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| Volume VIII, No. 33 |
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August 18, 2000 |
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| KEY RATE INDICES |
FANNIE MAE RATES * |
| Prime Rate |
9.50% |
| 11th District |
5.357% |
| 3 Mo. T’s (YTM) |
6.25%
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| 6 Mo. T’s (YTM) |
6.31% |
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| 5 Yr. U.S. T’s |
6.09% |
| 7 Yr. US T’s |
??? |
| 10 Yr. US T’s |
5.77% |
| 30 Yr. US T’s |
5.69% |
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| LIBOR - 1 mo. |
6.62% |
| LIBOR - 3 mo. |
6.69% |
| LIBOR - 6 mo. |
6.84% |
| LIBOR - 1 yr. |
6.98% |
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| Tier 2+ (80% LTV) |
7.91% |
| Tier 3+ (65% LTV) |
7.76% |
| Tier 4+ (55% LTV) |
7.56% |
| 10 yr. term/30 yr. amort. |
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TRANSACTION OF THE WEEK!!!
$12,500,000 (93% of Acquisition Costs) Non-Recourse Debt/Equity Financing for Spec Redevelopment Project in Hollywood-Closed in 30 Days: GSP arranged both the debt and equity for the acquisition of a historic property located in the heart of Hollywood. The equity component is the first ever investment of the Genesis LA Real Estate Fund which targets redevelopment in low-to-moderate income neighborhoods. The Property Today: 1943-built, former ABC Studios, classic "industrial moderne" architecture, 8 sound stages, plus office, 120,000 total s.f., 3.6 acres. To Be Redeveloped As: A 300,000 s.f. creative office campus, retaining the existing structures, adding mezzanine levels, a new building plus 6-story parking garage. GSP arranged debt with an out-of-state bridge lender who processed the transaction very quickly. Shortly after submission, application was signed, a site inspection was arranged, representatives flew out, commitment issued and the loan funded - all in less than a month. The Financing: $9,500,000 Debt: (1) Rate: 10.5% fixed; (2) Term: 9 months w/ 6-month extension option; (3) Amortization: Interest only; (4) 86% of purchase price; (5) Non-Recourse; (6) $1,000,000 total holdback for interest carry and pre-development soft costs; (7) Lender Fee: 1.75%, no exit fee. $3,000,000 Equity: 75% of the equity requirement, terms feature a straightforward promote fee that is subordinate to preferred return on parties' capital and the return of all capital on a pari passu basis. (Andrew Levant)
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| $5,300,000 Uncovered Construction Financing for Spec Office Condominiums in Camarillo: GSP has arranged construction financing for this unique property type--only the 3rd office condo transaction in GSP history. The finished product will feature: (1) 14 units; (2) each unit is designed for owner/user small businesses; (3) storefront/back office shipping and receiving/light industrial unit design; (4) unit sizes range from 6,000-9,000 s.f.. The financing features recourse only to the parent corporate entity, not the borrower personally and partial release provisions. Terms: (1) Rate: Prime + 1.25; (2) Term: 12 months w/ 6-month option; (3) Amortization: Interest Only; (4) Loan-to-Cost: 76%; (5) Lender Fee: 1.0%. (Andrew Levant, Steven Hamermesh) |
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| $8,750,000 for 181,000 s.f. Grocery/Drug Anchored Shopping Center in Orlando, FL: GSP has arranged permanent financing for this 40 tenant, 88% occupied property. Our borrower has owned and managed the property for over 30 years. Besides the Food Lion (29,000 s.f.) and the Walgreens (14,000 s.f.) the remaining tenants are a mix of local businesses, government (DMV, Sheriff, Library) and national chains. Most spaces are under 3,000 s.f. Highlights of the Financing/Process include: (1) No holdbacks or reserves; (2) 9,750 s.f. of "end cap" space was separately parcelized and carved out of the collateral due to below market rent and lease expiration in 2001; (3) Flexibility with Certificate of Occupancy requirements due to some older leases for side shops. Loan Terms: (1) Pricing: 10-year T + 2.32%; (2) Term/Amort.: 10/30; (3) LTV: 75%; (4) DCR: 1.25; (5) Non-recourse; (6) Lender Fee: Par. (Michael Schwartz, George Smith). |
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HOT MONEY!!!
Nationwide Healthcare Lender Funding Construction Mini-Perm Loans: All types of senior facilities are eligible with the exception of skilled nursing and acute care. Max. loan-to-cost 80%. Outpatient care, surgical centers, are eligible. Program Highlights: Construction: (1) Loan Amts.: $3MM to $15MM; (2) Pricing: LIBOR + 2.00%-3.00%; (3) Recourse to operating company. Mini-Perm: (1) Loan Terms: 2-4 years; (2) Pricing: LIBOR + 2.00-2.50%; (3) Amort.: 25-30 years.
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| Interest Rate Update - New Treasury Issue: A new 10-year Treasury with a maturity of August 2010 was issued last week and is now the "on the run" issue. The market immediately rallied from 5.90% to 5.78% (Today's close - 5.77%). The effect on mortgage rates however is minimal. Why? Due to government surpluses the treasury issued only $10 billion worth of the new bonds, compared with $23 billion for the previous issue, maturing in February 2010. Supply and demand dynamics caused the price to be bid up, dropping the yield significantly. However, credit/swap spreads increased by approx. the same amount as the rally, 10-year Swaps immediately jumped from +115 to +126. The overall yield expectations for bond buyers for FNMA, CMBS, corporates, etc. did not change just because of scarcity of the on the run issue. So, all credit spreads widened accordingly. Several CMBS originators confirmed this over the past week, indicating that the Swaps widening precluded them from dropping their all-in mortgage rates. Most indicated they could no longer "go below the matrix" or widened spreads. FNMA reported a net decrease of approx. 3-5 bps after all was said and done. (Note that 80% LTV FNMA loans, known as "Tier 2" are being priced at 7.91%). Bottom Line: New submissions are being priced in the 7.90%-8.50% range, depending on leverage, product type, quality, etc. Stay tuned… (David R. Pascale, Jr.) |
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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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