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| KEY RATE INDICES |
FANNIE MAE RATES * |
| Prime Rate |
6.75% |
| 11th District |
4.745% |
| 3 Mo. T’s (YTM) |
3.61%
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| 6 Mo. T’s (YTM) |
3.58% |
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| 5 Yr. U.S. T’s |
4.76% |
| 10 Yr. US T’s |
5.23% |
| 30 Yr. US T’s |
5.63% |
| 12-MAT |
5.102% |
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| LIBOR - 1 mo. |
3.83% |
| LIBOR - 3 mo. |
3.76% |
| LIBOR - 6 mo. |
3.80% |
| LIBOR - 1 yr. |
4.02% |
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| Tier 2+ (80% LTV) |
7.23% |
| Tier 3+ (65% LTV) |
7.05% |
| Tier 4+ (55% LTV) |
6.85% |
| 10 yr. term/30 yr. amort. |
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| TRANSACTION OF THE WEEK! |
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$7,050,000 for 45,000 s.f. West L.A. Class "B" Office Building: This late 70's vintage, 92% occupied building has been owned by our borrower since the mid 1990's. It was built as multi-tenant office but was used as a school in the early 90's. The 14 tenants are a mix of local businesses, government offices and some "creative" space. Challenges to financing included: (1) Borrowing entity needed to be restructured during processing due to borrower credit issue; (2) Underground gas tank from early 1950's was found during Phase II and being removed post close; (3) Property located in secondary location of the submarket; (4) Creative office vacancies increased due to tech meltdown in the area. The loan also allows for a lot split (with the extra parcel carved out of the collateral) during the term. Borrower intends to develop the parcel for apartments. Terms: (1) Rate: T + 2.35%; (2) Term/Amort: 10/30; (3) LTV: 74%; (3) DCR: 1.28; (4) Non-recourse; (5) Lender Fee: Par. (Steve Bram, David R. Pascale, Jr.)
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$6,900,000 Acquisition Loan (50-Day Close from App) for an Unanchored Shopping Center in Santa Fe New Mexico: GSP has arranged acquisition financing for a 43,000 s.f., 2-story, high-end shopping center located in the heart of Santa Fe's historic district. The property was built in 1941 and renovated in 1991. The 7 tenants include clothing and jewelry stores, and a 9,730 s.f. local restaurant. Occupancy: 83%. Other Challenges: (1) The bulk of the leases expire within 3 years; (2) Two tenants have lease termination options in January 2002 based on sales (they are now below the threshold, but sales are trending upward); (3) Lender underwrote parking income at double the historical collections (due to mismanagement by the former owner). Terms: (1) Rate: T + 2.45%; (2) Term/Amort: 10/30; (3) Loan-to-Cost: 75%; (4) DCR: 1.40; (5) Non-Recourse; (6) Lender Fee: Par. (Michael Schwartz).
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| $1,600,000 Refinance for 23,000 s.f. Medical Office with Streamlined CMBS Process: GSP arranged financing with the "small loan" division of a major bank conduit. The process featured no Phase I, no Alta survey, no lender legal and no borrower legal opinion requirements. Loan docs were streamlined also. What was required? MAI appraisal and property condition report. Lender acted as a "portfolio" lender during the process, even though it is a loan for securitization. Example: Small tenant went dark after application, leaving occupancy at 87%, lender held terms due to DCR of 1.50. Property location: Orange County. Loan amount included some "cash out". Terms: (1) Rate: T + 2.60%; (2) Term/Amort: 10/25; (3) LTV: 70%; (4) DCR: 1.50; (5) Lender Fee: Par. (Steven Hamermesh, David Stepanchak) |
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| $1,650,000 Floating Rate Perm (104% of Borrower Equity!) for 14-Unit Apartment Complex in Venice Beach: Our borrower purchased the property over a year ago and gut-rehabbed it down to the studs. He then fully leased it at market rents. GSP arranged take-out funding with a regional bank that allowed the borrower to pay off the existing loan, reimburse all rehab costs and recapture 104% of his original equity. Terms: (1) Rate: 6 month LIBOR + 2.15%; (2) Term/Amort: 7/30; (3) DCR: 1.35; (4) LTV: 71%; (5) Lender Fee: 0.375%; (6) Recourse. (Andrew Levant) |
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Interest Rate/CMBS Update: Treasury market see-sawed as economic reports indicated both positive and negative news. Jobless claims were up (indicating less wage inflation pressure). Meanwhile, retail sales were negative when compared to last year, but consumer confidence is up. Also, stocks rallied on unexpectedly strong corporate earnings. Stock rallies usually mean bond yields rise as funds flow into equities. This week, however, the Argentina debt crisis resulted in a "flight to quality" as international funds fled from emerging markets and into US Treasuries. Overall, the 10 year T rallied 14 bps this week down to 5.23%. CMBS: Scrutiny on retail- originators are watching retail trends closely: (1) Retail sales are down slightly, (2) S&P is downgrading several retailers. What are they doing? Individual store sales for anchor tenants is key (i.e. how do they rank? Trending up or down?); unanchored retail is out of favor unless it is absolute in-fill located. Also out of favor: any mall except the dominant mall in a given major market. One president of a major IB lender commented: "Malls are either A+, A or crap." 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. |
| Note: Lender pricing and loan points are subject to change and exclude GSP loan placement fees. |
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