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| Volume VIII, No. 48 |
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December 15, 2000 |
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| KEY RATE INDICES |
FANNIE MAE RATES * |
| Prime Rate |
9.50% |
| 11th District |
5.589% |
| 3 Mo. T’s (YTM) |
6.01%
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| 6 Mo. T’s (YTM) |
5.98% |
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| 5 Yr. U.S. T’s |
5.14% |
| 10 Yr. US T’s |
5.18% |
| 30 Yr. US T’s |
5.42% |
| 12-MAT |
6.128% |
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| LIBOR - 1 mo. |
6.69% |
| LIBOR - 3 mo. |
6.55% |
| LIBOR - 6 mo. |
6.42% |
| LIBOR - 1 yr. |
6.25% |
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| Tier 2+ (80% LTV) |
7.13% |
| Tier 3+ (65% LTV) |
6.98% |
| Tier 4+ (55% LTV) |
6.78% |
| 10 yr. term/30 yr. amort. |
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TRANSACTION OF THE WEEK!!!
$11,500,000 Construction Loan For 190,000 Sq. Ft. 35 Year Old K-Mart/Albertson's Visalia Center Where Old Buildings Are Being Demolished and New Buildings Being Constructed: GSP has arranged construction financing for this multi-phased redevelopment. Property Background and Development Overview: Built in the early 1960's and owned free and clear, the developer is redeveloping the center "new building by new building". (1) The phasing began last year with the construction of a 92,000 s.f. "Big K" and the refinishing of the parking lot including lighting. (2) Next is a reverse build-to-suit for a 50,000 s.f. Albertson's, replacing a 25,000 s.f. store. (3) The remaining improvements will include 5 new buildings ranging from 4,000-24,000 s.f. At completion, the developer expects the property to be worth in excess of $16,000,000. Financing: A regional bank, new to Southern California and seeking next customer relationships, provided financing as follows: Phase I: Reimbursement for the K-Mart building and parking lot; Phase II: Funding the Albertson's reverse build-to-suit upon completion, CofO and lease commencement; Phase III: Construction financing for the five new buildings, none of which are expected to be built without pre-leasing. Terms: (1) Pricing: Phase I and II - Prime + 0%, Phase III - Prime + 0.50%; (2) Term: 24 months with two 6-month extensions, each extension with a 0.25% fee; (3) Interest only; (4) Lender Fee: 0.75%; (6) LTV: 75%; (5) Recourse. (George A. Smith, Joel Simaie) |
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| $14,500,000 (T + 1.95%, 30/360) for 2 Newly Built Warehouses in San Joaquin Valley: The two properties total over 500,000 s.f. and are not cross-collateralized. Both buildings were "build-to-suit" for the investment grade tenants taking occupancy of these large pure warehouse buildings (office component: app. 2%). GSP arranged financing with a life company who approved the transactions during the construction period. Property Specs: Building #1--326,400 s.f., 2 tenants, Leases: 5 and 10 years. Building #2-364,000 s.f., single tenant, 10 year lease: Terms: (1) Pricing: 10-year T + 1.95%; (2) Term/Amort: 10/20 and 11/20 (borrower requested shorter amortization schedule); (3) LTV: 65%; (4) DCR: 1.40; (5) Non-recourse; (6) Lender Fee: Par. (Steve Bram, David R. Pascale, Jr.) |
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Single Tenant (Non-Credit) or Owner Occupied Financing…. All Major Product Types: This non-recourse, nationwide program is targeted at middle market tenants (including private companies). Lender is looking for tenants with "historic profitability" and underwrites tenants on a case-by-case basis. Note: Loan amount cannot exceed company's value. Minimum remaining lease term for single tenants: 5 years. Other Program Highlights: (1) Trans Szie: $1-$25MM (1) Loan Term/Amort Schedules: 5, 7, and 10 year terms with 25 year amort or 15/15, 20/20. Loan term cannot exceed remaining lease term; (2) Property Types: Industrial (all types), Retail, Office, Medical Office (5 doctors or more as owner/occupied preferred); (3) Leverage: 1.15 DCR for single tenant, 1.10 for owner occupied or 75% LTV whichever is lower; (4) Rate Lock: 90-day free lock available at application; (5) Pricing: 10 year T + 10 year SWAP + 1.60% (Today: 10 year T + 2.55%); (6) Non-recourse; (7) Other: Forward commitments for up to 12 months are available with a rate lock (fee dependent on transaction specifics, first 90 days are free). |
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CMBS Update: "Floors" In Place, Spread Widening on the Horizon? As the 10-year Treasury drops to a 20 month low (closing at 5.18% today) and Swap spreads breaking the 100 mark (+96 today), several originators are starting to institute interest rate floors. General consensus: 7.25% for multifamily, 7.50% for C&I. Why? Bond investors have certain yield targets for commercial real estate backed instruments regardless of Treasury rates. Also, loans originated now will most likely be sold into the secondary market during 1st quarter 2001. The pipeline calendar indicates an extremely active quarter: app $18-20 billion in conduit issues coming to market. With corporate bonds and commercial paper widening dramatically and a potential glut of CMBS paper coming to market, spreads may have to widen in order to attract investors. Stay tuned…. (David R. Pascale, Jr.)
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| HOT MONEY! FNMA Tier 2 pricing (80% LTV, 1.25 DCR, 10/30) = 7.13%. Remember, no extra charge to process FNMA transactions with GSP. |
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| * GSP is an L.A. correspondent for ARCS Commercial Mortgage, the nation's largest FNMA/DUS originator. |
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