| 4A - Occupancy < 80% U/W Occ and 2C - Servicing Trigger. The loan is secured by a 50,563 sf Office property in Elk Grove, CA built in 2004. The property was inspected on 11/25/08; rated in Good condition. Q1-2009 NCF DSCR is 1.20 with an occupancy of 79%; YE 2008 NCF DSCR was 1.22 with an occupancy of 86%. Occupancy decline first occurred during Q2-2008 when Coldwell Banker downsized space occupied from 9277 sf to 6294 sf, and when during Q3-2009 Financial Title (occupied 3772 sf) vacated. During Q1-2009, an additional 3506 sf became vacant when GMAC and Fort Dearborn vacated. As of 04/01/09, there is 10,712 vacant sf at the property. Borrower indicated that they have prospects for the 3772 sf and 1872 vacant spaces (prospect name and lease terms not provided) and final lease negotations are in process. For the remaining 5068 sf space, there are no firm prospects. Grubb & Ellis is responsible for the marketing and leasing of the spaces. Current asking rates are $2.25, and market rates are comparable as per Bwr. Bwr further indicated that leasing Class A office space is challenging given the current market, and many prospective tenants are expecting/demanding steep discounts. The rent roll indicates that Freeport Water, California Title, and Gallagher Bassett have leases that are exp in the next 6 months. Bwr stated that Freeport water will not be renewing their lease on the 3165 sf space. Ca Title renewed for an additional 3 years, and Gallagher Bassett is in an option period notice through 06/30/09. Per Bwr, initial conversations with Gallagher indicate that they will renew. As a result of the pending Gallagher lease exp, a servicing trigger has occurred where Bwr is required pursuant to loan docs to make monthly deposits of $18,333.33 until TI/LC balance reaches a minimum balance of $110,000. Bank of America will continue to monitor the loan.
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