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| Volume VIII, No. 49 |
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December 30, 1999 |
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| KEY RATE INDICES |
FANNIE MAE RATES * |
| Prime Rate |
8.50% |
| 11th District |
4.666% |
| 3 Mo. T’s (YTM) |
5.19%
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| 6 Mo. T’s (YTM) |
5.67% |
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| 5 Yr. U.S. T’s |
6.27% |
| 7 Yr. US T’s |
6.32% |
| 10 Yr. US T’s |
6.37% |
| 30 Yr. US T’s |
6.42% |
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| LIBOR - 1 mo. |
5.83% |
| LIBOR - 3 mo. |
6.00% |
| LIBOR - 6 mo. |
6.13% |
| LIBOR - 1 yr. |
6.50% |
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| Tier 2+ (80% LTV) |
8.12% |
| Tier 3+ (65% LTV) |
7.97% |
| Tier 4+ (55% LTV) |
7.77% |
| 10 yr. term/30 yr. amort. |
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TRANSACTIONS OF THE MILLENNIUM !
$19,950,000 Non-recourse Lot Development Financing for Single Family Residential Subdivision (67% of cost/62% LTV) Based on a pro-forma $31,800,000 net lot revenue sell out, the project shows a 14.5% return on cost. The project: (1) 317 single family lots; homes to range from 1,350 s.f. ($193,000) to 2,350 s.f. ($252,000); (2) Community amenities: gate-guarded entries, pools, spa, tot lots, and basketball courts. (3) Scenic infill location in a valley at the foot of a protected mountain range with dramatic topography and excellent views. This community is adjacent to a 150 lot development (selling a rate of 3+ homes per week) by the same developer. (4) Community control: In lieu of a community facilities district required, a homeowners association will be established for infrastructure issues/maintenance. Borrowing Entity: (1) Single asset entity with nominal capitalization; (2) Experienced developer with track record for SFR and income property development. Non-Recourse Financing: (1) Cash flow sweep of 90% of lot sales proceeds until loan paid down to $6,200,000, thereafter 125% releases; (2) Presale commitment and "blue top" from a national homebuilder for 1/3rd of the lots with a cash deposit in place. Terms: (1) Prime + 1.0%; (2) 18 months interest only with 6 mo. extension; (3) LTV: 62%; (4) Non-recourse; (5) Lender fee: 1.25%; (6) Borrower not required to finance home construction with the lender. (Michael Schwartz, George A. Smith)
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| $17,535,000 (87% of Total Project Cost) Acquisition/Reposition Senior Bridge (72% of Total Cost) and Equity Financing (90.00% of Total Equity Requirement) for 204-Unit Apartment Complex: GSP arranged $2,795,680 of equity (or 90.00% of total equity requirement) and $14,740,000 of non-recourse senior bridge financing (72% of total project cost) for the acquisition and reposition of a 204-unit apartment complex in the San Fernando Valley, CA. The Property: Quiet cul-de-sac in San Fernando Valley, 204-units (1.5% 1-bedroom, 55% 2 bedroom, and 43.5% 3 bedroom with 86% of units in Townhouse configuration), eighteen 2-story buildings, 7.72 acres, built in 1971-72, private park, 3 pools, spa & sauna, fitness center, clubhouse center, lighted tennis courts. Unit amenities include: Large units (averaging 1,172 s.f.), central air & heating, dishwashers, walk-in closets, full-size washer/dryers (in approx. 50% of units), large private balconies and/or patios. The Market/Location: Premier in-fill location adjacent to upscale bedroom communities. The area’s specific plan contains conforming development limitations and the area has virtually no vacant or entitled multifamily housing land available for future development. Submarket Occupancy: 95%+. Reposition: Borrower will renovate the project and raise rents to market as allowed by vacancy decontrol and increases within L.A. City rent control parameters. Unit rents are $270.00 below market on average. Capital Structure: (1) Purchase Price: $16,500,000; (2) Renovation, Working Capital Reserve, Interest Reserve, Closing Costs: Approx. $3,750,000; (3) Seller carried second trust deed of $2,500,000. Total Capitalization: Approx. $20,287,000. The Financing - Senior Debt: (1) Loan Amount: $14,740,000 (approx. 72% of total cost); (2) Rate: 30-day LIBOR + 3.00%; (3) Term: 3 years; (4) Interest only; (5) Non-recourse; (6) Lender Fee: 1.0%; (7) Prepayment: Year 1 - locked, year 2 - 0.75% fee; year 3 – 0.50%. Equity: (1) Amount: $2,795,680; (2) Terms: Confidential. (Gary E. Mozer, Lee T. Norman) |
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WE’RE HIRING: Processor / underwriter @ $40k+ bonus. Flexible hours; spreadsheet, finance and analytical skills; strong writing skills; underwriting and closing experience; MBA desired – not required. Mike Schwartz @ (310) 557-8336 X121.
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Happy New Year From
George Smith Partners!!!
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SPEAKER’S CORNER
George Smith will be moderating the Finance Panel at Real Estate Conference Group’s "Real Estate 2000… Looking to the Millennium"; Date: January 21, 2000; Location: Century Plaza Hotel (Los Angeles);
For more information, call (310) 285-5327
or go to www.realestateoutlook.com.
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| * GSP is the exclusive L.A. correspondent for ARCS Commercial Mortgage, the nation's largest FNMA/DUS originator. |
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