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| Volume VIII, No. 9 |
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March 3, 2000 |
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| KEY RATE INDICES |
FANNIE MAE RATES * |
| Prime Rate |
8.75% |
| 11th District |
4.901% |
| 3 Mo. T’s (YTM) |
5.81%
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| 6 Mo. T’s (YTM) |
6.01% |
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| 5 Yr. U.S. T’s |
6.59% |
| 7 Yr. US T’s |
6.59% |
| 10 Yr. US T’s |
6.38% |
| 30 Yr. US T’s |
6.13% |
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| LIBOR - 1 mo. |
5.94% |
| LIBOR - 3 mo. |
6.12% |
| LIBOR - 6 mo. |
6.34% |
| LIBOR - 1 yr. |
6.77% |
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| Tier 2+ (80% LTV) |
8.24% |
| Tier 3+ (65% LTV) |
8.09% |
| Tier 4+ (55% LTV) |
7.89% |
| 10 yr. term/30 yr. amort. |
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TRANSACTION OF THE WEEK !
$3,750,000 (78% Loan-to-Value) Senior Floating Rate Financing for the Refinance of a 100%, 3-Tenant 123,984 Sq. Ft. Warehouse/Distribution Building: GSP arranged $3,750,000 of non-recourse senior floating rate financing (78% loan-to-value) for the refinance of a 3-tenant, 123,984 sq. ft. warehouse/distribution building in the southeast area of Los Angeles, CA. The Property: The property is a 3-tenant warehouse/distribution facility, 100% occupied with 3 tenants, Class B use located on approx. 5.1 acres, built early 1950's, 18' clear heights with ample dock high and roll-up door and rail service, good turning radius with excess yard space. The client purchased the property (using an unsecured credit facility) in mid-1999 at which time there were only 2 tenants in occupancy. The client cosmetically improved the property, leased the one vacant space, and improved access by creating new curb cuts to the property (which required city approval). The financing returned approx. 82% of the initial capital invested in the transaction and provided the borrower prepayment flexibility as rents roll in the property over the next 2 years. Location: Institutional quality, in-fill location with large industrial base within a 10-mile radius and access to major transportation corridors, which is essential to distribution-type tenants. Submarket Occupancy: 95%+. The Financing - Senior Debt: (1) Loan Amount: $3,750,000 (78% loan-to-value); (2) Rate: LIBOR + 3.25%; (3) Term: 5 years; (4) Amortization: 25 years; (5) Non-recourse; (6) Lender Fee: 1.00%; (7) Prepayment: Year 1 - 1.00% fee, thereafter par; (8) Assumption: One-time assumption to qualified borrower for 1.00% fee. (Gary E. Mozer, Lee T. Norman)
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HOT MONEY!
Fannie "Re-Arms" A reminder that apartment owners can take advantage of Fannie Mae's new floating rate program, which provides maximum proceeds and flexibility. Program Highlights: (1) 77.5% LTV financing w/pricing of 30 day LIBOR + 1.71% (lower leverage transactions receive lower margins); (2) Term/Amort: 10/30; (3) Convert to fixed with minimal processing; (4) As property increases in value, Fannie Mae will provide second, third, etc. if borrower wants to maintain leverage.
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Nationwide Portfolio Lender Funding Land Acquisition/Development Loans. Residential or commercial projects considered. This niche investor will make loans and do joint venture equity partnerships for unentitled or entitled land acquisition and development. Debt program highlights: (1) Loan size: $3,000,000 to $40,000,000; (2) Patient Money: 2-12 year terms; (3) Rates: Deal specific, 8% pay rate, balance accrues; (4) Non-recourse; (5) Lender fee: par. JV Equity: Will invest up to 90% of the equity required. This lender has national relationships to bring in additional minority equity. Unique and friendly Developer friendly promote structure where developer earns, 80% of the profit over a 25% IRR.
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| Just went into application on a 21,000 s.f. pet store anchored center (the anchor occupies over 50% of total): $3,600,000, 85% of cost, Prime + 1.0% (George Smith, Henry Bryan) 21,000 s.f. Pet store anchored center (the anchor occupies over 50% of total): $3,600,000, 85% of cost, Prime + 1.0% (Henry Bryan, George Smith) |
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CMBS Update:In the past two weeks many originator matrices have widened slightly (5-7 bps) in reaction to increases in SWAP spreads. Some have "held the line" in order to compete as deals become more scarce. 10 year AAA spreads are app. T+120-130, up from 110 in late January. B-Piece Buyers on the sidelines? The pool of buyers has shrunk to 5 institutions. These players are either "waiting out" new pools or demanding super high yields in the 26-28% range. This may delay some offerings in an extremely time sensitive industry. Quote from senior VP at major IB: "We imagine that eventually a deal will be cut, the question is are they holding out for more yield or are they out completely. Also, some are capital constrained, some are personnel constrained." (The B-piece underwriting process is labor intensive). Possible Solutions: (1) B-piece pools might be tranched and re-securitized creating new liquidity, (2) New players are rumored to be raising capital to cash in on the high yields….Stay tuned…
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| Congratulations to GSP's Henry Bryan on his nomination for the 1999 Distinguished Service Award Presented by the Santa Monica Jaycees. Henry has served as President of the Santa Monica Boys and Girls Club for the past two years and is active in numerous fund raising activities including the annual auction and dinner. This event has raised over $240,000 over the past two years, making the services of Boys and Girls Club available to an additional 1,000 children….. and to Gene Brunkhardt's daughter Diana and her teammates on the Manhattan Beach Mira Costa Girl's Varsity soccer team on their advancement to the CIF Southern Section Division II Soccer Championship Finals: vs. Buena High, Saturday night, March 4, LaMirada High School. |
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SPEAKER'S CORNER
George Smith will be the opening speaker at the 29th Annual Benjamin S. Crocker Symposium, April 14, at the Regal Biltmore Hotel. For information, call Sharon Siebert, (213)896-6544
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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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