUISSE
FIRST
BOSTON
AMSTERDAM ....,,..................31 20 5754 890
AT|-ANTA.,-............................1 404 656 9s00
BALTIMORE .-........................1 410 223 3000
8EtJtNG..............-.-....--........ 86 l0 6410 6611
BOSTON.-.....-........................1 617 556 5500
8UDAPEST............................. 36 I 2022180
BUENOS 41R8S.................. 54 ll 4131 27N
cAtRo..........-......................,...202s67 7600
cHlcAGo....-.........................1 312750 :XlO0
FRANKFURT -.......................... /tg 69 7538 0
GENEVA...-...... .....................11 22394 70 00
HOUSTON..........-..................1 7t3 220 6700
HONG KONG....... --.......... --...- 852 2101 6000
tSTANBUL....... ....................8¡ 212278 2û0
JOHANNESBURG .........-......27 l'l 343 22 00
LONDON .-. 44 20 7888 8888
MADRID ......34 91 42316 00
MELBOURNE ........................ ô1 3 9280 1666
MEXCO C|TY......................... 52 5 2&? 89 00
M1L4N.............. 3902nU27
MOSCOW.............................. 7 5t¡l 951? &200
MUMBAI ......91 22230 fi13:l
NEW YORK ........................... I 212 325 æsD
PALO ALTO......................,.... 1 650 61/t ã|00
PARlS....-............,................. 33 I /t{¡ 76 8888
PASADENA ........................... 1 626 395 51 00
PH|LAÐELPHIA .......... -.......... 1 215 851 1000
sAN FRANCISCO .................1 415 836 7600
sÃo PAULO...........-............-55 ll 3841 6000
sEou1........--.-...................... 82 2 3107 3700
SHANGHA|...........................86 2t 6881 8118
s1NGAPORE........................-.--65 6212 2000
SYDNEY.............................'.'
TAtpEt..........................-.......886
61 2 8205 4400
2 2715 6388
TFüA||-AND...............,.........-.'...66 2 61¿¡ 6000
TOtCfo.................................. 8l 3 5104 9000
TORONTO.....-....................... 1 416 352 451¡0
vtEN]\tA...............................-..-4iì t 512 3023
WARSAW.-............... -........-. -,... 0111 134343
WASH|I{GTON DC................ I æ2351 2600
zuc...................................... 41 41 7n g7 @
zuRtcH.................................. 4l I 333 55 55
NbrÞün. æ.ùbi'yd @wourd be ænts.ryro raw orrcsurari' orvhi¿r wour¿ sbíåiòiräiäi"öËÀìãiãã'ià;nãiuòãoi"¡.áoramiåe (ættectivérytsFE') b ey,€ûtst¡etsqrq EoÐs¡r0
r€flißruntsfhh$drþÌi¡d-rcüo.Ar¡matêdetpresented¡nrhisrepo¡r,unres¡æcnåüñ#;îfi;.;;;;"i;f!-10ìiit"csca
Ñ-eoiberteial,mrtts6nlðtnqa¡vFpvoli'mavbÊ
6¡1i¡ 6 çqidaed lrEdemalkeqwrulce marks of csFB
""*¡¡
Eubsiboforcgrt¡¡qothqtiEncta[ndrurents. csFgreyrcthilera*aenya'ñüãnåæîatúcscuaiærelerre¿toiñthb.dfortaEsuilebleforariypânjðhrlrEdo'-
i.*åiñ"rrr-"åi,ji**"¿rËEaro-nraaaäno-åãn;;t't";;;i* PlÉeÞnolehperticuhrlhallh.basæãndloveìsorlaþf¡onmâvclEnqe-
åø Csfs i" unde.no obEgãliln to €rure thãt swh olhsGporb are browlÍlo tha etdl¡m of er¡y Eclpþ¡l dhs teloÉ -
ü"iii*nri i"cly ty csFB, or an aisociae of C€FB or csFB mdy be^the onlymaetñâker ir 3uch lresbncnts'
csFBuinnorftat
a|de!ümeÞ@biredio&bÊÞortæflec1âJrdgementatibodgiÉrdâr"o¡püår-mîlviËiïãüÀãËiùúi"ao.¡"æêÙinornnonæ Îppfæ,valuèofaøln@m¿fromÐof thewñl¡esor
Dricêorincorcotsudreødtiesqt¡nancialÌnstrurents, tnveloE¡n"uqr¿tos*åi-Àblälõ;äää-"h¡.1t.*infiæncedbvonqcvvolâtility'efecliv€ly¡sñ€lhisrÉ¡L
i.iuä al;**ü*iu, trekôm prclesional advìæñ a6 to lhe risks lwolved iô ma.k¡ng scf¡ a pufdtase
bore lryætmots díused ir th¡s report mêy have a htgh tevet ot wtatitity. +rigl¡ vorrïÌffäiät"iãv
-ddÐ a¡d l?rgo la¡lc ¡n lhe¡t !âlue É6ing loeswàs lhat mvfl b rølbed'
"tæti"n*
Þeymreffiyb$Dportthostoss. tnæmeytetdstumtnveslñeñsryflduaö;;i.i"'å'n!.q*-n-;À-'ntîli¡*Filal-Pa¡¡ltofjkeb€ifuæntmvbeusedaspãdofthâth@mvield' soæ
fr#i hîffi"üE eddEsE of, or ønbin hyperiinks to. websltë. Exceptio the e)dÉnt to which the eport releF to csfB's Mwbsle máeriel, csFB tEs mt cvÞwed ar¡y sÙdl srFatrt Èk6 no
êÞôns¡b¡f¡tytort€dte¡¡rønanæneÀ¡n. suoáåaressornypertùìt(ndudi;g;;r;;iïrt¡ç.rrn"ìgcsr.s-omw¿tstømaslaf)t9r|d€dsoþlyforyqrc@åhîæandinfomüm4dllE
corum of any sdr webs¡tedË æt h any Ey tom pa¡t of rÌü's dodml: 4o:esúädl reËitå"orfoíowirg *ctr fnk $@Eh this Éodt'øcsFBs Hebsit€ shallbe atyflr om tisk'
ftilãdr Lr¡nH- csFB Ræaró (Mar¡yjâ) sdr Bh4 credrr suisæ ri"¡ e"'m s''iË'eirlãàä-üi il ;Ë;äËr" t" tË*ø- ui üà eeø¿ ausised aftEâb of the abffi- Flogrch d TaiMÉ*
!ä;ä"'ñ;Ëd byc-;[s"'Ã;Ê,"t'Bi;iott,rã¡æleon.tr ¡o bo" p¡æare¿ anã¡àr rair¡¡¡ed bya re€idôred s€n'or BahÉs Pêlw'
tuùo.d*n Ðd mv ml* ü¡at ùE lÉde æ mde lß affidap w¡th appron" o""e-rLñ'i ¡om ¡eg¡#¡on ol føeiug t"qu-utt"nlu. Ñä;tU s. o*tf wishing to elfÊct a traÉqlio shild ænl6'l a
B[ j'r,l;* *"t t" *-or wes odg¡netv prepered and issued by csFB tor dsbjbd'þn to tlæi,r mart€t Þrc{dsidat and ¡Dd¡ùllronel in€Etø éslæE Ræip¡EnE who æ not mrld Þrdes{spl or
and/o,thouK@ñÞ.Erønscræ*yJîù'Jãu"¡r"uii'ã"än,in"r-¿a"¡"9gt"yrt'ret-myb.rn æ*ueæBaoler¡ponroqæEthr€€peddthbrepo¿
Copv¡Strt C,"dil SuE* FiI6t Eoston. dd its êub6iliaries Ðd affitiat6. 2003. iði! türl¡ts ¡ærued
PM-1904

stl
CBXNI4VPB rrrrrt* I¡**CAR-RT L0T*rC055
H008472556$ IøllLtø3
S85 PJ
ll$ffiIHilil Hïïïîî'h*
fiHHFffiffiffift üüffi:
$TåY 0AUGI{T IJF¡ Sign up for free e-mail news updates at saniose,üiziournáls:com.
tlE GôGI¡inn QAnRrl
r¡t ùuE¡\rlts çuutul
' BY sHARo[ stMotlsolt ,
si¡nonmn@bizjoumajiicon
., ; :_.,,
: i, Hþs¿"6-P"oO*U,Co. is,sæking,.
'$80'million for' à, 27-acr:e'êiiC'it "
on¡ns on the border of Moiihtain
View and PaloAlto, butpotential
bqyers say they doubt tåe information-technology
company will
collect arry.where near that sum
i00
. i . ...: :
'-.assumihg.no dark-horse bid.¡ ,, ,
deremerges... ..; i
' Palo Attebased IIP is selling'. .'
:thgr Þroperty .which inclufle-õi .'r
'488,900:'squdre fêêt bf offices;as' ::
partof anefforttocut.itsadmin- |
istrative facilities by 19 percent
worldwide. A spokeswoman de ,
. -.:
... ¡:.. ..S¿om0PEEfT,ÞgeÍ !
*
OUR E
PM-1905

!
I
I
( oO)
Pmfi3PEffiTY: I'lP's complex on Palo Alto-t\llountain l/iew border once housed 1,600 workers
TRllM PAGEl
cb¡ed to say how many square feet tfiat
would.be.
The company is pushing to sell üte
site quickly. "'
Neþhbors in the area say they are well
aware the property is on the block. Several
are concerned. that any new use not
overwhelm what is already a tightly
packed subùivision of some 1,000 largely
single-family homes on the Mourtain
View side. TWenty-two acres of the 27 totalare
in MountainView
"It's a pretty significant site," says Ellis
Berns, economic development manager
for that cit¡¿ "You don't often find
22 acres together."
There are many possible permutatiors
of what could be developetl on the proper'
ty if anew ownen seelrs to change its zoning,
Mr. Berns says, from housing to
neighborhoocl antl regional retaü. But
neighborhoocl input, and the needs of the
city to rarse revenue, will be guiding
forces in whatever happens, he adds
The complex housed some 1,600 HP
workers as recently as 2000 but is nearly
empty now It should be entirely vacant by
ApriÏs end- It sits nestled by lush land'
scaping in the older neighborhood of
what were once mostly working-class
homes thatnow sellforhundreds of tlrou'
sands of dollars, The site itself is the former
Mayf,eld Mall, hrilt jn 1967, a use
that a handfr:l of local residents say they
wouldn't mind seeing again.
Bids for the proBerts which HP converted
to a business complex when it
boueht the site in 1984, were due Feb. 1B'
The company dedinetl to say how many'
bids it received,
IIP marketed the properby nationally as
a potential headquarters with room to
add 160,000 square feet of ofüces and an
existing "advanced communications net'
work." It also swgested it could be convented
into a mdtitenant office park or
completely redeveloped for uses includi:og
houslng retall or a hotel.
Bidalers say the company hopes to close
the kansaction rvithin the next 120 days.
That spe€d is one reason the see¡ningly
*ã ewlett-Packard selling
The Palo Alto company says the property could be a new
corpomle headquarters, a multi tenant offlce property 0r
redeveloped as a mix of residenùal, ¡stail and hospitâl¡ty,
* tuo M.ylirld Àu.., Mountain View ìk
(former Mayfield Ma[ on Palo Allo-¡lount¿in Vier¡v
Site size: 27 acres
0ffice space:487,538 square frel in lhree buildinqs
Asking price: $80 million
Soürce: Ex0cutlll6 summary 0f b¡d solhlhtlon f][m Prud€¡l¡âl
Real Eslots Advhors ¡cilng 0n llewlett-P¡Blord's belulf
stongest class of potential bidders -
housing developers - isn't expected to
pay top clollar for the site, despite the exceptional
location.
To build housing - indeetl to change
the properh/s use to anything away ftom
its current ofüce use - requires a shjft in
zoning. That change couldtake ayearand
perhaps much longeE in part because the
land lies in two cities. Ovwrlng land while
that process u¡folcls costs money andnot
lmowing what the cities will eventually
allow creates risk. Both factors undenmine
the pr-operty's current value for a
housing developer even ttrough housing
is one of only two types of real estate de
velopment Urat is prospering in todafs
BayArea economy Retailis the other
'Tfb pretty crazy right now to be taking
down somethìng like that" says Steve
Kalmbaclr, Northern CalSfornia presi
dent for Pulte Homes Inc. Pulte is the
largest U.S. home builder, recently re-
Borting annual profit of $454 million, a
more than 50 percent increase from ttre
year before.
"You car buy lotlrer pieces of land]
baserl on receiving firll entitlements rel,atively
risk-free with an optior¡' he says.
Entitlements are the rights to clevelop a
piece of property in a particular way
Idealty a housing developen prefers to
buy the rþhts to purchase a properly
while pu¡suing developrnent plans
tl¡rough a cit5i If the developen is unable
to get a property zoneil for the kind of
housing clesired" he isn't oblþated to buy
the land. antl onlyloses his option.
Having such an alternative elsewhere
means Pulte wonlt make a run for the HP
offering, even though the company is aggressively
looking for new sites in tlre
area, i\fr lþlmbach says.
Pulte competitor I{B Home did bid, says
Robert F?eed, president of I(B's South
Bay company But }i1r. lTeeds ol¡seruations
matdted his peer's at Ptlte .
"FubJicþ traded builders won't buy
properW ouhight'as is,' " he says. "The'
value is intlre entitLements."
I(B reBorted net income of $314 million
for fi scal 2002, also nearly a 50 percent rise
over its previous fiscal year: I¡Ir Fleed de'
cïned to disclose Ns company's bid
amount.
Roger Menard, president and chief enecutive
ofücer of PaloAlto based Summer.ÉIi[
Elomes, says his company also
made a run for the sitg though the offer
was complicated when Ellis Partners'
LLC, a San Flancisco real estate developer
and investo4 decided against a bid.
Sur¡rmerHill hail been working with E.ll i s.
Mr. Menard did not disclose a proposed
purchasepiice.
Alt least two commencial property ovfiI'
ers also said they wor:ld bid for tlre sÍtg
though neithen world be identified.
husuingthe sitetomaintain itas an oÊ
fice holding is even more risþ than buy'
ing it with the intent of changing its zoning
for hornes, meaning their bicls are
likely evm lowen than the ones from tfie
homebuilders. A gfut of existing and oÊ
ten vacant otrce buildings tlroughout
the Bay Arm has deeply discounted. off ce
rents, meaning cashflow would be low, especially
at first. A dearth of prosBective
tenants seeking more than 25,000 square
feet also means a landlord could struggle
for a year or longer to get the property
fllled at all.
Whoever winds up v¡ith the property
will have to deal with what appea.rs to be
a very active homeo'çryners association on
the site's fla¡k. Residents in the Monta
Loma neighborhood Ín Mountain View
are frrliy aware of events and. new tlevelopments
that could atrect their properW
values and qualiff of life. A visit to the
neighborhood. producecl calls and emails
withinhours aften one resident broadsast
that a story was beingpreparetL
Several residents linked changes at the
IIP property to their disappoinûnent with
developmerrts at a nearby neighborhood
retail sbip centeq, which an Albertsort's
grocery store had vacatetl more than a
year ago. The store site rernains emptJ¿
For residerrts, the two areas represent ob'
vious extensions of their neighborhood,
and likely sites for commencial or retail
services to support it or new housing to
extend it.
Several residents noted the speed with
which rumors spread in the area, and
said keeBÍng everyone Ínformed with
facts would go a long way toward dissipatingfear
"If the use i:s to change, it is very important
that the developer bring the
neighborhood along during the planning
process," wrote Thaddeus Drive resident
Jim Cochran. 'We found dwing the time
whenthe citywas consideringpart of the
site for housing that runors were quick
to alarm many of us. ... We neeid to see
that the neighborhood wor¡it stffer."
Anofher rumor - that Stanford Universit5¡
which already owns L3 square
miles of land in the area, is also a bidder
forttre site- couldnotbe conirmeù
SHAA0il SlM0tlS0ll covers real estate for üe Eusiiess
- Jounal

. JANIJARYlO,2OT3
voL 20, N0:35
;' ' $1.50
ffiffiffiffiffiffi ilî*jî.
Rocli-bottom
price paid for
Inktomi HQ
. BY SHARON STMONSON
'. : slmonsoh@bhþumals.com .
STAY GAUGHT UP: Sign up for free e-mail news updates at sanJose,biziournais
Foster City headquarters of trou'
¡led mliomi Cory for a fraction
of what the lrternet search com'
pany pai4 léss than six months
ago.
Walton Street CaPital LLC,
which invests in real estate onbe
half of persion funds, insurance
companies and.other Private equiû
paitt $41.6 million, or just
,. --
. un¿er $160 a square foot, for the
A Chjcæo-based real -.r,.,t estate in- property accortlìng. to Public
vestrnent firm has purchased the. '' recorcls.
Inktomi bought the . same
260,00Èsquare.foot develoPment
for $43? a square foot, or $114 mil'
lion, Ín August.
A fund fun by Walton also is
the primary equitY investor in
the new downtown San Jose Mar'
rioft cgnvention center hotel.
For Urq Inlctomi ProPertg Wa1'
ton outbid thciugh not bY much
-
- three òther companies, j¡clud'
$æ lNKT0M!,'Pase 34
PM-1907

lNKT[Ml: Foster City headquarters complex sells for less than half,what oornpany paid in August
TBOI¡ PIEE 1
ing San Josebased Divcowest hopeltiæ
ðd Sm trtanciscGbased SPI Holil'
l¡æ LLg ädötüná tò sources, l¡cludllg
the chtêf êxæutivs for þne losi¡g
æmlEny
. . An secutlve.for livalton dedlned t0
spec,f,¡ how.mricb dèbt Walton Used to
.ærotrete the dæl or ib expected F
tun PeriT Pinùo, who hætlles rul'es.
.tate æqllisitlm.fq lválton SE€et ln
Noilhm:Câliforoia, did ænaæde; how'
eveB that the pu.rchæe''ts rtsky"
. "We do tbirk it ls a.vefy atfacdve
.deal- Thafs why we @de the investment,"
he aalded.
Ttle trmctlon ß the latèst evldenco
of tle @ltj¡qing dedire ir tbe value of
Bay Area æmmercia¡ prcperdes wltì
wobbly tffits - or nP tenæts at all -
..,¡ a marùet.whse few companies æ
seekingslne . .
The sale disdosed D€s 30 i¡ Inlrtoml
fili¡Ês with tÏe us. Seiuities æal Ëxchmge
Comht¡]slon, follows â handJi¡I
of Siliæn VaUey t"ruactiore since Au'
gust in w}jdrbuy$s wluing úo stomdr
'
exæptionäl rìst ¡flo pld{ed up Þrcperties
for. well below previous. valuæ.
Oplllons allfer on whether the Inktord
pÞperty is of the sâmê ilk æ sme of
the other s€.les, inclu¿li¡g Nortels ele of
its Santa Clåm mpus md a Mowtain
.View cmpus pür:Xas€d by the Computer
Hlstory MEemJlôs;ere4, jn geher¿l
the tmisctions ile boud by the d€.
presetl natræ of the priæs, often-troubled
omùs ail the buyer's obvioE *:
IEtation .that they æe..puÌcbaslng i¡
the,.@nomic tou¡ù ánd should prcñt
hmdsomely when theria*èt reboud$
'The lDktomt buüdilgs æ tuIy
leased,. one: factor lhat some aigue
u1åkes t¡e M-le difieHt froin some previou
cleals. SdlL wheE the s€le wþ fi-
¡åùilzeil, I¡rtctomi was.'irot .viewe:d æ a
sùellar teâirt, havhg i;r¡ilered eteep job
losæ md some diæy f¡rociål tims..
there hail nof yet been a pub[c m.
nouæment of t¡e þtoÞosed merger te
twæn aÌkioml ánd Ya¡oolnc of Suuy- .
yale, a ¡Âuçh shongs compey . ,.
For fscaj. yeæ 90Ûi æde¿ ¡n SeptónbeE
l¡lctomi lost more thm $500 mllllon.
This could rurn into a
real succes ifYahoo occupies
.the $pAce,or it could turn lntq .
anothBl one ofthe vacant ,
buildings ln the areal
Stlert¡'. Sh¡ff
Iis shæ have tzdedþelów $2 in recent
months. The compæy has appmKimâtF
ly 2m employees toda$ doM Aom a
. high of 1300:
Walto¡isMrPintosqysblddersbadno
iìùIing that the Ya¡æ msger wæ ln
thê offing, though it wâ3 colillonly
thoucht that lìldoml æuldJoin with Ð.
óther ftm Walton entet'tâtned the pos'
sibülty that lDktomi ¡nlght mt survire
when ii made its bid, he sYs.
Under the terms of.the tleal, xnktomi
will continue to Ht 130,000 gqlæ.fæt
.hl the.co¡npld under a frvsyeù læse
with Walþn, a@rd.ing !o the SEC fl'
.. ¡ngs, thorl ChmudloJ thespaçe jsmpty.
1
Real estate re¿l-ity
ftr lnkt0¡rl headquârtorsl0iú a ¡towlDg lld 0f disl¡êssed c0mnDrchl lrogerü¡s In tùeEglof, selllng ât ddep dlsmrrb fmm lt8lr previm vatuc.
8qß$ cûСú: ryF! Ii Êe dqd
InktoBi m renew for up to three àue
esire fiveye¿t t€ms. .
Howerel; l¡ what ould bæome a si€i.
n¡Ilmt caveat, InKmi alsq trEy terminatê
the leåi afrs oDly.tvio yeæs, for á
fæ that is not discl$ed.in thefiliñ g: I¡k.
tomt's chief fEmcisl'oftlce¡ì Rædy
Gottftied; did not retùn a €Il for æmment,
. Stuüt Z Shifi, Þchief eiecutlve ofEær
fòr Divibw€t, s$r,that áll of'tbe
blddeni wéæ bothered by lhe hieh vacancy
ratês in-¡bster.Clt]l incìuding thè
empty ntrly 400,00ûsquiueJ@t Pæk
side 'ibwers, omed by Equity Otræ
Proiært1æ TlEt, üteru¡¡y adoss the
'sbeet hom'the Inlrto¡iri campw .
' lThiÈ lthè ll1ktoml.{oEplex-l @uld
tum into a rea¡ sudÆ lf Yahoo æc11.
.pi¿b the spacê, or it æulil im into æother
one df the uøt buildings in t¡e
Ðu," he sayg..
. Ðtvæ has râlsed$'i?o EllllloD, much of
it ftom the Califomia PublicEmployæs'
Retiment'S¡steñ æil thè Californtá
State Teächsrc' Retiremenf Systerl to
invest in reâl estâte in the next æreral
yel$ primtriþ in the valeY
. .The lriktomirYahæ msger; whe¡èby
Ilktmi wtuhcom awhoÌy offii€dYâhæ
robsldÞ+i shoutit be iþm]mated
soÍietÍne tbls quårter When - and lf
'- the maEer ls done, Inhtoml wlll be
ù-aßformeil fþm a teffit with a qu*
ùonàì]e tuhue to one with fa greater
e:ræctatioro fof srvÛal
. Asimlng Inl(toni stays. for the tull
fivé iæ, it will forwdd $9.8 mil]ion in
aggregâte læse pâyments, including
costs, to Walton.
. The othei two teiHts in fte buildi¡gs
ae Iêgacy Comercial, whicb also wili
@ge the i¡mperüæ for Walton but
dß not have any ommhlp, ild AÈ
pl-ied Biosy.stems Inc Both hæe five
'yÉais re¡¡aining,on thÞil leær; Mn
räto sdis.
The saùi priæ for the frktomi l¡eadqwtere
ls fæ less.thil what lt wìtd
cost a.develop€r to build the same sEuc.
tm todali says Bilry DiRaimondo,
'piæidmt of LegæJt Pãbîere Colimer-r
bial, the trbéter City ileEtopû whó built
t¡e Inl(tomi buildtngs in the late 1990s .
Legâc1' sold the buildings to.Inktomi for
mioie tha 6¿oo a sqlæ foot, according
tolvû:.DlRâimònalo. : -..
''iBut in Jme 2004Ihktonl eDtü'ed.ihto
a sFthetic leæ .- a fom bf oË-b41.
æce:sheet ûna¡cl¡g - with Deirtsche
Bek ed afinlaþs, aæbrding to I¡ktG
mi's SEC fli¡gs. I¡ktmi w forc€al to
buy the buildi¡æ from Deubcbe Ba¡I
id.A[gustvhen.It fajleit,to mæLa mtril
mm ¡eùi of prefttabt[tyå cdnditionof
tElæ
. : Ii,h ÐtRaimonclti. est¡mates that it
rculil c¡sl a dweloler b€tween $u5 â
sqwe fæt md $230 a s$ws foot to rs
ptace the l¡ktomiibuildings todÃ$' in-
' cludlnc laid acquisÍtion, govùment
blesing, coßFuction æd leaStng æts
He.ahd óthers agree fi€ lrldomi deBl
ls ñEthel Þroûf that alistre*d vâlIey
assets aæ t¡ading for fil less thân thei¡
reÞlâæmÐtæsL r - ...
. "I thlnl litl ls endemic to what's haÞ
pen!¡g ln this part of the cycle," he says.
. Walton Steet's Iì,{r Pinto dimisss
that maiysis, sying the pruIEcts for
new consFdctien 1lr the valtey today de
s sllm æ to ñuke ily discßidn o! re
plaærient cæt iffe1wml Dæb have to
be evaluated bâs€d on rent llow in.
st@d. Howeve! ME PiDto doæ conq:ile:
"Tbls deål should læk attmctlve when
+Ì¡ey gét.bæk to bujlding.ill'the Bay
'Aræ.'l .
I¡vestr¡ênt sals ü1 the ralley hæe
bs few in tlle last 12 months, exæuì
tives sal Among the most notable hâve
bæn South Bay Developmmt co.'s pur'
chasi? of t¡e fomer Santa ClÈa headquafienÊ
of No'rlel Netmrtc Ltd., in:.
iluaurg 16 ac'res of lmd, forthe value of
imprcveneots máde io the building in
tle late I990s
Bffry Swnsn Builders of. sm JGe
md a group 8f ärvestorubought.d old'
eç pæËally.'vãcant 205,Q00'sguæfæt
indusHal buildi¡g i¡ north Sil Jose ior
what mmy eid wæ s sng; The building,
which hadrgoæ back to the lender,
l¡cluded a ltÞyeff lææ to FþdB æd
ætitlements lo devdlop Ð addtional
60;000 squàre fæL .. .
'Gl Pa{beF ot Me¡ùo.Pdlc a Fal6tate
opÞrtimity ffDd, bor8ht a 130,00G
squæfmt data ænterfor less thm $200
a qqua¡e foot jn Sah J6e l! De{mbs
with a redjt temt ahd :sme l'5(þ a
squæ fmt in temt imProremmts'
ttle building had b@ omed by Cuptrtino's
SobHto Development Cos., rYhich
donated it to Cotmuity Foudatioo
Siüæn Valley â yÐ ago. .
Johr Mlcbael Sobmto,.whGe æmluny
handled the ele, ack¡owledged in æ
i¡tèwièw that tbe sales.priæ "rcIlæted
todaYs sofr markel"
sHAß0il sl¡1toflSoil ffi @l 6l¡b lor$0 80úm
Jfl@t. . r;
PM-1908

VÀLI- ST'R,EET JOURNAL'
03 4 P.m. Ff
CH6 f (HG
'An--r4A
-1.96 -8.5
-020 -8.0
-0.30 -ó.9
-0.38 -6.5
' wt'u?
a----ffi
43
584
78
34
42
87,695
1711635
266,187
946,669
v4495
x0sE (lt6
Eii +fr,
9.98 -{1.10
1039 . -0.34
llJl *0.23
t,09 -0.06
p.m. Er I
lÍs 29.00
'
I qo.n
tnv s ú50
Àld n 2.55
: I
T NFI
þoos[(HG
i--tl¡ o-Zd'
i 42' 0r0
| 032 0,03
I 10.55 -0,01
| 2,83 0.03
:23.4t -0.10
25,6î 477
0,07 -0.01
: 0,39 -o.oz
ì t¡7 -019
i t¿7 o.o1 '.1t, 1.ó0
:t4.2'
i-{08 4,lP ,.{ -0.05
,u89 -0.08
r 3 0.30
ifL75 -0m
i 0"14 -0.02
;ó 0.02
lz
;¿60
:i24
o.z4
.tú7 012
t ...
þo
l(0 0.19
ru
!¡s
t¡¡ ¡.oz
t¡, ...
lft ...
ì, ¡,lo
S -{.05
It o.ot
$ -o.os
! +.os
l! -o.zo
þ.-
S -0.¡o
!s +.¡s
h.
ti uìì
Ey Sueul Muro
SAN FRANCISCO-Tlshnan SPeYer
ProBerties, which owus and operates sevelaf
landmark properties, is puttilg a
two-tower office properfy here on the
block after defar:ItÍng 0n its 10ân'
The move mal'ks the first distressed.
a record for German banlcuptcies, after
37.700 businesses went bust last year'
Déutsche Bank said it isn't as exposed to .
the domestic economy as other German
banks, v¡ith only 60% of revenue stemming
trom its home market. But Deut- '
schJBank's €2.1 bitlion in provisions last
vear were higher than those at the euro
äone's targest bank, BNP Paribas SA'
which chãiked up €1.5 billion for the
same period. l
Alsb, analysts said, anY Prolit
srowth at the bank likelY will come
írom cost cutting rather than increasins
revenue, capping Deutsche Banlr's
abìlity to sustain earnÍngs BrowÈh. -Total
revenue dectined last year to €26'5
biltion from €29.5 billion, led by a onethird
recluction in income frorn market
trading, clown to C4 billion' The German
dÁx 30 reached a five-Year low
during the Period'
Coiporate and investment bank reYenue
fell 187o as the sagging global econ'
omy cut clemaud for corporate-finance
services, such as adYice on mergers
and acquisitions and initial publiq offerines.
Diutsche Banlt remains Europe's
niãsest investment banlc by deal value'
Aähe private-clients and asset-management
rinit, reYenue dropped L4To to ë9
bitlion. The division is being restructurecl
t0 combine retail and private
banldng.
Deutsche Bank has cut costs faster
than its German competilors, slicing
expenses by €3.8 billion last year' By
tlrô end of 2003, the bank exPects to
MONDA.Y, FEBRUA.RY 10, 2OO3 G9
Tishrnnïì Tower Sale: Tech FalÏout?
sâle of a major property in this city hard At the besinning of February, fishhit
by the high-tech meltdovn.and coìld man Spever áefaulied on a $160 million
sigual the sta"rt of a much'alltlcipa¡ed Ia[- morteâeé loan from Morgan Stanley
out from the severe downnün In üle oI- rvfreriiiiaite. to make a balloon payu'ü,""5:ldef
auu""qgi,iÏ,"åliå1n:;;,1't,'¡;.y!iilö$'"HJr$!!:;.å
the propertY-lmown as M¿
ffi däii*""-,i.r#;'*T:1""'i"'lr,l:iï'üîîitr¡üi.üi:iJöiii+iË'ii
rear-estate market. rir. är,r'tüii"ìtäi! ttie largest iemaining in a commercialcompany,
which has tz *iliiõti-îq*iä mortgage-backed sðcurity issued in
Ëåïãñi;dñäro-wiae i"äiu,ii"g äì-cL- 209t.1 spor{esman for lishman spever
efeller center in New vr¡t,-¡ôïËñi uià saiat rhe Ìirm is nearing an agleement
piäîäiti - fsgg ior anoui'girís äiiión with the loan servicer that wilt allow it
:
a-\ . t Tì 1 t- \T^r T\^--LI^I
Ueutscne öanK s r\eL IJULI-rrrçLr
In 2002 but Missed Forecasts
By Þr,rzl¡Br¡r SouoPR
Dow Jones N¿usuires
FRANKruRT-Deutsche Bark AGr
savins the worst is behind it' announced
t¡ät u:rofit more than doubled for 2002. But
the iesult fell far short of forecasts because
of huge provisions against bad
debt, and analysts contimle to doubt
whether Germany's largest fhancial institution
willbe able to increæe revenue this.
vear as the courrtry fights a siaking económy
and record corporate bankuptcies'
The bank said 2002 net profit rose to
€397 nrilliou ($430.2 million) from €167
miilion in200L, shy of analysts' expectations
of €600 million. Still, the results
are a better pedormance than at rivals
such as Cornmerzbank AG, which
\üeclnesday reported its first-ever annual
loss.
Deutsche Bank officials heralded a
positive outlook, expressing confide-nce
-that provisiÖns lor bad loans, which doubled
to €2.1 billion last Year' have
TJeaked. They also cifed' alT%o reduction
in operating costs, achieved mostly
throrigli air unprecedented program of
layoffs.
- "O'¡r outlook for the bank is positive,"
Chief Executive Josef Ackermann said.
"Our view is that Deutsche Bank'has
tru'ned the corner ou loan provisioning-...
Even a further cleterioration in the German
economy would have a limited effect
on 2003 credÍt-risk pl'ovisioning"' Analysts
were unconvincecl. "No one can predlct
that ill this ma¡Icet environment,"
cairt llpnrc T(anders. analvst with
from Chewon CorP- the Peholeum giant,
which is now ChewonTexaco
Corp., leased a sizeable chunk 0f spâce
at fhe proþerLy until the end of last
year'- That departure, along with space
, ãumpecl by a number ol dot-coms, has
left the ??0,044 square-foot center more
Ihan 82Vo vacant'
to mainlain ownership of the property
until it is soltl, but declined to comrnent
further.
\ Iith the exception of propertiesput on
the blockbv troubled companies induding
Enron Corf. and WorldCom Inc., Market
Center is the first major dishessed propertv
being olfered for sale by ahigh-profile
landlordiince the econonric downturn.
For niore than ayear, flrlhtre investors
have been circling in anticipatioil of a host
of distressed offieè landlords looking to sel
theirnroperties as leasingcondüionsdeteri'
orateã añd tetters of crealit and other securiW
denosits lorleited by tenants begân t0
mñ oui. Stitl, office ploBerties have been
tratlins at prices that defy the falling occuoancvãndientalrãtesaarlthe
grimoutlook
ior the sector. While most don't expect a re'
neai of the rèat-estate debacle o{ the late
iggos aud eaxly 1990s, when-a significant
oortion ofthe nation's office stock changed
Îrands at distressed Pric,es, priqes, ufttne vtftue inves-
tors may be fincüng morè places places to land. land'
"We'11 see owners Urat have b€en try'
ine to hold on saying, 'Let's cut our losses
airämove on,' " particulaÌly glvtn the cost
of leasing a buitrling, said Dilk Àula'
baush. the San Francisco-based director
ãf rãal-estate services for guron ConsultiÌc
Grouo LLC. Caught in a position of
coinoetinã for tenants, Iandlords a¡e offerl¡e
-hie¡eir commissions to brokers and
mõre-ãenerous tenant improvements-allowanões
given to tenants tobuild out their
space-wñich are as much as $50 Per
sàuare foot, accorcling to Mr, Aulabaugh'
'
A person familiar with the situation'
said'iishman Speyer' executives didn't
think thev could turn around the Market
Center pi'operty given the d'ifficult market
conilitiõns in San Francisco, where
the vacancy rate is about 237o and aver
ase askins rents have plunged to about
$3"0 per sciuare Íoot from $85 in 2000.
SEtIs Reuiewirug
HiglterÀrYsE Fees
Or¿ßrarLCÍL Offices
By Cnenru \flnqor

CaIPERS
^ñîþ,
August 4,2008
LegalOffice
P.O. Box 942707
Sacramento, CA 94229-27 07
Telecommunications Device for the Deaf - (916) 79ç3240
(916) 7e5-3673 FAX (e16) 795-3659
Andy Blue
Tenants Together
995 Market Street, Suite 1202
San Francisco, CA 94103
Subject Public Records Act -
Dear Mr. Blue:
VIA FACSIMILE AND MAIL
Page Mill Properties
This responds to your Public Records Act request dated December 20,2007. ln your
letter v-ou recuested information pertaining to the following:
,v.lYl
,
. All investments or business proposals submitted to CaIPERS, or any agents of
CaIPERS, from PAGE MILL PROPERTIES ("PAGE MILL PROPERTIES" in this
request refers to Page Mill Properties; Page Mill Properties, L.P.; Page Mill
Properties ll, L.P.; Page Mill Properties LLC; David Taran; Divco West Properties;
and any affiliated persons or entities) from 1/01/02 to the present.
. All real estate investment proposals for CaIPERS submitted by PAGE MILL
PROPERTIES to any CaIPERS external real estate managers
.. All annual reports submitted to CaIPERS and/or the CaIPERS Board of Directors
by PAGE MILL PROPERTIES from 1lO1lO2 to the present.
. All annual reports submitted to CaIPERS and/or the CaIPERS Board of Directors
by any CaIPERS external real estate manager concerning PAGE MILL
PROPERTIES from 1lO1l02 to the present'
. Alf reports, other than annual reports, submitted to CaIPERS and/or the CaIPERS
Board of Directors by PAGE MILL PROPERTIES from 1101102 to the present.
. All repofts, other than annual reports, submítted to CaIPERS andior the CaIPERS
Board of Directors by any CaIPERS external real estate manager concerning
PAGE MILL PROPERTIES from 1lO1l02 to the present-
Galifornia Public Employees' Retirement System
www.calpers.ca.gov
PM-1910

Andy Blue
August 4,2008
o All documents concerning or constituting communications between PAGE MILL
PROPERTIES and CaIPERS from 1i01l02 to the present'
. Any documents describing a CaIPERS real estate partnership with PAGE MILL
PROPERTIES datíng from 1/01/02 to the present.
o Alldocuments concerning investments, or anticipated investments, by PAGE
MILL PROPERT¡ES in realestate in East Palo Alto, CA'
o All reports, summaries, or other documents prepared by CaIPERS' 9r-?ny agents
ot CaIPERS concerning CaIPERS' partnership with PAGE MILL PROPERTIES.
The appropriate real estate program staff is currently reviewing your request to
determine which documents are subject to disclosure under the Public Records Act. We
estimate that this review will be completed in approximately two weeks' Once this
review is completed and we have determined to what extent the documents will be made
available, we will provide you with copies and an accounting of the copying charges.
please feel free to contact me via email or at (916) 795-3673 if you have any questíons
or concerns regarding this matter.
FlJAVIER PLASENCIA
cc: Laurie Weir, Real Estate Unit t/
PM-191 1

08-08-2008
@
l6 r58 Fron-CÁLPERS LEûAL OFFICE -63 S
TENANTS California's
Statewide 0rganizati
for Renters'Rights
TOGETHER
July 24, 2008
CaIPERS Legal Office
Attn: Javier Plasencia
P.O. Box 942707
Sacrunenlo, C^ 9 4229 -27 07
RE: Public Records Act Requcst
Dear Mr, Plæcncia:
l^,1
ILU
P.00?/003 F-i55
Pursuant Io our ríghts under the California Public Records Act (Governruent Codè Seuion 6250 er
scq.), lenanrs 'l'ogerhel requests copìes of the rbliowing:
995 M¡rker sv¿er, Sufte lz0z
5¡n Francisco. CA 9¿103
Phone: (415) 495-8100
Fax; (aI5) 495-8105
' All investnent or business proposâls submitred ro CaIPERS. or trny agents of CaIPERS, lïsm
PAGE MlJ.t PROPERTIES ("PAGE MILL PROPERTIES'in this requesl refers to Page
Mill Properties; Page Mill Properrics, L.P-; Page Mill Properries II" L.P.; Page Mill
Propcrrics LLC: David Taran; Divco West Properries; and any affrliarecl persons or enriries)
tiom i/0t/02 to the present.
' A!! rea! es¡ate lnvestnnent proposals for Ca!FERS submirt:er! by PAGE MII-[- PROPERTIES
to any CaIPERS exrernal roal esute manageÊ.
' All annual reports submirred to CalPÉRS und/or the Caf PERS Board of Directors by PAGE
MILI- PROPERTIES from 1/01 /02 to the present.
' All annual reporrs submitretl to CaIPERS and/or lhe CaIPERS Board of Directors by any
CaIPERS external real estale rnanager concerning PACE MILL PROPERTIES trom 1l0l/02
to the presellr,
' Âllreports. olher than annualrcporLS, submitrcd ro CaIPERS and/or rhe CaIPERS Boar

08-08-2008 16:58 Frorn-CALPERS LECAL OFFICE sl 67S53659 T-63S P.003/003 F-755
. All reporrs, smmaries, or other d.ocuments prepard by CaIPERS' or any agenr¡J of CaìPERS
concerning calPERS' pannership with PAGE MILL PROPERTIES.
We ask for a determinarion on this requesl within 10 dayS of yOur receipr of it, and an evgn
prompter reply if you can make thar determination w¡Ihout having to review the rccord[s] in
question.
lf you determine rhat any or all or the information qualifies for an cxemprion from disclosurg, wc
u.ú you to nolè whefher, as is normally thc case underrhe Act, the exemption is dìscrerionary' and if
so wherher ir is necessary in this cÐse to exercise your discretion to withhold the informarion'
please provide a signed norificarion ciring rhe legal authorities on which you rely if you determine
tharany or all of rhe infonnation is exempr and will not be tiisclosed-
If you determine rhar some bnt nor all of the information ìs exernpr from disclosure and thar you
iniend to wi¡hhold ir, we nsk that you redact it for the rime being and rnake the rest available as
requesred.
If I can provide any clarification th¿twill help expedire your atrenrion to my request, pleæc conlacl
r,e at 415-495-8100- Please nori$ me ofany duptication costs exceeding $50 before you duplicate
rhe records so that we may decidc which records we want copiecl'
Thank you for your attention to this marter.
SincerelY,
AndY'Blue-'
Tenants Together
995 Market Street
S\¡ire 1202
San Francisco, CA 94103
and y@tenantstogeth er. org
(415) 4es-8100
PM-1913

ltRtiÀti¡Nü NF.ITS ÀND llttND$ lrl¡ol\l caLlFY)BNIAï (;()lttl\lDr{c¡'rL llFAf' lì.STÀ1'É lNl)usTllv
^cnosli
Reining ln Bent Control
@ Multtfamily inuestors should tnke note
of legalba.ttle ouer property ualue,attomEt says
BYCOLLIÞI fI.¡NNEtr
(efJgdllW.ltn
ôtrúlng litlt¡lioo chzllcrgln¡ I rtnt'
¡¡¡,. ¡'..¡s ¿¿sld elftcf lhc iilrc$l¡rtìl
ltorc0rhl tbr rcül{mlrolh¡J u¡otcrtF
f'olc.,'llxr båtÌd Po¡¡c lllill Propcn
rìr* 5lcå ¡ iù¡t ,¡û. lf' ln Sdil llztc¡
co!ilrí S!0G.iur {!vll ¡l¡lttrt thc rily ol lbet
Ì¡lF.qllc, ¡tìcr il P¡rjtd ¡ J¡r. il úrgtntv ùrdi'
Àndùr'Lçzlrg nni on n'nlcoolrollcd rttlrl'
ntcÈL{,
l,¡gÙ Mlll shoultl tr ¡bll' lo raise Ent> Filhin
ih. l¡ur¡ts ÍnÈrlou3h' ¡Êf.cll (o Ù) lll! cfy. tl[(
troBfudß.ol ¡ ntolFrtl''r ráhê ì¡ Nnt pt¿vr ¡ ¡tlf
t¡rl ¡a âr irl*tloi¡¿4¡tiôfl lo invÉtl¡! lhß Þlo9'
!'rlT, lrcôrúdg to clr¡s {;dffith. r dírÈdlr *llll
Dltmln ltlrte l¡offh Dr & Job!¡on FC,
-tfl
Fs¡r:Inthlg I proplrrly. t¡t birß$l l$Î[c ie
liDusi¡f rh¡t il'¡ ¡¡id''l rullnl
"¡orlh.'Gfiúllh
¡t¡i¡¡¡ l'agc Mill toultl ÙÈ ¡ F¡l tluv iÞ lEr¡lË of
v¡hl¡rß r tÌñrpcrìI bût(d or whoi thc lærl gowrr'
Ét.¡i ulr.'
I'¡gc Ilill ¡rquiv+rl tht l.f¿Du{it Ëôr PuloJlfio
:¡ùrrlolio kit I{ù,¡ccr¡diù, fo roxlrl¡uy sÞôls'
rn¡r L¡¡çq lgoon. $ubrcr¡ucul¡ tl)c iltr'ca¡ilctl
ãnd srr¡¡fcrDêtrt ¡¡fm hr¡9ul ¡tol¡ il I ltrlllþ¡ ìo
!{nol{ iil}rownrÉnls i¡lo ìùc ttoPrf l}'.
f ropdsd ñnl ißrc¡s(Þ' ¡v('nf lng ¡boül 9',Jtrt'
rÈnt D.r urit, rtprotr'|!:Ëd a siy gl oif*lllnt ihc
rôslôf tbcfê n{rv itllÌBl¡lÊülr.lÃlotr t¡ld.
liót Citt (:orrkîl r:rÊmbË.s¡Íd ¡lìßditriirl thc
iilc.ri* iùt(d trrrh,1('o aþil - Jnd åryuc ['¡4t
Ìlill irr¡rc¡d Èhould ittrÞlrnlcnt otty ilçrcÉrttrt¡l
velt i¡r¡c¡¡c¡, '
Àl i6$uc ¡t thc iìlù4Jtël¡liùn orÇrch 0Di1 t'$t-
:ilic.tr of urrihoùl tDxi,'w¡t;cl, l'r¡t À{ill taye
rc¡rç.ÈblF ¡ pronriæd allorrrblc oo¡ìhly rcol
(iry cficíclr arê ¡¡¡lnisc ôPtáf,lnlF s¡y pô[ê
!gûl ¡r ãllorcd to buotl rert Úy ol lnrral Xorcrll
aìloc¡lioo, ¡o¡l cat': b¡nk a! ol íhcàc ir.rctrci ¡l
ûDÍ! ro r¡isc ù0 rcDl lo il¡jlllccllìÌ[t
R¡ìrinx tht rrù¡s rhrl hißì xoct.l l¡u¡t P¡lo
r\lloi¡ pndt - tnd ilì ilkirl, *id l)*rcl flrrrir. r
roluricîr ì¡s)îr trillt Cil[t nùn¡ry ¡,*¡ì Stfdßs
ir Ets¡ F¡lc ¡\lo,
'ìl yôu donl ¡¡rrcilF¿ y¡{f ft{( ff;¡l ¡{ttl y!¡t
altrr yc¡r yok dln'l gcl lll[ ¡¡ßìlt b d! f],¡l ¡tl ln
unr lell sooD,- lt¿ ¡rld {llril! ¡ rro.3 ['dl,l8
rcF¡fl|í¡A llc 0 rg.ñ

FEBRUARY 19,2008 Print I E-mail
Reprint rights
Reining ln Rent Control
BY COLLEEN FLANNERY
CREJ Staff Writer
Pending litigation challenging a rent-hike freeze could
affect the investment potential for rent-controlled property.
Palo-Alto based Page Mill Properties filed a suit Jan. 16
in San Mateo County Superior Court against the city of East Palo Alto, after
it passed a Jan. I urgency ordinance freezing rent on rent-controlled
apartments.
Page Mill should be able to raise rents within the limits
previously agreed to by the city, since knowledge of a property's value in
rent plays a big part in an investor's decision to invest in the property,
according to Chris Griffrth, a director with Ellman Burke Hoffman & Johnson
PC.
"ln purchasing a property, the biggest issue is knowing
what it's worth." Griffith said. "A ruling against Page Mill could be a real
blow in terms of valuing a property based on what the local government
says."
Page Mill acquired the 1,620-unit East Palo Alto portfolio
last year, according to company spokesman Lance lgnon. Subsequently, the
investment and management firm has put about $1 1 million in tenant
improvements into the property.
Proposed rent increases, averaging about 9 percent per
unit, represented a way of offsetting the cost of these new investments,
lgnon said.
But City Council members and others insist the increase is
too much, too soon - and argue Page Mill instead should implement only
incremental rent increases.
At issue is the interpretation of each unit's "certificate
of máximum rent," which Page Mill says represents a promised allowable
monthly rent. City officials and rent-raise opponents say Page Mill is
allowed to boost rent by an annual general allocation, and can't bank all of
these increases at once to raise the rent to its full ceiling.
Raising the rents that high would hurt Palo Alto's poor -
and it's illegal, said Daniel Harris, a volunteer lawyer with Community
Legal Services in East Palo Alto.
"lf you don't increase your rent year after year after
year, you don't get the right to do that all in one fell swoop," he said
during a Jan. 3 meeting regarding the urgency ordinance.
Page Mitl had tried to implement gradual rent increases,
PM-1915

ut was stymied by East Palo Alto's Rent Stabilization Board, said James
Edward Thompson, Page Mill's director of development, during the Jan, 3 City
Council meeting.
"lnitially this was not our plan," he said. "Our plan was
to do incremental increases on a nominal basis over the years; we got caught
up in a race with the rent board."
Despite testimony by Thompson and others with Page Míll,
Cily Council members sided with Harris and with East Palo Alto city staff,
and approved the ordinance, whÍch suspends for 60 days all rent hikes within
the city. Discussion at the meeting and Page Mill's subsequent suit
indicated the decision focused on the property owner.
The vote came amid tensions between city officials and
Page Mill attorneys regarding whether one of the Council members who pays
rent at a Page Mill apartment could vote on the ordinance.
Planning for the Propositions
Not only will the lawsuit test the city's rent control
ordinance, its probing of rent control makes the outcome of particular
interest to attorneys who represent property owners, since a rent
control-overturning ballot measure is expected to face voter scrutiny in
June, according to Bryan W. Wenter, a real estate attorney wíth Morgan
Miller Blair. Wenter said real estate attorneys would watch the interplay of
rent control litigation and the new law, if it were successful.
"lf it passes, what happens next?" Wenter asked. "l'm not
sure what effect this will'have on the initiative and on the rent control
process."
lf it prevails during the June 23 primary vote, the
rent-control overturn measure, Proposition 98, would allow current
rent-control units to remain rent controlled only as long as they house
their current tenants. lts main purpose is to end eminent domain seizures of
private homes, businesses and farms for use by private developers, although
backers of the measure say rent and lease controls represent a type of
private-property seizure.
"Government should not be able to profit by seizing
private property from unwilling sellers," said Doug Ose, a former
Congressman who is serving as campaign finance chair for the anti-eminent
domain, anti-rent control initiative.
A competing measure, Proposition 99, would disallow
seizures of private, owner-occupied dwellings, but does not abolish rent
control. ln fact, Prop. 98 opponents use its anti-rent-control stance in
their efforts to oppose the measure.
"More than 90 percent of the funding to qualify this
measure comes from apartment and mobile home park landlords who hope to
fool
voters," said Nan Brasmer, president of the California Alliance for Retired
Americans, and a supporter of rent control for seniors. "They won't be
PM-1916

successful."
Despite its current popularity, rent control isn't the
only issue expected to come up during courtroom discussions of the case.
Councilman Ruben Abrica's participation ín the vote is named among the
causes of action in the suit because he was a tenant at a Page Mill
apartment. The court's eventual decision regarding his vote could have
important implications for other property owners' relationship with local
government, Griffith said.
Abrica defended his action during the Council's Jan. I
meeting, sayíng he pays part of his brother's rent and signs the lease, but
the increase doesn't really affect him to the extent that he should have
excused himself from voting.
"l pay him 30 percent of the rent and for the last 10
years príor to six months ago, I have not lived in that apartment," he said.
Rents throughout the entire San Jose market area have
risen and are expected to rise another 5 percent in 2008, according to a
Marcus & Millichap Real Estate lnvestment Services forecast report. Silicon
Valley-area investors are focusing on Class B and Class C properties because
they are affordable properties in a market where affordable housing demand
far exceeds supply.
As rents continue to rise in neighboring communitiès, Page
Mill's rent hike rekindled constant community worries about gentrification
and affordability - not surprising in a relatively low-income community
cheek-by-jowl with some of Silicon Valley's wealthiest. More than half of
all East Palo Alto wage-earners make less than $50,000, while median
household income in neighboring Palo Alto, just three miles away, is more
than $100,000 annually.
Possibly because of the economics behind the vote, the
rent ordinance drew tremendous turnout from East Palo Alto residents. Loma
Eaves, a Page Mill tenant, urged Council members to pass the ordinance to
keep the city's lowincome residents from being priced out of their homes.
"Raising the rents this much is a moral issue," she said'
lf Page Mill does prevail, it plans to pursue the rent
money sought in the rent hike retroactively, lgnon said. Notices have been
sent out to tenants telling them to put aside the money so they'll have it
to pay Page Mill when the litigation is resolved.
City officials could not be reached for comrnent on the
suit, but testimony from city attorney Michael Lawson during the Jan. 8
meeting indicated the city is ready and willing to respond to the
litigation.
"ln all likelihood Page Millwill sue the city," Lawson.
"So we'll see them in court."
- E-mail Colleen_Flannery@DailyJournal.com
PM-1917

Message
Weir, Laurie
From: Richard Hollowell lrhollowell@Squarmilner.com]
Sent: Friday, April 1 1, 2008 5:31 PM
To: Weir, Laurie
Subject: RE: Squar Milner Contact
Thank you very much, I enjoyed making your acquaintance by phone.
Best regards
Richard trC Hollowell
Squar, N{ilner, Petersono ìl{iranda & \&'illiasnson, LLP
Partner-In-Charge, Real Estate Services
4100 Newport Place Drive, Third Floor
Newport Beach, CA 92660
949-648-0502 Cell
949-222-2999 Main
949-809-5578 Fax
r4{w_wjs.q_ua rm i I n e r, c q¡n
From : Weir, La urie [mailto
SenE Friday, April 11, 2008 4:40 PM
To: Kang, Navdip; Richard Hollowell; Geoff Le Plastrier
Subject: RE: Squar Milner Contact
HiAII,
: Lau rie_Weir@Ca IPERS. ca,gov]
I have attached my v-card and included Geoff LePlastrier on this email.
Thanks verymuch. L
9t212008
--Ðriginal Message----
From: Kang, Navdip
Sent: Friday, April 11, 2008 4:18 PM
To: Weir, Laurie
Subject: Squar Milner Contact
Lauríe,
Per our discussion,
Squar Milner
Partner: Richard Hollowell
4100 Newport Place Drive 3rd Floor
Newport Beach, CA 92660
(949)222-2999
lf its okay, I'll let you shoot Richard an e-mail with your information.
Page I of2
PM-1918

Message
Again, Thanks for making time today, I know that your extremely busy.
Navdip S. Kang, Internal Audits
ffice of Audit Services
CaIPERS
(9r6) 79s-oss0
Page2 ofZ
Squar Milner has the distinction of being one of the nation's top 100 accounting and advisory firms as
*èil as one of the largest independent firms in Calífornia. With offices in Newport Beach, San Diego,
and Los Angeles, there are over 200 people to serve you. For more information on our services, please
visit our website at http ://www. squarmilner.com
IRS CIRCULAR 230 NOIICE¡ Please be advised that, based olr current IRS
rules and stand.ards, the advice above was not intended or'wrítten to
be used., and ít cannot be used by tshe taxpayer, f,or the purpose of
avoiding penal.ties Èhat may be imposed on the Èær¡layer. If this
messagie íS provlded in any mEÌnlrer to another taxpayer, he or stre
cannot use the advice anci shouio seeic advíce based on his or her owrr
particul-ar circumstances from an independenb tax ad'vísor.
CONFIDENTIALITY NOTICE: This email message is for the sole use of the intended recipient(s) and
may contain confidential and privileged information. Any unauthorized review, use, disclosure or
disiribution is prohibited. If you are not the intended recipient, please contact the sender by reply email
and destroy all copies of the original message.
9t2/2008
PM-1919

Message Page2 of3
9/2/2008
call.
Aloha,
Barbara
----Original Message-----
From : Ken neth Casarez [ma ilto : kacasarez@sbcA loba l. net]
Sent: Monday, January 28, 2008 1:37 PM
To: Stocking, Barbara
Cc: erin hutson; Amber Novey; Stausboll, Anne
Subject: Hawaii Project
Hello Barbara: Long time, hope you have been well.
I received this information this morning on this project in Hawaii which
I believe'should be RCP applicable. If so, would you please contact
Cilyview and let them know that we would like to work rvith them and
their parbrers on this project and that they can contact me as a place to
start. In the past, we haven't had much luck with City View regarding
fulfillíng aspects of the RCP, especially re: notification ofprojects,
hopeñllly, this project will be different. HolveveL, we did get this
notification fi'om the local newspaper article.
With any questions, please give me a call (916) 849 9969 cell, or email
all the best,
thanks for your time,
Friday, January 25, 2008
Big Island will get 'work-force'
homes
National investment firm CityVierv plans 276 units on Kohala Coast
Pacific Business News ( Honolulu ) - by Janis L. Magin Pacifìc Business News
A national housing invesfinent firm co-founded by fonner U.S. Housing
and Urban Development Secretary Henry Cisneros is financing a276unit
work-force housing development on the Big Island .
CityView, u'hich is funded by the nation's largest public pension fund,
the California Public Employees' Retirement System, has invested some
5700 rnillionin4T projects in 15 states to date.
The company joins with developers and home buildeß as an equity
partner on residential work-force projects aimed at f,rrst-tinie home
buyers, said Richie L. Butler, CityView's Dallas parhler and senior vice
president.
"CityVieu' is truly excited about the prospect of funding this project,"
said Cisneros" CityView's executive chairman, who also is the former
mayor of San Antonio , Texas . "It is directly aligned with our
overarching vision to help pravide rvork-force housing solutions in an
areathat desperately needs them."
PM-1920

Message
91212008
Page 3 of3
The Big Island project will make Hawaii CityView's 16th state, and
Butler said the compauy is looking for more projects to ñurd in the
islands.
"We have evaluated several projects but this is the fÌrst we've pulled the
trigger on," he said.
Keolalani is planned for 120 acres at the end of Paniolo Avenue in
Waikoloa Village , said developer Kevin Webb of Webb Properties
Inc., who has worked previously with CiffView on several projects in
CaLifomia
Webb and his pattners, 'Waikoloa Heights Land Investors LP, bought
866 acres adjacent to the village in March 2005 for $25 million,
according to county tax records.
The CityView project, which is targeting Kohala Coast hotel
employees, construction workers, teachers and other local workers as
buyers, is the first phase of what could be more housing on the land,
which is entitled for up to 3,000 homes, Webb saicl.
"We're excited that we can be a part of bringing quality housing to the
Big Island that we anticipate will represent work-force housing at workforce
housiltg prices," Butler said.
The lots average 10,000 squale feet and will be surrounded by green
space and walking trails, r.vith a commrurity recreation center, including
a pool and tennis corut, said Webb, who hopes to start work on roads
^-- Á !--î.-^^+---^+,.-^ ¡L.l^ -,^^- ^-l ^+^+ L".illi-^ 1^^'--. h., -^-1.' tnflC)
¿1ll0 II[¡.¿rUtILlt/tUIç UIIù yçAr illl\r ùL

Weir, Laurie
From: Taran, David [DTaran@PageMill.com]
Sent: Thursday, January 17,2008 5:43 PM
To: Weir, Laurie
Gc: Lee, Terry
Subject: Follow Up On Your Voicemail
Laurie,
Page 1 of 1
I received your voicemail. I have put a call into Jonathan Cevita as you requested. He was in a meeting so I left a
message with his assístant Camilla asking him to call me back. lf I don't hear from him, I will follow up with him
again. On your request to call Navdip King, I have asked Terry Lee to contact him and provide Navdip the
information he needs.
Have a great evening,
David
David A. Taran
CEO
Page Mill Properties, LLC
480 Cowper Street,2od Floor
Palo Alto, CA 94301
650i833-3888 - direet
4081205-5714 - mobile
650i833-3988 - direct fax
dtzr an(ò.n ase m ill. c o m
www.paggmill.com
wfitp"lyl,r,riL
9/2/2008
Pl\/'-1922

Plasencia, Javier
From: Brown, Jeffrey N. flbrown@pircher.com]
Sent; Monday, September 22,2008 5:00 PM
To: Plasencia, Javier
Page 1 of I
Javier: Pircher Nichols & Meeks engaged Sitrick & Company, lnc. (Lance lgnon works for Sitrick) pursuant to an
engagement lefter of December 26,2007.
(--
Jeffrey N. Brown
Pircher, Nichols & Meeks
1925 Century Park East, Suite 1700
Los Angeles, CA 90067
3 r0.201.8990
310.s64.1790 (faÐ
jbrown@pircher.com
IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with requirements imposed by the
lRS, we inform you that any tax advice contained in this communication (including any
attachments) was not intended or written to be used, and cannot be used, for the purpose of (¡)
avoiding tax-related penalt¡es underthe lnternal Revenue Code or (ii) promoting, marketing or
recommending to another party any matters addressed herein.
|I¡íPORTANT: This e-mail message is noi iniencjeci io be bincling or relieci uþon anci, wiihoui iimiiaiion on the foregoing, shali rroi eieaie, waive
or modiry any righl, obligation or liability, or be construed to contâin or b€ an electronic signaturs, to constitute a notice, approval, walver 0r
election, or to form, modify, amend or terminate any contract. The information contained in this message is confidential and is inlended onty
for the named addressee(s). This message may be protected by the attorney/clienl privilege, lf the reader of this message is not an ¡ntended
recipient (or the individual responsible for the delivery of this message to an intended recipient), please be advised lhat any re-use,
dissemination, dislribution or copying of lhis message is prohibited. If you have received this message in error, please reply to the sender lhat
you have received the message in error and then delete it.
]!:1!J::================
9/2312008
PM-1923

. Weir, Laurie
From: Shore. Jim UShore@PageMill.comf
Sent: Tuesday, September 09, 2008 10:28 PM
To: We¡r, Laur¡e
Subjec[ Page Mill Update
Attachments: David Taran- EPA Letter Executed.pdf
Laurie
l)rgc I ol'l
I wanted to update you regarding our recent efforts to engage the community. Attached ¡s a letter
David Taran sent to the East Palo Alto mayor and city council last week.
Today I had a great meetíng with Larry Moody, a key Trustee of the Ravenswood School Board, to
brainstorm about how to solve problemg lqcing our tenants who have school age children. On Monday
I am meeting wlth Councilmember David Woods of the city council. Our rnessãge is simple: Let's try ío
find common ground so we can put our combíned resources and expertise to work to adàress the
issues of the East Palo Alto community.
We are resolved to eslablísh a dlalogue with our community partners so our investment can be
profitable, bolh socially and fìnancially.
Please call me tomonow so we can catch up on some other items and to schedule my visit to
.Sacramento.
Thank you,
Jim Shore, Gencral Cr¡unscl
Page Mill P¡opertics, LLC
480 Coq'pe¡ Street, 2r¡d Floot, Palo Alto, CA 9430I
650.833.3838 dircct . 408209.0702 motiile .650.833.3938 dírect fax
9/t0t2008'
P:\ (i H I{,r,r.
L
,¡or¡e
P\/'-1924

September 5, 2008
Mayor, Patricia Foster
Vice Mayoç Donna Ruthelord
Councll Member, Ruben Abrlca
Councíl Member, A. Peter Evani
Council Member, David E. Woods
East Palo Alto City Hall
24¡5 Un¡vers¡ty Avenue
East Palo Alto, CA 94303
Dear Mayor Foster and Members of the C¡ty Counc¡l:
WOODI-AND PARK
apartments
The City of East Palo Alto and Woodland Park Management have spent a substant¡al amount of time and
money thls year defend¡ng our respectlve legal poslt'ons. Although we will continue to vigorously defend our
legal rights if need be, we befíeve we could accompllsh a great deal more for the commun¡ty and our tenants if
we were to resolve our dìfferences through a construct¡ve, collaborative and productive dialogue-
As you know, the housing providers lhat own the properties managed by Woodland Park have invested in
excess of S11 million on building repalr3, seísmlc upgrãdes, personal safety measures and other building
improvements to prov¡de better and safer housin6 for the tenants, and they lntend to do more. We hope you
agree with us that the community at large as well as the tenants will be better served if the City and Woodland
Park can find ways to combine their respective experlise and resources to further lmprove our community.
Please accept this offer as a slncere attempt to find common ground and reasonable compromÍses for the
benefit of everyone concerned, including our tenants,
We stand ready to work diligently with any or all members of the Counc¡l and City Staff to discuss our
differences and work towards common sense and reasonable solutions to resolve our disagreernents. Please
contact me at 650-833-3800 if you would like to discuss this or set up a meeting.
Sincerely,
cc: Alvin James, City Manager
5 Newefl Court. East Palo Alto, CA 94303
rel: (650) 32¡-6180 ' Fax: (650) 324-7202
Leasing: 1650) 324-5220. Emergenc!¿: (650) 924-0319
PM-1925

September 5, 2008
Mayor, Patricia Foster
Vice Mayor, Donna Rutherford
Council Member, Ruben Abrica
Council Member, A, Peter Evans
Council Member, David E. Woods
East Palo Alto C¡tY Hall
2415 University Avenue
East Palo Alto, CA 94303
Dear Mayor Foster and Members of the C¡ty Council:
WOODT¿,ND PARK
apartments
The City of East palo Alto and Woodland Park Management have spent a subslantial amount of time and
money this year defending our respective legal positions. Although we will continue to vigorously defend our
legal rights ii need be, we believe we could accomplish a great deal more for the community and our tenants lf
we were to resolve our differences through a construct¡ve, collaborative and productive dialogue.
As you know, the housing providers that own the propertiesmanaged by Woodland Park have invested in
excess of $11 million on building repairs, seismic upgrades, personal safety measures and other building
¡mprovements to provide befter and safer housing for the tenants, and they intend to do more. We hope you
agiee with us that the community at large as wetl as the tenants will be better served if the City and Woodland
pãrk can find ways to combine their respective expertise and resources to further improve our community'
please accept this offer as a sincere attempt to find common ground and reasonable compromises for the
benefit of everyone concemed, including our tenants.
We stand ready to work diligently with any or all members of the Council and City Staff to discuss our
differences and work towards common sense and reasonable solut¡ons to resolve our disagreements. Please
contact me at 650-833-3800 if you would like to discuss this or set up a meeting.
Sincerelç
cc: Alvin James, CitY Manager
5 Newell Court. East Palo Alto, CA 94303
Tel: (650) 324-6150. Fax: (650) 324-7202
Leasing: (650) 324'5220' Emergency: (650) 924-O3L9
PM-1926

Alexander, Judy
From: Lee,Terry[TLee@PageMill.com]
Sent: Monday, May 07, 2007 6:58 PM
To: Alexander, Judy
Subject: RE: Page Mill Properties ll LP - Annual Meeting
Judy
Page 1 of2
I don't believe we've had a chance to "meet" yet. Please let us know if we should coordinate with you or others ai
Calpers and iflwhen it would be appropriate to schedule a (re)introductory meeting.
Many thanks and best regards,
Terry
Terry Lee
cFo
Page Mill Properties, LLC
480 Cowper Street, Suite 200
Palo Alto, CA 94301
tlee@pagemill.com
(p) 650 833 3818
(f) 650 833 3918
I'l
^
¡ ñ lf r
'
r
.t, -d\ LT li lYl I l, l"
rno?alftrEs
From: Lee, Terry
SenH Monday, April 23,2007 1:39 PM
To:'judy_alexander@calpers.ca.gov'
Cc: Taran, David
Subject: FW: Page Mill Propedies II LP - Annual Meetíng
Judy
We wanted to follow up about scheduling the annual meeting for Page Mill Properties ll LP. While we haven't yet
called capital, we did initiate significant investment and operaling activities last year to update you on and need to
review certain other items with CaIPERS / the LP Advisory Committee. How can we most easily schedule this in
away, for a time and at a location that is most convenient for you?
Many thanks and best regards,
Terry
On behalf of the Page Mill Properties Team
Terry Lee
cFo
Page Mill Properties, LLC
480 Cowper Street, Suite 200
Palo Alto, CA 9430'1
llee@pescnü.ça¡n
(p) 650 833 3818
(f) 650 833 3e18
9/212008
P\11-1927

From: Lee, Terry
Senh Fríday, April 13, 2007 9:55 AM
To:'judy_alexander@calpers,ca.gov'
Subject: FW: Page Mill Propefties Ii LP - 2006Investor Letter and Audit Repoft
Judy
Page 2 of2
Katherine just confirmed that you have taken over responsibility for all of the Opportunity Funds, including Page
Mill Properties ll LP, for Calpers. Congratulations! We at Page Mill Properties are looking forward to the
opportunity to work with you. Enclosed for your reference is a copy of the year end investor letter and statements
for Page Mill Properties ll LP.
We also wanted to reach out and schedule a time for a more comprehensive introductory meeting / annual
update, preferably in person, at your earliest convenience- We would be delighted to vìsit you in Sacramento if
more convenient for you. Or alternatively, we would welcome the opportunity to host you in Palo Alto at our
headquarters which would also afford us an opportunity to give you a brief tour of sor'ne of our current
investments. I just left a voicemail message regarding scheduling an introductory / annual meeting as well.
Again, we look forward to the opportunity to work with / for you. Many thanks and best regards,
Terry
Il¿cEMtrL
?h$fr¡T¡fÉ
Terry Lee
cFo
Page Mill Properties, LLC
480 Cowper Street, Suite 200
Palo Alto, CA 94301
tlee@paqemill.com
(p) 650 833 381 I
(f) 650 833 39'r8
ffif,Åp,lHr,\t
9/2/2008
PM-1928

Alexander, Judy
From: Lee,Terry[TLee@PageMill.com]
Sent: Monday, April23, 2007 1:39 PM
To: Alexander, Judy
Cc: Taran, David
Subject: FW: Page Mill Properties llLP - AnnualMeeting
Judy
Page 1 of2
We wanied to follow up about scheduling the annual meeting for Page Mill Properties ll LP. While we haven't yet
called capital, we did initiate significant ínvestment and operating activíties last year to update you on and need to
review certain other items with CaIPERS / the LP Advisory Committee. How can we most easily schedule this ín
a way, for a tirne and at a location that is most convenient for you?
Many thanks and best regards,
Terry
On behalf of the Page Mill Properties Team
Terry Lee
cFo
Page Mill Properties, LLC
480 Cowper Street, Suite 200
Palo Alto, CA 94301
tlee(@pagemill.com
(p) 650 833 381 I
(f) 650 833 3918
P¡\ ü g M I [ il
PRÐpãrrlãÍ
From: Lee, Terry
Sent: Friday, AprÍl 13, 2007 9:55 AM
To:'judy_alexander@calpers,ca.gov'
Subject: FW: Page Mill Properties II LP - 2006Investor Letter and Audit Report
Judy
Katherine just confirmed that you have taken over responsibílity for all of the Opportunity Funds, including Page
Mill Properties ll LP, for Calpers. Congratulations! We at Page Mill Properties are looking fon¡vard to the
opportunity to work with you. Enclosed for your reference is a copy of the year end investor letter and statements
for Page Mill Properties ll LP.
We also wanted to reach out and schedule a time for a more comprehensive introductory meeting / annual
update, preferably in person, at your earliest convenience. We would be delighted to visit you ín Sacramento if
more convenient for you. Or alternatively, we would welcome the opportunity to host you in Palo Alto at our
headquarters which would also afford us an opportunity to give you a brief tour of some of our current
investments. ljust left a voicemail message regarding scfreduling an introductory / annual meeting as well.
Again, we look forward to the opportunity to work with / for you. Many thanks and best regards,
Terry
912/2008
PM-1929

Terry Lee
cFo
Page Mill Properties, LLC
480 Cowper Street, Suite 200
Palo Alto, CA 94301
flee@pagemill.com
(p) 650 833 3818
(Ð 650 83s 3918
fä'ilPr\GRh{rLr.
IW.J?roF¡nrrts
9t212008
Page2 ofZ
PM-1930

Message Page 1 of2
Alexander, Judy
From: Lee,Terry[TLee@PageMill.com]
Sent: Monday, May 14,2OOl 12:46PM
To: Alexander, Judy
Cc: Taran, David
Subject RE: Page Mill Properties ll LP - Annual Meeting
Judy
Tenific to hear from youl Hope you had a good weekend. And thank you so much for following up with David
_.---/ánd myself. We look fonrard to introductions on the 5th. I understand Lui might be following up with you per your
- suggestion for a little time before/after that introductory meeting to cover additional / more specific fund matters /
updates.
Separately and at your earliest convenience, we look fonvard to welcoming you to our offices in Palo Alto (and
perhaps showing you some representative local investments). Perhaps we can add on to another trip you are
already planning to the Bay Areer/Peninsula...
We appreciate the opportunity to meet / work with you.
Many thanks and best regards,
Terry
Terry Lee
cFo
Page Mill Properties, LLC
480 Cowper Street, Suite 200
Palo Alto, CA 94301
tlee@paqemill.com
(p) 650 833 3818
(f) 650 833 3918
Pn C E M I I, L
p[Ô?atTliES
From : Alexander, J udy Ima ilto:J udy_Alexander@Ca I PERS.CA, GOV]
Sent: Monday, May L4,2007 10:59 AM
To: Lee, Terry
Subject: RE: Page Mill Propefties II LP - Annual Meeting
Terry,
Thank you for the invitation. I am sorry it has taken me so long to respond. lt looks like Ted and I will be meeting
with David on June Sth for introductions. lf this is just an introduction meeting with Ted, we can meet after and go
over any issues or updates not covered in the meeting with Ted. At some point, I would like to meet at your office
for a tour.
I look fon¡vard to meeting and learning more about your fund.
Best regards,
9/2/2008
PM-1931

Message
Judy M. Alexander
Portfolio Manager
CaIPERS
lnvestments - Global Real Estate
400 Q Street Room E4800
Sacramento, CA 95814
Tele: (916)795-228:2
Fax: (916) 795-3965
Email: judy_alexander@calpers.ca.gov
9t212008
Page2 of2
PM-1932

Weir. Laurie
From:
Sent:
To:
SubJect:
McKinley, Clark
Thursday, December 20,2007 7:34 AM
'Sharon Simonsonr
RE: Page Mill Properties LP and Page Mill Properties ll,LP
Yes. There ís definitely another side of Ehe story. Our preference is to have you speak
with a Page Mill spokesperson rather than going through CaIPERS. I don't know if you hawe
Èhe contact informaÈion, buu I'J-I pass on a name and phone number, once I receive
confirmation from their end.
ft'Ê our pieference in such cases Lo have media LaIk to our partners or their
represenLatives rather than to us. If they're unwilfing to tafk about this câse, we wilf.
However, they have indicated Eo us their wilJ-ingness to go forward with media on the East
Palo Al-to issue
I¡ile appreciate ygur patience. Thank you.
CIark McKin1ey
Information officer
CaIPERS Office of Public Affairs
916 /'7 9s-ü-96 ; f.ax: 9t6 /795 -3507
-----original Message- ----
From: sharon Simonson [mailtosssimonson@bizjournals.com]
sent: V'lednesday, December 19, 2OO7 5:37 PM
To: McKinley, Clark
--J ñ--^ r,i r ì i ^^ TT f n
ÞuDJ gcL : Ke : Hage rvrarf, FIUtr)cl Lf c5 .tJr diru rdgs Ilrf r rf e}Jçr u¡çÞ ar, !r
Hey C1ark -- did you get anywhere on the Page MiIl matter?
oî 1,2/:-8/07 3.2:2L P14, "McKinley, clark"
wrote:
> sharon,
> Confirming that I routed t.his request. f'11 let you know lvhat I get
> back. Meanwh.ile, here's the l-ink to the Page Mi]I performance report:
> htt.p : / / vrww . calpers . ca. gov / eip -docs / about /board.- ca 1 - agenda/agendas/ inve
>st
> /2oo7La/supplement -now07 /part-c-2.pdf (scroll- down to partñers)
> Clark McKinley
> fnformation Officer
> CalPERs Office of Public Affairs
> 9L6/795-41-96,. fax: 916/'.l95-3507
> From: Sharon Simonson [mailto:ssimoneon@bizjournals.com]
> Sent: Tuesday, December a8, 2OO7 12:01 PM
> To: McKinley, Clark
> Subject: Page MiJ-J- Properties LP and Page MilI Properties II,l,P
> Thank you, Clark, for your help.
> These are the two funds I'm interested in, partícularly the second
> one. I want to know who the fund. sponsors are for each of these '
> Assuming t-hat David Taran and Page MiI1 Properties LLC are the
1
PM-1933

sponsors for the second fund, as f bel-ieve they are, I want to know
what CaIPERS'views are on his company's acEivities with regard to
renbers in Ehe East Palo Alto area where he is buying. As I said on
the phone, Page Mil-l wants to increase rentè in the arêa by
substantial margins and the renLers, many of whom are minority and
Iow-income, are very upset.
Did cafpers know when it inwested in Èhis fund E,hat iLs target was
these East Palo A1Èo apartments? And was the original expectation that
there would be redevelopment?
Pasted below is a story I rdrote this summer about a lawsuit thaE Mr.
Taran and Page Mill is involved .in. That suit remains unsettled.
My number right Èo my desk is 408-299-1853.
Silicon Va1ley / sar_ Jose Business Journal - LTune 25, 2oO7
http: /,/sanj ose. bizj ournals . com/ sanj ose,/ stori es/ zool / oe / 25 / storyt. html
Friday, ,June 22 , 2OO7
East Palo AlCo plan hits bump
Silicon Val1ey / san ilose Business Journal - by sharon Simonson
Silicon Val.ley real- estate developer David A. Taran is bettÍng big on
the transformatiwe power of a PaIo Alto address, but his ambitions are
being sÈyrnied by a bitter dispute with a local real estate broker who
claims Taran owes him millions of dollars.
According to public record, incJ-uding hundreds of documents on fiie in
San Mateo county court, Taran has spent wefl in excess of $100 million
since September 2006 to acquire 70 parcels, mostly contiguous, in a
thin ribbon of land fronting U.S. LOl- and a stone's throl¡/ from what is
arguably the most status-laden community in the South Bay. Yet, all of
the properties Iie Ín East Palo Alto, among the region's most humble
communities, and they range from modest and aging apartments to some
that can only be described as blighted.
The properties also flank University Circl-e, East Palo Alto's
redevelopment centerpiece completed in the last five years thaÈ
includes a four-star hote1, sparkling fountains and three stunning
CLass A office tov/ers.
There is every ewidence that Taran intends to continue his buying
binge. Such large-sca1e, real-estate aggregations often precede
ambitious redeveJ-opment p1ans.
At the same time, Taran and his firm, Page Mitl Propertles tLc, have
become enmeshed ín a rancorous legal fight with Cupertj-no reaf estate
broker Intero ReaI EstaLe Serwices and its agenÈ Efi Luzon. In at
least three lawsuits and one countersuit, the two si-des are battling
ower broker commissions related to Page Mil-l's acquisitions and
f¡uzon's subsequent purchase.of two sites at the cenÈer of Page Mil]'s
assemblage efforts.
fntero is demanding in excess of $a million for Luzon's work in the
transactions,' thus far, Page Mill- has paid only $500,000, court
records show. Lawyers for Taran also are seeking to force Luzon to
give up his ownership of the tlvo properties he acquired, arguing thaÈ
he breached his fiduciary duty in buying them. Luzonrs atÈorneys say
his oblÍgations to Page Mil-I ended. in August 2006 when the two severed
ties. Luzon bought the two sites well after that date.
Taran's l-ah'yer, .Teffrey N. Brown of Los Angeles' Pircher, Nichols a
2
PM-1934

Meeks, did not return a call- for comment. Taran did not return t.hree
> caLl.s for comment on his plans for. East Palo Afto.
> But long-time valley real estate attorney Ron Rossi, who represents
> InLero, defends Luzon's right to acquire the properties in guestion,
> saying he has the same opportunity as any other buyer.
> 'rPage Mill is trying to monopolize the enLire East PaIo ÀIto area and
> to claim that their plans are somehow trade secrets and unknown to the
> publÍc. ft's absurd because anyone driving l-01 woul-d have to see (East
> Palo Alto's) nelrt Ikea and the new hotel and office buildings and know
> that there is change going on and opportunity exists," he sayb.
> East Palo AlÈo city officials say they're a\^¡are of some of Page Mill's
> activiÈies and are generally pleased with the rehabilitation work that
> his firm has undertaken at some of the apartments he has acquired.
> That includes evicting several felonious tenants and some major
> overhaul work of air conditioning and other primary building systems-
> Page MiII is now the largest apartment owner in East Palo Al-to with
> far in excess of 1,L00 units- Dominating a markeÈ in that way can give
> a landlord leverage to raise rents.
> But the cityts acting planning manaçJer, Brad Tarr, and iLs
> redevelopment manager, Carlos Marti-nez, both say they have not been
> apprised of any plan by Page Mil] to attempt whoLesale demoliEion of
> buildings on the sites thaÈ the company has acquired- Moreover, Tarr
> suggesÈs currenb city ordinances might make such a project d.ifficult
> to execuÈe.
> Sti1l, in court documents, Taran's atÈorneys regularly refer to Ëhe
' > company's "redevelopment p1an" for t.he area.
> Taran's repuLaLion within walley commercial real estate circles is one
> of a cantankerous wj.sionary. According bo Page Mill's Vleb site, he
> practiced real estate faw in Los Angeles at one tíme and holds
> multiple advanced degrees from American and Canadian universities - He
> has been admitted to the attorney's bar in California, New York,
> Florida and the Canadian province of Quebec. He is also a licensed
> Cafifornia real estaÈe broker and a member of the strategic advisory
> board of City National Bank.
> But Taran has a history of prickly relationships with business
> associates. He and his long-Eime busíness partner Stuart Shiff. parted
> ways nearly Èwo years ago after internal disagreements at their
> company, Divco West Properties. That split followed the departure of
> the firm's long-tíme chief operating officer, who abruptly resigned,
> also amidst a compensation dispute.
> Page Mi1l's strategy in East Pal-o Alto exemplifies Taran's abilit.y to
> see potential that less analytical or imaginaÈive eyes might miss -
> With its clean lines and creamy Brazilian granite and ltalian
> lj-mestone, the University Circle development is an oasis of calm and
> order in an often chaotic setting. The courtyard for the property
> features v/ater fountains and its offices are populated by presÈigious
> tenants inci.uding global law firm DLA Piper.'With 45L,000 square feet,
> the offices alone traded for nearly $300 mil]ion in mid-2005.
> And, only yards from University Circle lies Palo Alto, arguably the
> most desirable address in the South Bay- Its population is among the
> most educated in the nation, its streets are lined with mature trees
> and charming housing, and the town is anchored by the world-recognized
> Stanford UniversiÈy- It is also home to Stanford Shopping Center, a
> perennial- leader in saLes among the nation's mal-ls and home to elite
> retailers including Neiman Marcus, jeweler Tiffany & Co., and Brooks
> Brothers clothiers.
> Yet, immediately adjacent. to University Circle, which is surrounded by
3
PM-1935

high waIls, is a jumble of largely dilapidated apartment complexes,
duplexes and homes. Many of the properties are secured by perimeter
fencing and locked gates. Poorly maintained yards, irregular'property
lines, old cars, trash and overgrown shrubbery are the norm, OnIy the
bold would.be tempted to buy a home or condo here, much less ?0
parcels, plus conceive a plan to acquire that many properties again,
as Page Mill seems to have done-
Raja Ahluwalia, an attorney and real esEaÈe investor who owns a condo
next to University Circl-e, says he was unaware of Page MiIl's
activities. Despite EasÈ Palo AIto'E evident troubles, he boughE his
property because he saw some of the same potential as Taran, Ahluwalia
says.
nlÈrs an ideal location next to PaLo A1Èo, a very desirable place to
live," he says, It's also next to a major freeway, which provides
great access, and at the center of Silicon Valley.
Ahluwalia is trying to sell- his condo, but only because he is no
longer interested in main.taining the partnership that owns it
"BuE I know that five years from now, I will l-ook back and wish" the
sale hadn't been necessary, he says. uIf th.e redevel-opment occurs, it
would be very good for the area- It will improve the quality of life
for everyone. tl
SHARON SIMONSON covers real estate for the Business ,Journa]. Reach her
at
(408) 299-'t-8s3.
Al1 contents of this site (c) American City Business ,Journals Inc. All
rights reserved
PM-1936

From: Jean Trinh
Sent: Thursday, January 77,2008 8:33 AM
To: William Ganett; Chris Griffith; David Taran; Jeffrey Brown; Jennifer Moore; Jim Thompson;
j ohn I @hanvan. com ; Michael S cheinberg; Rosario P"rry; T erry Lee
Cc: Lance Ignon
Subject: Page Mill News Clips 1.17.08
Page Mill Properties sues East Palo Alto over rent control ordinance
Silicon Valley / San Jose Business Journal
Thursday, January 17,2008 - 6:59 AM PST
Page I of4
Page Mill Properties said late'Wednesday it filed a lawsuit in San Mateo County Superior Court to force
the city of East Palo Alto to rescind an urgency ordinance that retroactively freezes rents on all rentcohtrolled
aparbnents,
The suit alleges that the City Council's action was "arbitrary and capricious, lacking in rational basis,
and conhary to law."
The lawsuit further contends that the ordinance should be rescinded because Councilman Ruben Abrica
signed a lease for one of the affected apartrnents and therefore "has a personal financial interest in the
decision to lreeze rents," Page Mill said.
A hearing is scheduled for Feb. 21 on the issue.
Last week the City Council passed an urgency ordinance imposing a six-month rent freeze.
The unanimous vote was in the wake of a meeting a week earlier in which the emergency measure failed
because only four of the council's five members attended the session and only three of those were in
support ofthe measure.
About 1,000 rents were hiked by landlord Page Mill Properties on Dec. 1. About two-thirds of the units
saw rent increases ranging between $36 and $150; the remaining units saw rent increases higher than
that.
Palo Alto-based Page Mill Properties, which has acquire d l,ízlapartments in the community over the
last 15 months or so, came under fiie from some members of the community after it proposed to raise
rents on about 1,000 units. About 1,300 of Page Mill's units are governed by the community's Rent
Stabilization ordinance, which covers about 2,500 apartments in all.
In general, the law allows landlords whose properties are covered by it to raise rents annually by the rate
of inflation as set by the federal government. In question is whether those annual increases can be
"banked" or saved from year to year when they are not applied, and then imposed later when the market
will bear.
Also in question is the setting of the base rents on which the annual increases are to be applied.
"The court agreed that we stated a legitimate cause of action and ordered an expedited process for
reaching a conclusion on the merits of our case, so we are very pleased with this outcome," said Chris
Griffilh, a Page Mill attorney with Ellman Burke Hoffman & Johnson.
Landlord sues city over rent freeze
fiie:/iC:\Documents and Settings\lweir\Local Settings\Temporary Intemet Files\OLK122\P--. ll28l20}8
PM-1937

Page Mill wants urgency ordÍnance rescinded
Palo Alto Daily News
By Banks Albach / Daily News Staff Writer
Jan. 17,2008
Page2 of 4
After freezing rent hikes last week for six months, the city of East Palo Alto is facing a legal challenge
from the city's largest landlord, Page Mill Properties, which recently gave the majority of its 1,600
tenants rent increases that were set to take effect on Feb. 1.
Page Mill filed the suit late Wednesday aftemoon in San Mateo County Superior Court and is hoping for
an early judgment against the city at the first hearing, scheduled for Feb. 21. The company is asking a
judge to rescind the urgency ordinance and let the rent hikes take effect. Page Mill's attorney, Chris
Griffith, said she has yet to fiIe for damages, but could eventually do so depending on how much back
rent accumulates after Feb. 1.
Normally, a first hearing could happen as far as six months down the line, but a judge allowed a faster
process, Griffith said.
"I think today was a good first step," she saíd. "It was a small victory for us to get an expedited hearing,
and I'm very confident on the legal issues."
The city's outside attorney, Rick Jarvis, said the city has every right to protect the public good, also
referred to as police power. In this instance, with imminent rent increases around the corner, the city
council acted legally in passing the urgency ordinance, he said. Most of the hikes range between $50 and
$150, but some are as high as $300 and $400. They aitect about 1,300 tenants, most of whom currentiy
pay between $600 and $900 per month.
"The reason for the ugency ordinance is obvious," Jarvis said. "The new rents were going to take effect
and possibly displace tenants."
Many residents who live in Page Mill holdings and who spoke at public meetings are disabled, on fixed
incomes and elderly. Page Mill has rescinded or lowered the hikes for these tenants on a case by case
basis and continues to do so, Grifñth said.
Regardless of how a judge comes down on the fueeze, the lawsuit involves a deeper legal issue with the
city's rent program. East Palo Alto uses certiflcates of maximum rent to mark a rent ceiling for each of
its almost 2,500 stabilized units, so it would seem logical that tenants are paying the certif,red amount.
But in the last few years, many of the previous owners opted to not raise rents. And after the dot-com
bubble burst, rents plunged, adding to what has become alarge discrepancy between the maximum rents
and actual rents- The city's rent ordinance also pegs arurual increases at around 3.2percent, based on a
cost of living and inflation index.
Page Mill's increases are based off the certifïcates, not what tenants have been paying, and reflect
numerous annual increases combined, not just one based on last year's rent, Jarvis said. That tactic is
also known as banking, he said.
"I am confident that the moratorium will be upheld, and the city will be allowed to take the steps t

Page 3 of4
Griffith said she is also asking a judge to rule that the certificates are binding on the city under state law,
meaning the cify would not be allowed to legally lower the maximum rents.
The lawsuit comes as no surprise to council members. Griffith and Page Mill CEO David Taran
threatened legal action on Jan. I before the ordinance was passed. Council Member Peter Evans biamed
ttre situation on poor city management, especially regarding the certificates, which are issued by the
city's rent stabilization board and its staff.
Mayor Patricia Foster said that Page Mill was wrong to view the moratorium as an aggressive act.
"I'm disappointed," Foster said. "To have over a thousand residents face rent increases of around 10
percent, we needed more time to work through it. That's what the urgency ordinance is all about."
E-mail B anks A lb ach at b alb ach@dai lynews group. c om.
Page Mill Properties sues EPA in rent dispute
By Don Kazak
Palo Alto Weekly
January 16, 2008, 5:16 PM
Page Mill Propertìes, a Palo Alto company that owns about 1,600 apartments in East Palo Alto, filed suit
against that city Wednesday, claiming an urgency ordinance passed unanimously by the City Council
Jan. 8 is illegal.
The urgency measure prohibited rent increases of greater than the 3.2 percent currently allowed by the
city.
According to the lawsuit, Page-Mill Properties "gave notice of intent" to increase rent to 1,300 tenants
averaging 9 percent. Those increases were due Feb. 1, until the City Council acted last week.
Page Mill Properties is asking San Mateo County Superior Court to order the city to rescind its Jan. 8
urgency measure before Feb. 1.
However, that isn't likely to happen because according to. a press release from the company, the court
has ordered an expedited hearing for Feb. 21.
City Attorney Michael Lawson could not be reached for comment on the lawsuit, but Lawson and
another lawyer representing the city told the City Council that the Jan. 8 wgency measure was legally
defensible.
The lawsuit claims that while the city is limiting current rent increases to 3.2 percent, the company
relied on "certificates of maximum legal rent" issued for each apartment by the city.
file://C:\Documents and Settings\lweir\Local Settings\Temporary Internet Files\OLK122\P... l/28/2008
PM-1939

Those certificates, by Page Mill's calculations, would allow an average rent increase of 37 percent.
Page 4 of 4
But city officials argue that Page Mill is adding past rent increases allowed for each apartment over the
years but which tryeren't always charged.
City ofñcials last week said they fully expected to have Page Mill challenge the Jan. 8 urgency measure-
"We'll see them in court," Lawson said at the time.
page Mill properties claimed in a press release that the city rejected Page Mill's offers to negotiate the
differences between the city and company.
"Ow goal was to form a partnership with the city to improve the living conditions at our properties,"
CEO bavid Taran of Page Mill Próperties said in the release. "Instead, ttre city rejected our repeated
offers to negotiate the isiue of rent increases and left us with no choice but to litigate."
file://C:\Documents and Settings\lweir\Local Settings\Temporary Internet Files\OLKl22\P... 1128/2008
PM-1940

September 5, 20O8
Mayor, Patricia Foster
Vice Mayor, Donna Rutherford
Council Member, Ruben Abrica
Council Member, A. Peter Evans
Council Member, David E. Woods
East Palo Alto c¡ty Hall
2415 University Avenue
East Palo Alto, CA 94303
Dear Mayor Foster and Members of the City Council:
WOODTAND PARK
ap¿ìrtrnents
The City of East Palo Alto and Woodland Park Management have spent a substantial amount of t¡me and
money this year defending our respective legal positions. Although we will continue to vigorously defend our
legal rights if need be, we believe we could accomplish a great deal more for the community and our tenants if
we were to resolve our differences through a constructive, collaborative and productive dialogue.
As you know, the housing providers that own the properties managed by Woodland Park have ¡*erted ¡n
excess of 511 million on building repairs, se¡sm¡c upgrades, personal safety measures and other building
improvements to provide better and safer housing for the tenants, and they intend to do more. We hope you
agree with us that the community at large as well as the tenants will be better served if the City and Woodland
Park can find ways to combine lheir respective expertise and resources to further ¡mprove our commun¡ty.
Please accept this offer as a sincere attempt to find common ground and reasonable compromises for the
benefit of everyone concerned, including our tenants,
We stand ready to work diligently with any or all members of the Council and City Staff to discuss our
differences and work towards common sense and reasonable solutions to resolve our disagreements. Please
contact me at 650-833-3800 if you would like to discuss this or set up a meet¡ng.
Sincerely,
cc: Alvin James, C¡ty Manager
5 Newell Court. East Palo Alto, C-A 94303
Tel: (650) 324-6180. Fax: (650) 32.4-I2Oz
Leasing : 1650l, 324 -5220 . E me rge ncy : (650) 924-03 19
PM-1941

Weir, Laurie
From:
Sent:
To:
Subject:
Attachments:
r4ì
_l
Page Mill clips
2.14,08.doc (3..
FYI
Lance lgnon [Lance_lgnon@sitrick.com]
Thursday, February 14,2008 3:34 PM
Weir, Laurie; MqKinley, Clark
Fw: Page Mill Properties clip
Page Mill clips 2.14.08.doc
----- original Message -----
From: Jean Trinh
To: Chris criffith ; William Garrett i
Terry Lee ; Tammy Taylor,' Rosario Perry
Sent: Thu Feb 14 O9:44:Q2 2QAA
Subject: Page MilI Propertíes cJ.ip
Eaét Palo AlEo admits error in rent increases
Palo Alto WeeklY
Èr' n^ñ V=c;l¿
!'lednesday, February 13, 2008
East palo Alto, facing a lawsuit from an apartmenE company over rent lncreases,
conÈribuEed to the problem, lawyers for the city admit
The East Pafo Alto Rent Stabifization Board contriLruted to the legal standoff between the
city and its largest landlord by issuing "certificates of maximum rentrr for apartments
that erroneously allowed renE increases far in excess of what the board was acbually
a1lowing, according to a response by the city's lawyers to a lawsuiÈ that was filed
against the citY
The response, dated Feb. 8. called the issuance of the rent certificates with higher-thanallowed
rent increases "unfortunate. "
The city,s legal filing is in response to a lawsui-t filed last month by Page MiLI
properties, a Palo Alto company that owns and manages about 1,600 apartments in East Pafo
Alto.
page Milì. sued after the City Councif voted unanimously Jan. I to impose a moratorium on
any rent increases greater than 3,2 percent, Èhe current limit al-lowed by the city's rent
board- The rent board calcul-ates al-Iowed rent increages each year on the basis of
increases in Lhe Bay Area Consumer Príce lndex (CPI) .
P\Ã-1942

Page MilL contends its rent increases for hundreds of apartments, which had been due to
take effect Feb- 1. averaged 9 percent, albhough city officials said that many rent
increases were 15 percent or greater.
Page Mi11 officials contend that Lheir announced rent increases were legal because the
company followed the certificates of maximum rent j-ssued by the city's rent board for each
. apartment.
But city official.s say that the certificates were used by the company incorrectly.
"Basica11y, these cerEificates reflect \"rhat renE woufd be alLowed if the rent for each
unit had been raised by the maximum CPI amount allowed every year since the Rent
StabitizaEion Program began in 1988," the city's lega1 filing reads.
The Lawsuit response added that the city's renE ordinance rronLy permits annuaf CPI rent
increases based upon what rent was actually lawfulIy charged the prior year, not the
amounÈ whích woul.d be theoretically alLowed if the maximum rent increases had been made
each year. "
The Page Mill- l-awsuit seeks to overturn the ciLy's moratorj.um on rent increases greater
tsL-- t â ¡a¡¡aal
- ¿ }Jsreç¡¡e.
The proposed rent increases drew Èundreds of angry and frightened Page Mil-l tenants Èo a
rent board meeting in December and two Cit.y Councif meeEings in Januafy.
A hearing on the Page MiJ.l l-awsuit against the city is scheduled to be held Feb. 2l- in San
Mateo County Superior Court.
PM-1943

Weir, Laurie
From: Lance lgnon [Lance_lgnon@sitrick.com]
Sent: Tuesday, January 29,2OOg 7:53 pM
To: Weir, Laurie; McKinley, Clark
Subject: Op/Ed about page Mi[
Attachments: 01 1 1 98 SJBJ Editoriat.htm
Laurie and Clark,
I thought you'd like to see this.
Lance lgnon
Member of the Firm
Sitrick And Co.
cell: 4'l5-793-8851
otlice: 415-388-8525
9/2t2íJrJ8
Page I of I
PM-1944

Weir, Laurie
From: Taran,David[DTaran@PageMillcom]
Sent: Wednesday, January 16, 2008 11:38 AM
To: Weir, Laurie
Subject: San Jose Business Journal Request for Documents
Laurie,
Page I of I
I got your voicemail. Please send us a copy of the public records,request and the documents you are considering
producing so that we can review them and get back to you regarding what should not be produced and is
confidential.
Thanks,
David
David A. Taran
CEO
Page Mill PropertÍes, LLC
480 Cowper Street, 2nd Floor
Dnln Älfn lì O/?nl
¡ uru nrrva vn /a!rvI
650/833-3888 - direct
408/205-5714 - mobile
650/833-3988 - direct fax
dtaran@,pasemill.com
Ìvrvvy.pagemill.csm
9/2t2008
P,\CEI,III, I.
P¡OPIÊIIE'
PM-1945

Weir. Laurie
From:
Sent:
To:
Gc:
Subject:
Attachments:
011608 press
:lease Final.pdf.
Dear Laurie and Clark,
Lance Ignon ILance_lgnon@sitrick.com]
Wednesday, January 16,2008 4:30 PM
Weir, Laurie; McKinley, Clark
dtaran@pagemill.com
Page Millupdate
01 1608 press release Final.pdf
David asked that I send you a copy of a press release that we issued t.his afternoon
Lance Ignon/Member of the Firm/Sitrick And Company
Office: 415-388-8525 CeIl: 4]-5-793-8851
PM-1946

Weir, Laurie
From: Lance lgnon [Lance_lgnon@sitrick.com]
Sent: Wednesday, January 09,2008 5:06 pM
To: Weir, Laurie; McKinley, Clark
Cc: dtaran@pagemill.com
Subject: news clips for page Mill
Attachments: 0104 thru 0109.doc; page Miil e&A Final.doc
Laurie and Clark,
Page 1 ofl
I have attached a Word document with all of the newspaper coverage of page Mill since
January 3' You will note that there is a great deal more balance to îne roué"àg". I have also
attached a revised Q&A that I distributed to reporters and which I hope you-find informative.
Best regards,
Lance
Lance lgnon
Member of the Firrn
Sitrick And Co.
cell: 415-793-8851
office: 415-388-8525
912/2008
PM-1947

Page Mill Properties Q&A
January 8, 2008
This document provides answers to some of the most frequently asked
questions about Page Mill Properties' activíties in East Palo Alto. Please
contact Lance lgnon aL415-793-8851 with questions.
Why did Page Mill Properties increase rents on a portion of the rental
units it manages in East Palo Alto?
Page Mill Properties had planned to implement only modest annual rent
increases. The company was forced to abandon this approach and
implement higher increases when East Palo Alto's Rent Stabilization
Board moved to amend the City's Rent Stabilization Ordinance by
eliminating the company's right to increase rents according to the
Ordinance.
How did the Rent $tabilization Board intend to eliminate Page Mill's
rights?
The Board wanted to eliminate the company's ability to charge rents
according to the level allowed by the City's Certificates of Maximum Rent
and as per State law.
What are the Gertificates of Maximum Rent and why are they
important?
The Certificates establish the maximum rent that any housing provider can
charge for rent-stabilized apartments. This certificate system informs both
tenants and housing providers about the allowable rent. Page Mill relied
on the Certificate amounts in making its investments and was encouraged
by City officials to do so when the City issued the annual Certificates.
Did Page Mill raise rents above levels allowed by the Gertificates of
Maximum Rent?
No. ln fact, in most cases, Page Mill's increases were well below the
amount allowed by the'Certificates of Maximum Rent. Moreover, the
majority of the rents even after the increase will still be below market rents
for the area. There were some instances where clerical errors led to initial
notices that exceeded the Certificate amounts, but all of those have been
corrected and it was never Page Mill's intent to exceed the Certificate
amount for any unit.
But the Gity says that Page Mill was allowei to raise rents by only
!.zVo,which was the annual increase in the Gonsumer Price lndex.
Extensive legal analysis of the Rent Stabilization Ordinance clearly shows
that the City's Certificates of Maximum Rent, not the CPl, establish the
annual allowable rent increases. That's why the City issues them each
year to housing providers. lndeed, the City told Page Mill to rely on the
Certificates when the company made its investment in its East Palo Alto
propertíes - and the company did so.
PM-1948

Page Mill Properties Q&A
January 8,2008
By how much was Page Mill allowed to raise rents according to the
Maximum Rent Gertificates?
The Certificates gave Page Mill the right to raise rents by an average of
nearly 37o/o, or $314 per month.
By how much did Page Mill Properties raise rents?
o The average rent increase was 9%, or $89 per month.
o 21o/o, or 340 of the units, received no increases at all.
o Rents on nearly two thirds of the units were increased between $36
and $150 per month.
o 75 units, or 4.60/o of the total, had
and $200.
o 15 units, or O.9Vo of the total, had
$200 and $250.
monthly increases between $150
monthly increases of between
o 10 units, or 0.6% of the total, had monthly increases above $250.
o The higheSt increase, 47o/o,was on a two-bedroom townhouse with
a private yard occupied by a single individualthat had been renting
for $850 per month - well below anything approaching comparable
rents for the area.
o Jhe larger increases applied only to those units that were renting
¡^- .,,^ll ù.^l^.., n¡a. ¡ailina ralaa in llra aama l.¡r rilrlinn
lul wEll LJtiluw Plçvalllllv lcrtçÐ lll llle ùqlr¡ç vurrvrrrti!
The city claims that "hundreds or thousands" of people will be
forced to leave their apartments as a result of the rent increases, and
that this is why they need an emergency ordinance to freeze rent
increases for six months.
Residents from 13 units have n'otified Page Mill that they plan to leave
their units as a result of the rent increases.
What will happen to residents who cannot afford the rent increases?
Page Mill has already granted rent decreases to residents with special
circumstances, such as a disability or a fixed income. Other residents with
similar circumstances are encouraged to contact the company to
determine if they qualify for similar exceptions.
Who are Page Mill's investors?
Page Mill's investors represent people from all walks of life, including
retired state workers living on modest fixed incomes. Page Mill has a
responsibility to provide clean and secure housing to its residents, but it
has an equally profound responsibility to provide a reasonable return
those who entrusted the company with their investment.
PM-1949

Page Mill Properties Q&A
January 8, 2008
. ls Page Mill increasing rents so it can drive out tenants and then
increase rents aga¡n?
No. lf this had been Page Mill's intention, it would have raised all of its
rents to the maximum allowed by the Certificates of Maximum Rent. lt
also would not have invested so much of its financial resources into
improving the safety, health and living conditions at its properties.
o What kind of improvements is Page Mill making to its properties?
Page Mill is investing $11 million in capital improvements to its properties,
many of which had been poorly ma¡ntained or neglected for years. Page
Mill's efforts are mak¡ng not only its properties but the entire neighborhood
cleaner, safer and more livable.
The improvements go well beyond cosmetic improvements and include:
o new roofs on nearly two dozen buildings;
o seismic upgrades;
o repairing eiisting or installing new fences around swimming pools
to enhance child safetY;
o installing new energy-efficient washers and dryers;
o improving common areas by replacing worn-out carpets with safer
and more durable tile flooring;
(J ^ '^^^irina lEPqll ltlv vly ¡lnt ¡vlr ¡al rrncafa qltÙqrv ]ralnnniae uqrvv anrl hanrl-rails'
o an aggressive program to rid the neighborhood of rodents and
other pests;
o implementing green programs to eliminate rubbish; and
o installing energy-efficient lighting inside common areas'
. ts Page Mill also making improvements to the interiors of the units?
yes! Þage Mill has resolved 56 of the 80 repair requests it has received
so far and is cont¡nuing to work on the remainder. Many of the issues
inside the units existed before Page Mill owned the properties, so it takes
time to catch up on repairs. Many of these repairs would not be necessary
had previous property owners been as diligent as Page Mill has been.
¡ What is Page Mill doing about insect infestations?
Terminex, a highly regarded exterminator, is under contract to Page Mill
and is dispatched promptly to deal with insect problems, including
cockroaches. Structuralwork on the buildings and the removal of habitat
have displaced insects and rodents, but Page Mill has implemented
programs, such as the one with Terminex, to finally eliminate these
infestations.
PM-1950

Page Mill Properties Q&A
January 8, 2008
. ls Page Mill improving security?
Yes. The company has híred two security companies that provide vehicle
and foot patrols at least four times nightly on various properties. Many
members of the security companies are off-duty police officers and may
therefore have been mistaken for police officers by some residents.
Among other security improvements, Page Mill is:
o installing video surveillance systems connected to a dispatch center;
o installing security gates and fences with card-key access;
o hosting monthly meetings between the police and residents to build
stronger cooperation;
o working directly with police to rid the neíghborhood of drug dealers;
o providing discounted rents to govemment workers, Such aS police, fire
and teachers, who provide a stabilizing force for the entire commun¡ty;
and;
o alerting PG&E to replace street lighting that had been burned out for
years.
. Are these security measures having any effect?
Yes. The neighborhood in which Page Mill's properties are located, Beat
4,had the lowest crime rate ¡n East Palo Alto in November 2007,
-^^^".¡ih^ tn nnlina o*aficfi¡o TJra nnmnanrr'c offnrte fn rarlltne nrimc mav
clvuvlt¡lltv t\J Pvltvs ùlqllùllw' I l¡v wr¡rl/qrtJ v
have contributed to the overall decline in serious crimes in East Palo Alto
last year.
PM-1951

CaIPERS
lnvestment ^ÑTDOffice
Post Office Box2749
Sacramento, CA 958 1 2 -27 49
916 795-3400
916 795-3965 (fax)
August 7,2006
Mr. David Taran
Chief Executíve Officer
Page Mill Properties
1900 University Avenue, Suite 201
East Palo Alto CA 94303
Re: PageMill Properties ll, L.P.
Dear Mr. Taran:
Today I was informed that due to Jose McNeill's departure from CaIPERS, that the Page
Mill Properties ll, L.P. Fund was being reassigned to my desk. Although I have not had
an opportunity to fully review this Fund, I have reviewed Page Mills' actual since
inception and pro forma data for the period ending September 2005 and am looking
forward to leaning more about your investment principals and strategies.
On July 27,2006, The Situs Company, due diligence consultant for CaIPERS reported
that su'ccessful due diligence had been achieved and recommended the contemplated
investment to the Fund. I don't see a fully executed LP Agreement in the fìle, however, in
speaking to Cox, Castle & Nicholson, LLP this morning, the closing binders are
forthcoming.
I will be following up with other CaIPERS internat divisions to verify that all required
processes are in place and that all reporting deliverables have been identified. lf
possible, I would like to have an electronic organizational chart of the Page Mill
Þroperties Team, along with their contact information so that I may call upon the
appropriate staff for any additional information that may be needed.
Galifornia Public Employees' Retirement System
Lincoln Plaza East - 400 I Street, Suite E4800 - Sacramento, GA 95814
PM-1952

Mr. David Taran
August 7 ,2006
Page 2
My contact information is as follows:
(91 6) 795-0261 (direct)
(e16) 795-3e65 (fax)
Katherine fox@calPers.ca.qov.
Please let me know if anything is needed on your end'
SincerelY,
11 fia
Katherine Fox
lnvestment Officer -
ccr Al Femandez
Randy Pottle
Sandra Plasencia
Mike lnglett
Phillip Gee
Global Real Estate
PM-1953

R6i, !l¡E!61N8À
Rd$¡l & Clüt
lmTh!^b¡!â
Slittl@
Sn Jqg
r5t7çt19t
Pt ({r}26112J2
Fär ({Il8) ¡61#
I
2
3
4
5
6
7
I
9
l0
ll
t2
13
ai
t.'
15
t6
t7
18
19
20
2t
)')
23
24
25
26
27
28
RONALD R. ROSSI (SBN 43067)
susAN R. REISCHL (SBN 94307',)
DEAN C. ROSSI (SBN 188844)
RYÀN M. HAGAN (SBN 2008s0)
ROSSI, IIAMERSLOUGH, REISCHL & CHUCK
1960 The Alameda, Suite 200
SanJose, C^ 95t26-L493
(408)26t-42s2
Fax: (408)261-4292
Attomeys for Defendant EFI LUZON and
DefendanVCross-Comp lainant
INTERO REAL ESTATE SERVICES, INC.;
Defendants EFI LUZON, EPHRAIM K. LOZON TRUST, and
1909,1917,1919 CAPITOL AVE. EPA, LLC; ANd
Defendants EFi LUZON and 1908 COOLEY AVE, E.P.A., LLC
IN THE SUPERIOR COLIRT OF THE STATE OF CALIFORNIA
PAGE MILL PROPERTIES, LLC, a Delaware
limited liability company,
vs.
Plaintiff,
EPHRAIM LUZON, also known as EFI LUZON,
also known as EFI LOZON an individual;
INTERO REAL ESTATE SERVICES,INC., a
California corporation; and DOES
inclusive,
Defendants.
IAND CONSOLIDATED AND RELATED
iN AND FOR THE COUNTY OF SAN MATEO
CaseNo.: CIY 457866
[Consolidated with CaseNo. CIV 461130]
[Consolidated r¡rith Case No. CI\f 462137]
NOTICE OT'TAKING DEPOSITION OF
CALIFORNIA PUBLIC EMPLOYEES'
RETIREMENT SYSTEM (BY
SUBPOENA) AND REQUEST FOR
PRODUCTION OF DOCUMENTS
(c.c.P. $s 2025.01 0, 2025.?,30')
NOTICE TIIAT DEPOSITION MÄY BE
YIDEOTAPED tc. c.P. $202s.220(aXs)l
Date: March 3, 2008
Time: 10:00 a.m.
Place: QDS
3750 Auburn Blvd,, Ste. "8"
Sacramento, C^95821
Trial Date: July 8, 2008
OF TAKING DEPOSITION OF CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM (BY
SUBPOENA) AND REQUESTFORPRODUCTION OF DOCLJMENTS (C.C.P. $$ 202s.010,2025.230);NOTICE
THAT DEPOSITION MAY BE VIDEOTAPED [C.C.P. $2025220(a)(5)]; Paee MilU. Luzon. et .?1.; Case No. CIV
457866 (Consolidated)
PM-1954

R6t, ¡bnúr¡il1À
R.ls.¡l è Chs¿
1160 Thê Át¡ñ.d!
Sd¡c æ0
S.n 14 CA
%t7bt1rJ
Pù (6¡)Íl¡2t2
Pã(6)261¡2tt
I
2
3
4
5
6
7
8
9
IO
1l
12
13
1.4
15
16
t7
l8
1,9
20
2l
22
23
24
25
26
27
28
PLEASE TAKE NOTICE that on March 3, 2008 at the horu of 10:00 a.m. at the offices of
QDS, 3750 Auburn Blvd., Ste. rB", Sacramento, CA 95821; telephone number (9f q 4æ-7030,
Defendant EEI LUZON and DefendanVCross-Complainant INTERO REAL ESTATE SERVICES,
INC.; Defendants EFI LUZON, EPHRAIM K. LOZON TRUST, and 1909, l9l7,l9l9 CAPITOL
AVE. EPA, LLC; and Defendants EFI LUZON and 1908 COOLEY AVE. E.P.A., LLC , tluough
their attorney of record, in accordance with California Code of Civil Procedure Section 2A25.010, et.
seq.,willtake the deposition of Califomia Public Employees'Retirement System (CaIPERS), by and
through its office¡, director, managing agent, employee, or agent who is most qualified to testiff on
its behalf as to matters described in Item No. 4 ofthe Deposition Subpoena (attached hereto as
Exhibit "A'), upon oral examination, before a notary public, the taking thereof to continue from day to
day thereafter at the same place until completed.
PLEASE TAKE FURTHERNOTICE that pursuant to Code of Civil Procedure
A?mq ??ôla\f {\ fìafcn¿l¡nl EE'I T I I7t.ì'l\I an¡l Tìcfen¡lanf/l-rnss-f-nmnleinnnt TNTF'.RO RF.ÂT.
ESTATE SERVICES,INC.;Defendants EFI LUZON, EPHRAIM K. LOZON TRUST, and 1909,
1917,7979 CAPITOL AVE. EPA, LLC; and Defendants EFI LUZON and lgOg COOLEY AVE.
E.P.A., LLC intend to record the testimony by videotape, in addition to recording the testimony by
stenographic method as required by C.C.P. $2025.330(a)-(d).
PLEASE TAKE FURTHER NOTICE that Defendant EFI LUZON and Defendant/Cross-
ComplainantINTERO REAL ESTATE SERVICES,INC.; Defendants EFI LUZON, EPHRAIM K.
LOZON TRUST, and 1909, 7917,1919 CAPITOL AVE. EPA, LLC; and Defendants EFI LUZON
and 1908 COOLEY AVE. E.P.A., LLc inten.d to reserve the right to use at trial the videotaped
deposition of the above-referenced individual.
t/
t/
//
/t
NOTICE OF TAKTNG DEPOSITION OF CALIFORNIA RETIREI\iÍENT SYSTEM (BY
SIJBPOENA) AND REQUEST FOR PRoDUcTIoN oF DOCUMENTS (C.C.P. $$ 2025.010, 2025.230);NoTIcE
TI{AT DEPOSITION MAY BE VIDEOTAPED [C.C.P. 52025.220(a)(5)]; Paee Mill v. Luzon, et. al.: Case No. CW
457866 (Consolidated) 2
PM-1955

tus¡. Büsdøtr
Rúdü&Gú¡
Itollc
Süll.1m ^bntrÀ
sa! rE cÀ
9Sl1ß-Lr1
Pft ({oo2614¡51
Fs(10t)261{P2
I
,l
L
J
4
5
6
7
8
9
10
1l
12
13
14
1s
t6
17
l8
l9
20
z1
22
23
24
25
26
27
28
NOTICE IS FURTHER GIVEN that in accordance with the Code of Civil Procedure
g2025.220(a)(4), said deponent is requested to bring with him at the time of the deposition any and all
documents and writings as defined and identified in AfiachmentNo. 3 to Exhibit "A" attached hereto.
&
DATED: February Y() ,2008
R.SLOUGH, REISCHL & CHUCK
n------õ
ñv
DEAN C. ROSSI
Attomevs for Defendant EFI LUZON and
DefendánlCro ss-ComPlainant
INTERO REAL ESTATE SERVICES, INC.
PM-1956

EXHIBIT *A))
PM-1957

nrfOnNev On p¡nfy WÍÍHOUT ATTORNÊY (Núo, Stale 9at number, and addßss):
;io-ñäïD n. iossr (43061);DEAN c- Ros-sr (188844)
NOSST, HAMERSLOUGH, RETSCHL E CHUCK
rÕoo iHe AIAMEDA, surrg 2oo
sAN JosE, cA 951'26
"*''ããi*l*o, -(aoe l- áø-qzsz r¡xMr.lopù'm4: (408) 267-4292
E-¡i.All" ADDRESS loprløsr:
¡rnproryFoRr^raind' DEFENDANT INTERO REAI ESTAIE qIByI-qE-S' IN
ffiñroncouRToFcALtFoRNtA,couNTYoF sAN MATEo
sTREETADDREsS: 400 COUNTY CENTER
MAILING ADORESS:
c[YANozlPcoDE; REDIÍOOD CITY, CA 94063
gRÁNCH ¡l¡ME SOUTHERN BRANCH
FEnïoTER'PAGE MrLL PRoPERTTES, LLC' a Delaware
Limited liabilitY comPany'
RESPONDENT: Ephraim Luzon, aka Efí Luzon
DEPOSITION SUBPOENA
APPEARÑCE ÃHO pnOOUCTION OF DOctJmEIIq AND TH]NG9
SUBP-O20
THE pEOpLE OF THE STATE OF CALIFORNIA, fo (name, address, and telephone number of deponenl if known)z -
cåItfornlePublicEnployees,Retirementsystem(calPERs),4oo.Q''street'sacramento,callforniag5Sll;(916)
795-3oOo,
1. you ARE oRDERED To AppEAR tN pERSoN To rEsÍFy As A wlrNEss in lhls aotion at the following date' t¡me'
and place:
Date: March 3, 2008 Time: 10:00 am Rddìress: QPS, 3750 Auburn Blvd. , Ste.
As a deponent w¡o l" not a iãturul puoot, you are ordered to deslgnate one or more pelsons to
to the matlers described in ¡tem 4. (Code Civ. Proc., $ 2O25'220(a)(6))'
b.T\-.ìYouareorderedtoproducelhedocumentsandthingsdesc¡ibedinitem3.
the insten! vlsua! dlsplay of testimony'
on your behalf âs
t'8"
95821 (916) 483-
c. I xl This deposition wiii 'oe recorciecì stenographicaliy '[-] '¡roug!ì
and bY f-_l audiotaPe [Fl videotaPe
d_ l- )¡l rtr¡s viueotape deposiüon is intended lor posslble use at trial under code of clvll Procedure secton 2025'620(d)'
2. The personal attendance of the custodian or other qualified wilness and the production of the original records are required by this
subpoena. -fhe procedure authorized by Evidence iode sections 1560(b), 1561 and 1562 will not be deemed sufficientcompliance
'
with this subPoena.
The documents and things to be produced and any tesling or sampling being sought are described as follows: see
Attachment No. 3.
[X I Continued on Attachment 3.
4. lf the witness is a represenlative of a business or other entity, lhe matters upon which the witness is to be examined are described
aSfOllOWS:AIl facts and circumstances surrounai.ng any CâIPERS lhvestment' Loan' note' debenture' equity
interest or private Pl.acement with Page uirr ntóputiies, or with Page MifI through iÈs'agents or l-enders
(inctuding vtachovia) concerning rear èstate i" eä"t PaLo Àltor cållfornla from Àpril 2006 thlough present'
|---l Continued on Attachment 4.
r. ñöi;i"tËËfiäÈ*uto wrrH rHts suBPoEIA 49 4 9.99r.o.?låï:f-"311Yy5191ny:;.g1',tÆ:Àt53:,uJot*
5oï"r"#ð,i[i'å'oi-å',i*"iåËöäöiíir;ãl-oïrösã.'6 ño lnororu ro'euAsH oRAN oBJEcrroN HAs BEEN
, t^ rñiÉO f:íÞ EitlDI l'l\
^ ^^rlct
!Ë*eü=io'niibü:Àtãiäìi"nbË'iääïöËË'ü¡tllïôÉi¡¡E þÁÀres, wrrNEssEs,ÁNDcoNSUMER oR EMPLoYEE
^ô Érrñf ^vrE oE^ñÞñQ
iFËË"'irË'*'uËi âe"oåiÀrùËitãÊrónÈ you ARäRÈouìneo ro pRoDUcE coNSUMER oR EMPLoYEE REGoRDS.
--
---r^J ^¡^^^-,^^hl¡¡tt¡t atlha ãonacìli
u. äiñã"olii"iliä"Ì'vii,ir7ìîäåü¿äå"Ï,'äñ;ääá oìãi'r'"^ îi,Ï!,^lfiiäi'i*!:;#;i,;;;::i';:";;;;t,;;-y;;,;;v-,;;d"a,;*ti"; "rl "-':y:SlP,:::y:d"::,?i:l:Y:::!::!i:,7!:i:i,''
';'o'd,2!.!^i!:i1?,1::,::'iß"::::Y':":,":::!,3:,
tarer útey ate ttd"õuttuvu tv' ttvú¿'p'v ' --
,'i"i" üa ,nrage actually traveled both ways. The,money must be paid, at
sign lhe deposilion. You are entitled to¡eceint *j{!9s1,,.--.-.!¡L
-^-.i-ñ ^rrL;- ô,¡ÀMóñ a ar er thø timc af the deoosition.
the of lhe
noüce of the ;ilh;; iilh serv¡ãe or t¡¡¡s õ ubpoena or at the t¡ne of the depos¡tion
olsoiffiENAMAYeepuHlsneo¡scoHreuprBYTH¡ScoURT.YoUWlLLALsoBELlABLE
FOR THE SUM OF FIVE HUNDREÐ DOLLARS NÑO ÃLI- ONTVII
Date issued: FebruarY , 2OQ8
Føn Adopled lq Msndâtory Uso
Jud¡cial Corpl ol CEllonla
SUBP42O [ReY. January l' 2007¡
of sen lce on
PERSON ISSUING SUBPOENA)
ALtornev for Def s.=JL'¡IERO & LUZON
ffi FoR PERSoNAL-{PPEARAN cE
--'ANtiÞRôoÙcrrcÑ ôr oocu¡¡eNTs AND THINGS soffi#,,"
Q.Phß
ornE) _^_
I ol2
Cod6 ol Clvf Procodrro,
s5 æ20. 5lo, 2025.2ãt, 2Ù25 -62Ù,
Government Code, S æ097.1
PM-1958

ATTACInûpNTNO.3
l) AII *WRITINGS" as defined in Califomia Evidence Code Section 250 pertaining to any
ialifornia Public Employees' Retirement System ("CaIPERS') investment, loan, note,
debenture, equity ¡ntereú or private placement with Page Mill Properties, LLC ("Page Mill"), or
with page Mitt ti,rougtt its agãnts or lenders (including Wachovia) conceming real estate in East
Palo Alto, California from April 2006 through present.
Z) All "WRITINGS" as defined in California Evidence Code Section 250 constr'tuting, or
pãrtuiting to, any communications between CaIPERS and Page Mill (including, b-ut not limited
io, David-Taran, James Thompson, Terry Lee, and Jennifer Moore) regarding real estate in East
Palo Alto, Califomia, from Ap:il 2006 tlrougþ present.
3) A¡ *WRITINGS" as defined in CalifomiaEvidence Code Section 250 constituting, or
perøining to, any comrnunications regarding real estate in East Paló Alto, California, from April
äOOO tt¡o:"gtr prér.ot, befween CaIPERS and Page Mill's: a) attorneys (including, but not limited
to, Jeffiey Bto*, Alan Petlak, Linda Donner, Scott Abrahamsoq or any other attomey at
pircher. Nichols & Meeks); b) agents; or, c) ienders (including, but not limited to, Wachovia)-
4) All .,WRITINGS" as defined in CatifomiaEvidence Code Section 250 constituting, or
p"rtuioing to, any private placement memoranda sent by Page Mitl to CaIPERS regarding real
ãstrt" in East Palo Alto, California" from April 2006 ttuough present'
5) AII *WRITINGS" as defined in Califomia Evidence Code Section 250 constituting, or
pãttuiniog to, any communications between CaIPERS and Page Mill (including, but not limited
io, David-Taran, Jartres Thorrpson, Terry.Lee, and Jennifer Moore), or Page Mill's attomeys,
regarding INTERO REAL ESTATE SERVICES, INC'
6) All ,.WRITINGS" as defined in California Evidence Code Section 250 constituting, or
p"rtuioi"g to, any communications between CaIPERS and Page Mill (including, but not limited
io, David-Tæan, James Thompson, Terry Lee, and Jennifer Moore), or Page Mill's attorneys,
regarding Ephraim Luzon, aka Efr Luzon akaEfiLozon'
PM-1959

Rúi, Htndow\
nÊiEhl ¿ tuù
¡9trft&ñú
Slilè 16
sin ¡ß cA
g't?bllrt
Ph ({6) 261{252
Fa(fr¡)¡6¡{¡r¡
PM-1960

Weir, Laurie
From: Lance lgnon [Lance-lgnon@sitrick.com]
Sent: Friday, MaY 30,2008 4:39 PM
To: Weir, Laurie;McKinleY, Clark
Gc: dtaran@pagemill.com
Subject: Latest news re: Page Mill in East Palo Alto
Attachments: image002.emz; image003.gif
FYI
Lance ignon/Member of the Firm/Sitrick And Company
Office: 415-388-8525 Cell: 415-793"8851
From the Burlingame DailyNews:
Page I of2
Thursday May 29
Vandals tear up school garden in East Palo Alto
By Banks A|bach I Daily News Staff Wrlter
Pólice aren't seeking suspects, and damage for the most part has already been undone, but the thought of someone vandalizing the garden at
East Palo Alto 49ers Academy Middle School won't go away anytime soon.
,'I u.,as klnd of angry because we worked really hard on it," said l4-year-old student Lashapale Penn. "The strawberries were my favorite.'
Between Friday night and Sunday moming, someone jumped one of two six-foot fencei and knocked over about 1 5 planters and pots,
spilling soil onthe pavement and uprooting several plants, including two young citrus trees and a hearty growth oftomatoes.
After-school program coordinator Aja Desmond said shc came in Sunday aftemoon to do some extra work when she saw the scene.
"It was just a pathetic scene," she said Wednesday. "It's so pointless to destroy something that's so positive. The students'reactions, that's
rvhat I was really wonied about."
The garden, which sprung cabbage, lettuce, mint, tomatoes, lemons, jalapenos, chives and strawberries, is only two months old.
The sixth- through eighth-grade school created the garden as part ofa Thursday nutrition class in its after-school program. About two
dozen students h"elpeã devãlop the garden and I 0 hãve been working daily shifts watering and maintaining it. Luckily, students harvested
thc garden on Friday and made a giant salad for a potluck with parents, siudents and staff.
The school's director, Michele Sharkey, said in an e-mail that the initial investment was about $1,000 for the containers plus plant costs'
"(But) we can't put a price on all the volunteer time," Sharkey said.
The administration has decided not to file a formal complaint with the police department.
Some recent media coverage, however, has led to outside support to rebuild the garden. Page Miil Properties sent ou1 a dozen workers to
fìx the garden right away, Sharkey said.
In addition, Desmond noted, some residcnts have started bringing money, and an Alameda resident offered to donale planting supplies.
"We just have to build it back up," said Guiselle Hemandez, 13.
E-mail Banks Albach at balbach@dailynewsgroup.com-
Comment on this story
Lui Gabriel
PAGE MILL PROPERTIES, LLC | 480 Cowper Srreer, 2nd Flr, Palo Atto, cA 94301 | 650.833.3800 I
91212008
PM-1961

650.833.3833 direct | 650.833,3933 direct fax
Â
f;fl Pl."t" .ortsidcr thc cnvironlnent bcfore prinling this enlail'
....4083 liv¿s los¿'.'
912/2008
Page2 of2
PM-1962

Weir, Laurie
From: Lance lgnon [Lance_lgnon@sitrick.com]
Sent: Tuesday, February 19, 2008 9:17 AM
To: McKinley, Clark;Weir, Laurie
Subject: Page Mill article
Attachments: 021908 Calif Daily Joumal.doc; 021908 Cailf Daily Journal.pdf
FYI -
Same article, different formats.
Lance lgnon
Member of the Firm
Sitrick And Co.
cell: 415-793-8851
office: 415-388-8525
9t2/2008
Page 1 ofl
PM-1963

Weir, Laurie
From; Lance lgnon [Lance_lgnon@sitrick.com]
Sent: Thursday, January 17,2008 9:58 PM
To: McKinley, Clark;Weir, Laurie
Subject: news clips
Attachinents: Page Mill News Clips 1.17.08.htm
Clark and Laurie,
Page 1 ofl
I have attached the latest news clips, which describe the filing of Page Mill's lawsuit against the
City of East Palo Alto.
Best regards,
Lance
Lance lgnon
Member of the Firm
Sitrick And Go.
cell: 415-793-8851
office: 415-388-8525
9/2/2008
PM-1964

Weir, Laurie
From: Ayala, Sonia [SAyala@PageMill.com]
Sent: Friday, December 28,2007 12:07 PM
To: Weir, Laurie;McKinleY, Clark
Subject: SJ Business Journal Article: "CALPERS backs Page Mill Plan"
Attachments : SJ Business Journal Article (2007 1228)..pdf
Page 1 ofl
Lance lgnon asked that I emailyou a copy of the article'CALPERS backs Page Mill Plan" that
appeared in today's San Jose Business Journal. Please conlact Lance or Jim should you have any
questions.
Best regards,
Sonia Ayala
Page Mill Propertíes, LLC
480 Cowper Street, 2nd Floor
Palo Alto, CA 94301
Direct: (650) 833-3803
Fax: (650) 833-3903
9tzt2008
PM-1965

Weir, Laurie
From:
Sent:
To:
Cc:
Subject:
Park, Eileen
Monday, May 19, 2008 9:26 AM
Weir, Laurie
Arau, Jose
FW: Ovier Mariscal - CaIPERS On-Line Web Site - Ask CaIPERS # 293929
Iraurie - PLease see this note forwarded frorn the Talkback system. This issue is related to
Page Mi1I. Would you be the one to handle this one? Eileen
- - - --Original Message--- --
From: TalkBack, INVO1
Sent: Monday, May L9, 2008 8:58 AM
To: Park, Eileen
Subject: FW; Ovier Mariscal - CaIPERS On-Line Web Site - Açk CaIPERS # 293929
Hi Eileen,
Can you take care of Ehis compl-aint?
Thanks
Jose
-- - --original Message- -- - -
From : oviermariscal@yahoo . com lmailto : owiermariscal@yahoo - com]
Sent: Thursday, May 15,2008 3:2'7 PNI
To: TalkBack, IÌÍVOIsubject:
ovier Mariscal - calPERS On-Line Web site - Ask calPERs # 293929
To : inwol_askcalpers@calpers . ca . gov
Ask CaIPERS #: 293929
Date Submitted: 2oo8-05-15
Time Submitted: a5226236
Session Perspective Information:
Member Status - Unknown
Member CaEegory - Unknown
Employer Agency Type - Unknown
Date Of Birth:
Social Security #:
Status: fnterested Party
IJast Name: Mariscal
First Name: Ovier
Phone #: 650-322-9L65
Respond By: Email
E-Mail Address : oviermariscal@yahoo.com
Date Sent: 2008-05-15
Time SenE : 1-5:26 236
Subj ect : Investment Policies (.2 0 )
http: //ínsid.er.calpers.ca.gov:82/on|ine,/askcalpers/subject-owners.asp
Street: 2L35 Clarke Avenue
City: East PaIo AIto
State: CA
Zip Code: 94303
1
PM-1966

Organization:
euestion: My name is Ovier Mariscal and i am a community member of East Palo Alto' I'm
emailing beèause i was inteùestsed in finding out Cal- Pers relationship with eage.l'till
properties. page Mitl Properties has recentiy made an attempt to displace community
members in East palo Afto by raising the rents in high amounts. I wanted to see what type
of guidelines Cal pers has when invésting in companies because Page MilI Properties based
of éalo A1to, CA has acted in an unethicaL manner raising the rents of some people with
increases of up to 4'7? of what they were paying before this years-increase- Please direcÈ
me with the appropriate person "o th"t we can set up meeting to discuss the matter
further, We believe Ca1 Þers has great guidelines in regards to investing in ethical
companies, so we want to know if éaf peis had looked into this issue- You can reach me at
650-322-9465.
http: //insider.calpers.ca.gov:82/oni-íne/askcalpers/tal-kback-focaLe-asp?TaIkBacklD=293929
vileb Browser: Netscape 5.0 (Macintosh; en-US)
PM-1967

From:
Sent:
To:
Subject:
Dear Mr. Mariscal:
Park, Eileen
Wednesday, May 21, 2008 11:12 AM
'ovierm ariscal @yahoo.com'
RE: Ovier Mariscal - CaIPERS On-Line Web Site - Ask CaIPERS # 293929
I am transmitting this response to your question for the Reaf EsÈate seníor sÈaff:
Thank you for brínging your concerns to our atténtion. We are ar¡rare of issues you raised
and we are closely-moniloring events related to the Page M111 invesLment- In iluly'06
CalpERS invested $fOO *itfion nage Mill Properties II tP fund- Under the fund structure
page Mi11 makes all investment dècisions, Ovier shouLd direct further questions to Page
Mi11.
- - - --Original Message- --- -
From: TalkBack, INVO1
Sent: Monday, MaY L9, 20OB 8:58 A]4
To: Park, Eileen
Subject: FW: Ovier Mariscal - CaIPERS On-Line Web Site
Hi Eileen,
can you take care of this comPlaint?
Thanks,
Jose
Ask CaLPERS # 293929
- - - - -originai Message--- - -
From : oviermariscal@yahoo. com lmailto : oviermariscal@yahoo' com]
Sent: Thursday, MaY 15,20OA 322'1 PM
To: TalkBack, INVO1
Subject: Owier Mariscal - CaI-PERS On-Line I^Ieb SiEe - Ask CaIPERS # 293929
To : invol_askcalpers@calpers. ca. gov
Ask CaIPERS #: 293929
Date Submitted: 2008-05-l-5
Time Submitted: 3.5:26:36
Session Perspective Information :
Member status - Unknown
Member Category - Unkno\,rn
Employer Agency TyPe - Unknown
Date of Birth;
Social- Security #:
Status: Interested Party
Last Name: Mariscal
First Name: Ovier
Phone #: 650-322-9165
Respond By: Email
E-Mai1 Address : oviermariscal@yahoo.com
Date Sent: 2008-05-L5
Time Sent: 7.5226:36
Subject: Investment Policies (20)
PM-1968

http: //insíder.calpers.ca.gov:82,/online/askcalpers/subject-owners-asp
Street = 2L35 C1arke Avenue
City: East PaLo Alto
State: CA
Zip Code: 94303
organizaÈion:
euestion: My name is Ovier Mariscal and i am a community member of East Palo AIto' I'm
ãmailingr beãause i was inÈere.sted in finding out' cal Peis relationship with eage.t"till
properties. page Mill properties has recently made an attempt to displace community
members in East palo Alto by raising the rents in high amounts ' f wanted Eo see what tlpe
of guidelines Ca1 pers has wfren invãsting in companies because Page Mil1 Properties based
of pal-o Afto, CA has acted in an uneÈhical manner raising Lhe rents of some people with
j.ncreases of up to 4'7"t of what they were paying before this years.j-ncrease. Plea6e direct
me with the apiropriate person so that r¡/e can set up meeting to discuss the matter
further. we ¡étieve CaI Þers has great guidelines in regards to inwesting in ethicaf
companies, so we want to know if CaI pers had looked into this issue- You can reach me at
650-322-91,65.
htÈp: //insíder.calpers.ca.gov:82/online/askcalpers/talkback-locate.asp?TalkBacklD=293929
Web Bro\¡.tser: NetscaPe 5. o (Macintosh; en-US)
PM-1969

February 1,2008
Sharon Simonson
96 N. Third St. Suite 100
San Jose, CA 95112
Subject Public Records Act Request
Dear Ms. Sirnonson:
This is the California Public Employees' Retirement System's (CaIPERS)followup
letter to our December 31,2007 response. This will constitute CaIPERS' final
response to your Public Records Act Request dated December 20,2007.
ln your e-mailyou requested information perfaining to the following:
"a copy of any documents presented to CaIPERS staff or board members
by Page Mill Properties and íts founder and chief executive David Taran
explaining the investment strategy for the company's Page Mill Properties
ll LP lnvestment fund."
ln response to your request, Real Estate staff reviewed your request and found a
private placement memorandum (PPM) addressing Page Mill's investment
strategy and responsive to your request. However, the documents were
provided to CaIPERS in confidence (hereinafter referred to as "Confidential
Records") and are.exempt from disclosure, as described below.
The Public Records Act
The Act embodíes the California Legislature's fundamental determination that all
the state's business is presumptively subject to public scrutiny, by providing that
"every person has a right to inspect any public record." (Sec. 6253(a).)l
CaIPERS is fully aware of the purpose of the Act and takes seriously the public
policy codified by the Act that access to information concerning the public's
business is a fundamental right of the people of the State of California. However,
in enacting the Act, the Legislature also recognized the necessity for keeping
t All statutory references are to the California Government Code, unless othen¡vise specifically
noted.
PM-1970

S. Simonson
February 1,2008
certain documents confidential by enacting statutory exemptions to the general
principle of disclosure.
The Act exempts records the disclosure of which is exempted or prohibited
pursuant to federal or state law, including, but not limited to, provisions of the
Evidence Code relating to privilege. (Sec. 6254(k).) This exemption
encompasses, among other things, Evidence Code section 950, relating to
attorney-client communications, Evidence Code section 1060, relatíng to trade
secrets, and Evidence Code section 1040, relating to official information.
Finally, the Act exempts public records from disclosure when the public interesi
served by not disclosing the record clearly outweighs the public interest served
by disclosure of the record. (Sec. 6255.) These statutory exceptions from
disclosure recognize that there arê circumstances for keeping otherwise public
documents confidential and are applicable to the Confidential RecOrds.
Trade Secret Privilege
a
The exgmption to the Act set forth in section 6254(k) protects trade secrets,
which are privileged under Evidence Code section 1060. This section provides
that'"the owner of a iracje secret has a priviiege to refuse to ciisciose the secret,
and to prevent another from disclosing it, if the allowance of the privilege will not
tend to concealfraud or otheiwise work injustice." CaIPERS has concluded, in
consultation with its investment staff, consultants, and partners, that financial and
proprietary information contained in the Confidential Records constitutes a trade
secret since the information derives economic value, both actual and potential,
from such information not being generally known to the public or to other persons
who can obtain economic value from its disclosure or use. (See definition of
"trade secret" in section 3426.1 of the Calífornia Civil Code.) The Confidential
Records are therefore exempt from disclosure under the Section 6254(k).
The exception to the Act set forth in section 6254(k) also includes officÍal
information, which is privileged under Evidence Code section.1040. "Official
information" includes "information acquired in confidence by a public employee in
the course of his or her duty and not open, or officially disclosed, to the public
prior to the time the claim of privilege is made." This is a conditional privilege in
that the information must be acquired in confidence and the necessity for
preserving the confídentiality of the information must outweigh the necessity for
disclosure in the interest of justice.
CaIPERS received the Confidential Records in confidence, as part of the
investment proposal. CaIPERS was advised of the proprietary nature of the
information and that said records should remain confidential and not be
California Public Employees' Retirement System
www.calPers.ca.gov
PM-1971

S. Simonson
-3-
February 1,2008
disclosed. Therefore, the first prong of the "official information" privilege is met
with regard to these documents
The second prong of this privilege, the "weighing" or "balancing" test, is
substantially similar to the weighing of the public.interest test required by section
6255. Here, the necessity for preserving the confidentiality of the Confidential
Records outweighs the.public's interest in disclosure'
Section 6255(a) provides that a state agency:
shalljustify withholding any record by demonstrating
that the record ín question is exempt under express
provisions of this chapter or that on the facts of the
particular case the public interest served by not
disclosing the record clearly outweighs the public
interest served by disclosure of the record'
CaIPERS understands the public's inteiest in the requested documents, given
the public interest in CaIPERS' investments. Nonetheless, CaIPERS cannot
justify the release of information that could negatively 3ff."t the return on
batpERS' investments. CaIPERS would be jeopardizing its investmeni anci its
relationships with its business partners if it gave competitors valuable proprietary
information. The Confidential Records could also revealto the public market
place, including CaIPERS' competitors, valuable proprielary information_ and
baus" detrimeñt to the value of CaIPERS' investment. CaIPERS, therefore,
cannot justify the release of the Confidential Records. Therefore, the
Confidéntial Records are exempt under the express provisions of section
6254(k), including the official information privilege, and the balancing test of
section 6255(a).
Government Code Seclion 6254.26
The Confidential Records are also exempt from disclosure under section
6254.26.2 This code section specifically exempts from disclosure investment
2 Gou"rnr"nt Code section 6254.26 reads, in part, as follows: (a) Notwithstanding any
provision of this chapter or other law, the following records regarding alternative investments in
wnícfr puOtic investment funds invest shall not be subject to disclosure pursuant to this chapter'
unless the information has already been publicly released by the keeper of the information.
(1) Due diligence materials that are proprietary to the public investment fund or the alternative
investment vehicle.
:....
(6) Altemative investment agreements and all related documents.
iOi t-lo¡"¡tn"tanding subdivision (a) the followíng information.contained in records described in
àíOO¡u¡sion (a) regãrding atternatìve investments in which public investment funds invest shall be
subject to disclosure puisuant to this chapter and shall not be considered a trade secret exempt
from disclosure:
Gatifornia Public Employees' Retirement System
www.calPers.ca.gov
P\ll-1972

S. Simonson
February 1,2008
agreements and related documents relating to the venture funds. The
investment about which you inquire is a venture investment
Please feel free to contact me at the above telephone number if you have any
questions or concerns regarding this matter.
Sincerely,
JAVIER PLASENCIA
FJP:mio
(1) The name, address and vintage year of each alternative investment vehicle.
-4-
(c) For purposes of this section, the following definitions shall apply:
it) 'nlternative investment' means an investment ín a private equity fund, venture fund, hedge
fund, or absolute return fund.
(2) 'Alternative investment vehicle' means the limited partnership, limited liability company, or
òim¡tar legal structure through which the public investment fund invests in portfolio companies.
California Public Employees' Retirement System
www.calPers.ca.gov
PM-1973

From:
Sent:
lo:
Gcl
Subject:
Weir, Laurie
Tuesday, August 26,2008 9:43 AM
Carrillo, Diego; Park, Eileen
Martin, Omar; Rodriguez, Bianca
RE: Public Records Act request re: Page Mill
It looks like we need to move quickly on this as Javier has given us an end of the week deadline to collect all, review it in
house here, ano rorwarJ tã ñi'ì, - ãil'ov the end of the weekl I emailed him noting that this would be challenging. I hope to
hear back fiom him with more time, but I don't think we can count on il.
Thanks for all your good work. L
From:
Sent:
To:
Cc¡
Subjectl
Carrillo, Diego
Tuesday, August 26, 2008 9:42 AM
Parlç Eileen; We¡r, Laurie
Martin, Omar; Rodriguez, Bianca
RE: Public Records Act request re: Page Mill
Omar has experience with gathering documents for PRA requests. He will start the project and keep us in the loop as he progresses'
thanks
From:
Sent:
To:
ec:
Subject:
Par( Eileen
Tuesday, August 26, 2008 9:24 AM
Weir, Laurie; Carrillo, Diego
Martin, omar; Rodr¡guez, ijlanca
RE: Public Records Act request re: Page M¡ll
you can also work with omar and Bianca on lhe archived files. They can also do the copying for you. E
From:
Sent:
To:
Cc:
Subject:
HiDiego,
Weir, Laurie
Tuesday, August 26, 2008 9:20 AM
Carrillo, D¡ego
Park, Eileen
FW: Public Records Act request re: Page Mill
please coordinate a search for all records we have relating to Page Mill properties- Determine if we have anything in
stòiage or remote filing oi:ies. once you have it bring it iñto myõrice and'we will review. we are supposed to have this
review complete by the end of this week.
Work with Eileen if you need to delegate some of this work.
Let me know if there are questions. Thanks L
From:
Sent:
TO:
Subject:
Plasencla, Javier
Monday, August 25, 2008 6:19 PM
'a ndy@tenantstogether.org'
Public Records Act request re: Page Mill
Andy,
ii*ji " pteasure speaking with you. As per our discussion of today, thank you for your 9o1!esy,1n granting my request to
i"r|""á îo vour pu'btic n"Ëorái Âct requäst untir ihe end of lhis weêx. As I mentioned, calPERS' staff is sathering the
information and it has taken longer thaÅ expected. However, after gathering the information, we also need to review the
docu.ments and determine whelñer the material is proprietary and exempt from disclosure' .
We also discussed the possibilîty of you narrowing'yoür reqúest. For instance, my understanding is that your focus
pi¡,.nãr¡lv óãrtàin" to paér rvlill Êíopefti"" u, L.p. a-ná to the'extent that Paqe Mill Properties LP and Divco west Properties
Prv-1974

are independent and distinct investments from Page Mills Properties ll, LP, you might be willing to exclude these from your
request and narrow your request to the remaining entities and individuals.
fnänk you for taking the folläwing request into consideration. Please feel free to call me if you have any questions-
Regards,
F. Javier Plasencia
Senior Staff Counsel
(e16) 7e5-3673
PM-1975

Weir, Laurie
From:
Sent:
To:
Gc:
Subject:
H¡AII,
Weir, Laurie
Friday, August 15,2008 5:42 PM
Eliopoulos, Theodore; Pottle, Randy
Stausboll, Anne; Park, Eileen; McKinley, Clark; Plasencia, Javier;Weir, Laurie
RE: Page Mill Litigation -Attorney Client Privileged Communication--
I spoke with Terry Lee and Jim Shore, CIO and Chief Counsel of Page Mill.
They were aware of the class action lawsuit, but were only aware that the Stanford Community Law Clinic had gathered
information from tenanls on rent increases. They were not aware that an additional legal action was contemplated. They
are searching their tenant rolls to determine if Chris Lund lives in a Page Mill property.
They view the class action suit as a legal nuisance. They believe that the suit ignores key provisions which define what a
landlord is for the purposes of the exclusion to rent control. They have hired San Francisco based outside counsel, Zacks,
Ultrecht, Leadbetter to represent them in both the class action and counter suits.
. They state that it was the taw firm of Heller Ehrman that advised David Taran (then with Divco, not Page Mill Fund ll)
that he should use separate property ownership vehicles for tax purposes. Page Mill believes that this is a conflict for
Heller Ehrman. Heller does not agree. Page Mill intends to file a motion to dismiss on conflict grounds.
. Page Mill also states that the class action suit was filed in Santa Clara County when the properties are located in San
Mateo County. They believe that the plaintiffs chose Santa Clara County because Page Mill recently won a rent
control suit in San Mateo County. They will request a change of venue to San Mateo County courts.
r Their first formal action has been to request declaratory relief from the court that there is no legitimate claim. That
request is c,urrently pending.
Page Miii states that they believe thai they are on iirm iegai ground. They agreeci io provicie Ca|PERS with a memo on aii
legal issues, anticipated timing, and potential impact on investment strategy. They will try to get this to us in time for
Javier and my meeting on Tuesday.
I reminded them that it is always best for CaIPERS to hear about issues such as these from our investment partners and
not from the community or press. They expressed regret that they had not kept us informed of these events and
would keep us up to date as events unfold.
I will keep the group informed as we move forward.
All the best, Lauríe
From:
Sent:
Tol
Cc:
SubJect:
Hi Ted and Randy,
Weir, Laurie
Friday, August 15, 2008 1:48 PM
Eliopoulos, Theodore; Potde, Randy
Stausboll, Anne; Park, E¡leen; McKnley, Clark; Plasencia, Javier
Page M¡ll LitigaUon --Attomey client Pr¡v¡leged Communication--
I received a call today from Chris Lund. Chris is a tenant in a 4-plex unit owned by Page Mill properties in East Palo Alto.
Chris stated that he is a party named in a law suit and relayed the following:
ln mid-July a class action law suit was brought against Page Mill properties claiming that Page Mill Ís using LLC ownership
structures for the purpose of circumventing rent control regulations in East Palo Alto. The pro bono suit, represented by
Heller Ehrman LLP, claims that Page Mill registered each small rental property (4 unit or less) in separate LLC structures
in order to meet the "Mom and Pop" exclusion to rent control. They state that Page Mill is a large owner of rental property
in East Palo Alto and should not be considered a small operator for the purposes of rent control. Page Mill has filed a
counter law suit stating that they are entitled to establish LLC ownership of property.
There is a larger case that the Stanford Community Law Clinic (SCLC) plans to file in the near future. SCLC's website
PM-1976

states they are "a direct-services clinic serving low-income people in and around East Palo Alto, an economically
challenged community four miles from the law school campus." According to Chris, this suit will focus on Page Mill's
holdings of 5 units or more. SCLC willclaim that under the rent control ordinance Page Mill is not allowed to raise rents
more than 3.2 percent annually. Page Mill has worked on a concept of "banking" prior year unused rent increases to allow
them to raise rents in excess of 3.2 percent annually. Chris noted that SCLC has determined that some tenants in Page
Mills rental units are CaIPERS system members.
Chris stated that Page Millwas using predatory practices. Page Mill's properties are the only affordable housing for
students and grad students in the area.
He has reviewed that 2007 lnvestment Report on line that notes that CaIPERS is an investor with Page Mill. They are
unable to determíne who are the other investors in the fund.
Chris wants to know:
1) what is the size of the current investment GaIPERS has with Page Mill,
2) does Page Mill's use of LLC's violate CaIPERS good corporate governance principles, and
3) what is the formal process to bring these questions fonvard to CaIPERS?
Chris stated that this is the starting point of their campaign, they intend to send letters to the head of CaIPERS
lnvestrnents and the Governors Office on the issue. I thanked Chris for bringing the issues to our attention. I gave him my
contact information and asked that he continue to keep me ínformed as the issues progress. He said that he would do
that, and that he would put his questions in an emailto Clark McKinley and l. I said that it might take us time to respond to
his questions, but lhat we would get back to him with our answers.
Chris is sophisticated and not overly adversarial. He stated that he appreciates CaIPERS progressive position on
responsible investment, that he is an investor and he underslands that often times investors do not know the detail of what
investment partners are doing.
I placed a callto David Taran and Terry Lee, principals at Page Mill to discuss the issue. I have not heard back from them.
I willwork closely with Javier once the public records act (email) comes in from Chris.
Javier and I are working on another public records act request from Andy Blue of Tenants Together, a tenant rights
organization in the San Francisco area. We are currently looking into our files to determine what, if anything, is disclosable
to Tenants Together in our investment partnership with Page Mill.
Laurie'Weir, Porrfolio Manager
Global Real Estate Investments
Califomia Public Employees Retirement System
400 Q Street, Suite E4800
Sacramento, CA 95814
Michele Mateo, Assistant
916-795-9428 phone
916-795-3965 fax
CaIPEPS ^Ñ1h"
P\1t-1977