| Volume VIII, No 35 |
|
September 17, 1999 |
|
|
| KEY RATE INDICES |
| Prime Rate |
8.25% |
| 11th District |
4.500% |
| 3 Mo. T’s (YTM) |
4.68%
|
| 6 Mo. T’s (YTM) |
5.05% |
|
| 5 Yr. U.S. T’s |
5.75% |
| 7 Yr. US T’s |
5.80% |
| 10 Yr. US T’s |
5.86% |
| 30 Yr. US T’s |
6.05% |
|
| LIBOR - 1 mo. |
5.39% |
| LIBOR - 3 mo. |
5.51% |
| LIBOR - 6 mo. |
5.94% |
| LIBOR - 1 yr. |
6.04% |
|
|
|
|
TRANSACTION OF THE WEEK!!!
$46,586,132 (96.7% of Total Project Cost) Acquisition/Reposition Senior Bridge (80% of Total Cost) and Equity Financing (86.50% of Total Equity Requirement) for 474-Unit Apartment Complex: GSP arranged $10,326,132 of equity (or 86.50% of total equity requirement) and $36,260,000 of non-recourse senior bridge financing for the acquisition and reposition of a 474-unit apartment complex in the San Fernando Valley, CA. GSP has arranged debt and equity for 25+ acquisitions over the past two years for this client who specializes in the acquisition and reposition of Southern California apartments. The Property: San Fernando Valley, 474-unit, six 4-story buildings, 8.08 acres, built in 1968, 2 swimming pools, 2 spas, new fitness center, clubhouse/recreation center, 2 lighted tennis courts. The complex also features meandering walkways, 3 fountains, gazebo area and outdoor barbeque. Unit amenities include: Large units (averaging 920 s.f.), dishwashers, private balconies and/or sitting areas. The Market/Location: Premier in-fill location adjacent to upscale bedroom communities, walking distance to shopping/office/education centers. 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: 97%+. 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 $200.00 below market on average. Capital Structure: (1) Purchase Price: $41,000,000; (2) Renovation, Working Capital Reserve, Interest Reserve, Closing Costs: Approx. $5,200,000, (3) plus a one-time income earn-out of up to $2,000,000 (to be funded when property sustains 1.25 DCR for trailing 9 months utilizing the actual interest rate of 30-day LIBOR + 2.85% and a 30 year amort. for sizing of the earn-out). Total Capitalization: Approx.$48,200,000. The Financing - Senior Debt: (1) Loan Amount: $36,260,000 (approx. 80% of total cost); (2) Rate: 30-day LIBOR + 2.85%; (3) Term: 3 years w/ two 6-month options; (4) Interest only (until income earn-out is funded, then 30 year amort.); (5) Non-recourse; (6) Lender Fee: 1.0%; (7) Prepayment: Year 1 - locked, year 2 - 0.5% fee; year 3 - prepayable at par; (8) No reconveyance fees. Equity: (1) Amount: $10,326,132; (2) Terms: Confidential. (Gary E. Mozer, Lee T. Norman)
Three Approaches with Early Prepayment Options: Our client is purchasing a single tenant, 500,000 s.f. manufacturing complex in the Midwest. The property’s lease is guaranteed by an investment grade (BBB-) tenant with 8 years remaining on the lease. The tenant has an early termination clause and purchase option at a pre-determined price (which is currently below market) with the receipt of the remaining lease payments discounted by 7.5%. The borrower required financing that will accommodate the potential early payoff and can close in 6 weeks. We obtained three fixed rate, non-recourse, pre-payable quotes: (1) 80% of Purchase, 5 yr. T’s+190, 8 yr. term w/ 8 yr. amort., par lender fee, par "involuntary "early prepayment fee; (2) 77% of Purchase, 7 yr. T’s+200, 8 yr. term w/ 10 yr. amort., par lender fee, 1% early prepayment fee; (3) 95% of Purchase, 7 yr. T’s+240, 8 yr. term w/ 10 yr. amort., 1.25% lender fee, par early prepayment fee, residual value insurance required for 4% of ending loan balance. (Steve Bram, Brad Black)
$2,800,000 (80% Loan to Total Project Cost) Non-Recourse Acquisition/Reposition Financing for Beverly Hills Adjacent Apartment Complex: This 20-unit, 5-story property was built in 1988. All units boast washer/dryer hookups, walk-in closets, high ceilings, dramatic floor plans, balconies, fireplaces, etc. within a contemporary design. Most units are 2 BR/approx. 1,000 s.f. GSP arranged financing with a local bank who provided a commitment within 2 weeks of application and closed/funded 30 days after application. This was crucial to the borrower’s acquisition timetable. The lender provided 80% of total costs (which include approx. $400,000 in rehab), which translates to 70% of projected stabilized value. This is Andrew Levant’s first transaction at GSP and he already has several more deals under application. Terms: (1) Rate: Prime + 1.25%; (2) Term: 3 years; (3) Amort: Interest only; (4) Prepayable at any time with no penalty/no exit fee; (5) Non-recourse. (Andrew Levant)
GSP Places 3rd (1st Among Mortgage Brokers) In 13th Annual Broker Challenge This annual beach event pitted 16 real estate firms to benefit Family Service of Santa Monica, a nonprofit social services agency. Henry Bryan and Mike Gottlieb led the GSP team. How did GSP do? (1) Volleyball: 2nd Place, (2) Paddle Tennis: 2nd Place, (3) Capture the Flag: GSP participant Megan Michael’s valiant dive won the event and secured our overall 3rd place finish. Quote from Henry Bryan "Kilroy had better ringers than we had. At least ours all work in real estate."
|
SPEAKER'S CORNER
George Smith will be addressing the law firm of Allen, Matkins, Leck, Gamble & Mallory on Mon., Sept. 27th.
|
|
|
|
|
|
|
|
