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| KEY RATE INDICES |
FANNIE MAE RATES * |
| Prime Rate |
6.75% |
| 11th District |
4.745% |
| 3 Mo. T’s (YTM) |
3.62%
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| 6 Mo. T’s (YTM) |
3.54% |
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| 5 Yr. U.S. T’s |
4.85% |
| 10 Yr. US T’s |
5.37% |
| 30 Yr. US T’s |
5.74% |
| 12-MAT |
5.318% |
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| LIBOR - 1 mo. |
3.85% |
| LIBOR - 3 mo. |
3.81% |
| LIBOR - 6 mo. |
3.88% |
| LIBOR - 1 yr. |
4.14% |
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| Tier 2+ (80% LTV) |
7.41% |
| Tier 3+ (65% LTV) |
7.23% |
| Tier 4+ (55% LTV) |
7.03% |
| 10 yr. term/30 yr. amort. |
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| TRANSACTION OF THE WEEK! |
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$5,500,00 (78% Loan to Purchase Price) Acquisition Financing for Shadow Anchored Shopping Center in the Inland Empire: GSP has arranged acquisition financing for a 110,000 s.f., 97% occupied, 18 tenant shopping center. Anchors: regional grocer and nationwide drug store, neither is part of the security. The center was built in 1989-1990 and has been impeccably maintained. Challenges to Financing: (1) The property is the best located, merchandised and operated center in the market area. Therefore, the rents are considerably higher than the comparable properties. Considerable market data had to be arranged to justify the above market rents; (2) The anchor tenant announced a nationwide restructuring the day of the commitment. GSP and lender had to structure around this uncertainty. Terms: (1) Rate: 7 year interpolated T + 2.30%; (2) LTV: 78%; (3) DCR: 1.25; (4) Term/Amort: 7/30; (5) Non-recourse; (6) Lender Fee: par. (David Rifkind)
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$2,450,000 for 47,000 s.f. Single Tenant Office Building in Major Alaska Market: This transaction was closed by GSP's Alaska office. J. Jay Brooks, who worked in our main office in the late 1990's, has opened up a GSP branch in his hometown of Anchorage. J. Jay is concentrating on the Pacific Northwest and Alaska. He is reachable at (907) 222-2704 or jjbrooks@gspartners.com. Property Specs: 47,000 s.f., 30 year old office building, government tenant, 5 year lease w/5 year option. Our borrower is the original developer. The challenge to financing was arranging a 10 year term for a single tenant property with a 5 year lease. GSP structured financing with the lender that included a cash management "sweep" 90 days prior to lease expiration for TI/LC reserves in the event the tenant does not renew. Terms: (1) Rate: 10 year T + 2.44%; (2) LTV: 70%; (3) DCR: underwritten to the 10.09 "Fitch constant" at a 1.10 DCR; (4) Term/Amort: 10/25; (5) Non-recourse. (J. Jay Brooks)
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| $1,165,000 Fannie Mae Refinance for 1930 Built "Bricker" in Colorado: This 24 Unit, vintage apartment complex is located in a secondary market. The 100% leased property features distinctive architecture and spectacular views. That's how they built them back then: Virtually all units are 1 BR and the property contains only 2 parking spaces. GSP arranged Fannie Mae financing under the "5/50" program with Tier 2+ pricing. (For properties with 5-50 units, the program features streamlined docs and lower 3rd party costs) Terms: (1) Rate: 7.21%; (2) LTV: 80%; (3) DCR: 1.25; (4) Term/Amort: 10/30; (5) Non-recourse; (6) Lender Fee: 1.0%. (Gary E. Mozer, Gerald Price) |
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| $2,260,000 Fannie Mae Convertible Floater (Tier 2, 3 month LIBOR + 1.70%) for 31-Unit Orange County Apartment Complex: This 6-Building, 31-Unit complex features townhouse units (all 2+2) with fireplaces. Amenities include landscaped yard areas, pool and covered parking. Occupancy: 100%. GSP arranged a Fannie Mae floating rate loan, allowing the borrower to take advantage of the super low LIBOR rates. The underwriting allowed for more loan proceeds than the maximum Fannie Mae fixed rate loan (app. 5% more LTV due to the relative DCR constraints). The start rate is approximately 5.60%! Other floating rate features: (1) 30 year amort; (2) 3% "collar" for the entire loan term (rate cannot adjust more than 3% up or down, 1% max per adjustment); (3) Loan is convertible to a fixed rate from years 2-5 to a 7 or 10 year fixed rate loan. The property is re-underwritten at the time of conversion; (4) Prepayment: year 1: 5%; 2: 3.25%, 3: 2.75%, 4: 2.25%, 5: 1.75%, 6: 1.25%, 7-10: 1.0%. Terms: (1) Rate: 3 month LIBOR + 1.70%; (2) LTV: 77.5%; (3) DCR: 1.25; (4) Term/Amort: 10/30; (5) Non-recourse; (6) Lender Fee: 1.0%. (Gary E. Mozer, Gerald Price) |
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Wall Street Journal Economist Survey Consensus: The mid year survey of 54 economists was published on July 2, 2001. The average prediction for the 30 year T for year end 2001 is 5.30% (down from today's close at 5.74%). We can interpolate that their prediction for the 10 year T is around 5.00-5.10%. The GDP predictions indicate a gradual recovery (2.7, 3.0, 3.1, 2.9 for the next four quarters). The overall feeling is a gradual uptick in activity (but not up to the pace of the late 1990's and 2000) combined with low inflation and declining rates.
Next week: GSP announces the winners in our forecasting contest!
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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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