Notes Payable

Senior Secured Revolving Credit Facility

In conjunction with our IPO and formation transactions, we entered into a $200.0 million secured revolving credit facility with a group of lenders for which an affiliate of Barclays Capital Inc. acts as administrative agent and joint lead arranger and affiliates of Merrill Lynch, Pierce, Fenner & Smith Incorporated act as syndication agent and joint lead arranger. Until it was amended on April 4, 2011, the credit facility bore interest at a rate per annum equal to LIBOR plus 325 basis points to 400 basis points, depending on our leverage ratio, subject to a LIBOR floor of 1.50%. On April 4, 2011, we amended this facility as described more fully in this footnote below.

The amount available for us to borrow under the facility is subject to the lesser of a percentage of the appraisal value of our properties that form the borrowing base of the facility and a minimum implied debt service coverage ratio. As a result of the April 4, 2011 amendment, the secured revolving credit facility now bears interest at a rate per annum equal to LIBOR plus 250 basis points to 325 basis points (down from 325 basis points to 400 basis points), depending on our leverage ratio, and is no longer subject to a LIBOR floor of 1.50%. The secured revolving credit facility continues to include an accordion feature that allows us to increase the availability by $50.0 million, to $250.0 million, under specified circumstances. Our ability to borrow under the facility is subject to continued compliance with a number of customary restrictive covenants, including:


•	a maximum leverage ratio (defined as consolidated total indebtedness to total asset value) of 0.60:1.00;


•	a minimum fixed charge coverage ratio (defined as consolidated earnings before interest, taxes; depreciation and amortization to consolidated fixed charges) of 1.75:1.00;


•	a maximum consolidated floating rate debt ratio (defined as consolidated floating rate indebtedness to total asset value) of 0.25:1.00;


•	a maximum recourse debt ratio (defined as recourse indebtedness other than indebtedness under the revolving credit facility but including unsecured lines of credit to total asset value) of 0.15:1.00; and


•	a minimum tangible net worth equal to at least 85% of our tangible net worth at the closing of our IPO plus 75% of the net proceeds of any additional equity issuances.

At June 30, 2011, we are in compliance with these covenants. As of June 30, 2011, we had approximately $141.2 million available under our credit facility.

The following table sets forth information as of June 30, 2011 with respect to our outstanding indebtedness. The $37.0 million note secured by the Sunset Bronson property summarized below was repaid from proceeds of the $92.0 million note secured by Sunset Gower / Sunset Bronson properties as described in (2) below. The $106.0 million note secured by the Rincon Center property summarized below was repaid from proceeds of the $110.0 million note secured by Rincon Center property as described in (3) below.



Debt	Outstanding June 30, 2011		Outstanding December 31, 2010		Interest Rate⁽¹⁾	Maturity Date
Mortgage loan secured by Sunset Bronson⁽²⁾	$	—	$	37,000	LIBOR+3.65%	4/30/2011
Mortgage loan secured by Rincon Center ⁽³⁾	—		106,000		6.08%	7/1/2011
Mortgage loan secured by First Financial	43,000		43,000		5.34%	12/1/2011
Mortgage loan secured by Tierrasanta⁽⁴⁾	—		14,300		5.62%	12/1/2011
Mortgage loan secured by 10950 Washington	30,000		30,000		5.94%	2/11/2012
Secured Revolving Credit Facility	—		111,117		LIBOR+2.50% to 3.25%	6/29/2013
Mortgage loan secured by Sunset Gower/Sunset Bronson ⁽²⁾	92,000		—		LIBOR+3.50%	2/11/2016
Mortgage loan secured by Rincon Center⁽³⁾	109,887		—		5.13%	5/1/2018
Subtotal	$	274,887	$	341,417
Unamortized loan premium, net⁽⁵⁾	115		643
Total	$	275,002	$	342,060

__________________


(1)	Interest rate with respect to indebtedness is calculated on the basis of a 360-day year for the actual days elapsed, excluding the amortization of loan fees and costs.

(2)

On February 11, 2011, we closed a five-year term loan totaling $92.0 million with Wells Fargo Bank, N.A., secured by our Sunset Gower and Sunset Bronson media and entertainment properties. The loan bears interest at a rate equal to one-month LIBOR plus 3.50%. $37.0 million of the loan was subject to an interest rate contract, which swaps one-month LIBOR to a fixed rate of 0.75% through April 30, 2011. On March 16, 2011, we purchased an interest rate cap in order to cap one-month LIBOR at 3.715% with respect to $50.0 million of the loan through its maturity on February 11, 2016. Proceeds from the loan were used to fully refinance a $37.0 million mortgage loan secured by our Sunset Bronson property that was scheduled to mature on April 30, 2011. The remaining proceeds were used to partially pay down our secured revolving credit facility. Until its repayment on February 11, 2011, the $37.0 million mortgage loan secured by our Sunset Bronson property incurred interest at a rate of one-month LIBOR plus 3.65% and was subject to the same interest rate contract swapping one-month LIBOR to a fixed rate of 0.75% described earlier.

(3)

Outstanding balance as of December 31, 2010 reflects full project-level indebtedness on Rincon Center, without pro rata adjustment for our 51% share of the Rincon Center joint venture. On April 29, 2011, we closed a seven-year term loan totaling $110.0 million with JPMorgan Chase Bank, National Association, secured by our Rincon Center property. The loan bears interest at a fixed annual rate of 5.134%. The loan fully refinanced the prior $106.0 million project loan on the property that was scheduled to mature on July 1, 2011.


(4)	This loan was fully repaid as of June 1, 2011.


(5)	Represents unamortized amount of the non-cash mark-to-market adjustment on debt associated with the First Financial, Tierrasanta (as of December 31, 2010, only), Rincon (as of December 31, 2010, only), and 10950 Washington loans.

The Company presents its financial statements on a consolidated/combined basis. Notwithstanding such presentation, except to the extent expressly indicated, such as in the case of the project financing for our Sunset Gower and Sunset Bronson properties, our separate property owning subsidiaries are not obligors of or under the debt of their respective affiliates and each property owning subsidiary's separate liabilities do no constitute obligations of its respective affiliates.