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| Volume VIII, No. 32 |
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August 11, 2000 |
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| KEY RATE INDICES |
FANNIE MAE RATES * |
| Prime Rate |
9.50% |
| 11th District |
5.357% |
| 3 Mo. T’s (YTM) |
6.29%
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| 6 Mo. T’s (YTM) |
6.33% |
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| 5 Yr. U.S. T’s |
6.06% |
| 7 Yr. US T’s |
??? |
| 10 Yr. US T’s |
5.79% |
| 30 Yr. US T’s |
5.71% |
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| LIBOR - 1 mo. |
6.62% |
| LIBOR - 3 mo. |
6.68% |
| LIBOR - 6 mo. |
6.82% |
| LIBOR - 1 yr. |
6.93% |
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| Tier 2+ (80% LTV) |
7.95% |
| Tier 3+ (65% LTV) |
7.80% |
| Tier 4+ (55% LTV) |
7.60% |
| 10 yr. term/30 yr. amort. |
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TRANSACTION OF THE WEEK!!!
$19,500,000 Acquisition Financing (85% of Purchase Price, T + 215) for 153,000 s.f. Unanchored Promotional Shopping Center in Southern California Secondary Market--CMBS Transaction-Closed in 30 Days: GSP obtained quotes from 10 lenders for this transaction. The lender who funded the loan came in 10 bps better than several quotes at T + 225. Due to the borrower's extremely tight timeframe for closing, the borrower immediately went into application and the transaction was expedited at all levels including a 10 day appraisal. The transaction closed and funded 30 days later. The Property: Consists of 2 adjacent centers, 100% leased with waiting lists: 154,000 s.f., 5 buildings, 27 tenants (including Ross, Office Depot, Barnes & Noble, Kinko's, Stroud's, Petco), built in 1975, with an additional portion built in 1986 and a rehab in 1990. Terms: (1) Rate: T + 2.15% (8.17%); (2) Term/Amort: 10/30; (3) Loan-to-Purchase Price: 85%; (4) LTV: 80%; (5) DCR: 1.25; (6) Non-recourse; (7) Lender Fee: Par; (8) Lender approved the loan exactly as applied for. (Steve Bram, David R. Pascale, Jr.)
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| Jack Kyser, Chief Economist for the Los Angeles County Economic Development Corporation, Briefs A-T Medical Research Foundation Executive Luncheon Participants on Wednesday, August 9, 2000: SoCal Overview: (1) Democratic Convention: bringing in lots of business, protest/unrest is feared: several downtown businesses will be closed for the week; (2) Several economists looking for signs of a slowdown: more signs in national economy than in California & SoCal; (3) Problems in entertainment industry: SAG striking now against commercial producers, costing a million dollars a day with no negotiations scheduled. May 1 and July 1, 2001-SAG and AFTRA basic contracts expire, industry gearing up for a strike by massive production until then, also July 1, 2002-Directors Guild contract expires; (4) Fed watch prediction: no rate change at the Aug 22 meeting; (5) L.A. County non farm employment growing at 2.2% rate, 86,0000 new jobs per year, Orange County: 3.3% increase, 45,000 new jobs per year, San Bernardino/Riverside ("red hot little area"): 5.2% increase, 48,000 jobs. "The numbers come with a little asterisk: it doesn't capture all the jobs in entertainment and software…..in LA County, you're probably undercounting about 261,000 jobs and in Orange County about 121,000"; (6) Unemployment rate in LA County: 5.5%, however, business community is finding it hard to fill positions with qualified workers, same in Orange, Riverside, San Bernardino. (7) Population growth: early 1990's stories about LA "out bounders" were in the news, now 179,000 new people per year, by year end LA County will move over the 10,000,000 mark in population (if it was a state it would be #9 in the US); (8) Growth leader: International trade is rolling, LA Customs running 18% ahead of last year with export activity up 14%--Major trade projects: Alameda corridor construction ahead of schedule, LA Port: $1 billion expansion, Long Beach port: $2 billion expansion; (9) Other growth leaders: technology: 6,000 new jobs a year officially, however subject to the "undercounting" and tourism: Hotel occupancy in LA County running at 76% (over 70% is considered "full occupancy") 3 submarkets run at 80% occupancy which is phenomenal, LA County is underhoteled for 4-star, new Disney venture opens next year, 7 million annual visitors a year are expected, Hollywood and Highland opens next year, look for it to become an instant tourist icon due to academy awards; (10) Mass Transit: North Hollywood is open, MTA now building the "Rose Line" to Pasadena; (11) Problem industries: aerospace-losing about 9,000 jobs per year, making overall job gains so impressive. Major projects are winding down at McDonnell/Douglas and Boeing, the new administration will take a year or two to decide on new projects, also apparel manufacturing. Real Estate: (1) Industrial: Shortage of space, LA County vacancy at 4.3%, central city: 3.5% most of it aging and outdated, $375,000,000 of new permits issued this year, but its not enough to fill the gap; Orange County is not as tight; Riverside/San Bernardino is an "incredible market, building at record levels"; (2) Office: "more sedate" modest growth with no 80's style overbuilding. Markets: LA downtown still high vacancy, Westside is tight with "virtually no space available in Santa Monica" Orange County office: 9.5% vacancy with new construction up 73%, most of the action is in South County such as Irvine and down the I-5. Riverside/San Bernardino: may be overbuilding with high existing vacancy; (3) Retail: Massive building 97-99: LA County permitted over $1 billion in new retail, Orange: $582 million. Dillard's and Kohl's are coming out from the Midwest, value stores. Target expanding with massive new SuperTargets coming on line at the old Fedco site and other places. Trouble for Mervyn's and JC Penney stores; (4) Residential: LA County has a housing deficit of 240,000 units. Apartment permits are up but not enough to close the gap, Orange County numbers are similar. "We are running out of land in the urban cores of Los Angeles County and Orange County" NIMBYism: Many communities are instituting moratoriums on new apartment construction. The housing crunch may bedevil our economy for some time. (5) Old land-use decisions may come back to haunt us, example: too much strip retail, how do we recycle? (6) Infrastructure: SoCal needs new airport capacity, LAX is just about maxed out, expansions are hindered by politics and neighborhood groups. Freeways: capacity isn't rising with population growth. Power deregulation isn't working: "we need more power plants, very very quickly" (7) Summary: "Things are going good, we can enjoy it, we got to get through next week, best advice is to go to San Diego or Santa Barbara, forget about it for a week, then come back and get involved". |
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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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