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| KEY RATE INDICES |
FANNIE MAE RATES * |
| Prime Rate |
4.75% |
| 11th District |
2.810% |
| 3 Mo. T’s (YTM) |
1.67%
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| 6 Mo. T’s (YTM) |
1.68% |
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| 5 Yr. U.S. T’s |
3.11% |
| 10 Yr. US T’s |
4.06% |
| 30 Yr. US T’s |
4.87% |
| 12-MAT |
2.272% |
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| LIBOR - 1 mo. |
1.81% |
| LIBOR - 3 mo. |
1.80% |
| LIBOR - 6 mo. |
1.79% |
| LIBOR - 1 yr. |
1.90% |
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| Tier 2+ (80% LTV) |
5.79% |
| Tier 3+ (65% LTV) |
5.61% |
| Tier 4+ (55% LTV) |
5.41% |
| 10 yr. term/30 yr. amort. |
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TRANSACTION OF THE WEEK!
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$10,050,000 (89% of cost including a one year interest reserve) Non Recourse Land Acquisition Loan for Brickell Station: GSP has arranged land acquisition financing for this proposed condominium/apartment complex in one of Miami's redeveloping areas. Background: Beginning in 1999, borrowers assembled 3 contiguous parcels (totaling 91,000 s.f. of land, one city block). They spent three years processing and securing entitlements for the development of 2 class "A", 38-story condominium/apartment towers (718 units) with 17,500 s.f. street front retail. The property is in Brickell Village- an in-fill, re-developing "urban village", located proximate to Miami's central business district and a few miles from Miami's most upscale high-rise waterfront properties. The city's elevated Metro Rail fronts and stops at the property. The land options were due to expire on August 31st, 2002. Maximizing the Profit Opportunity: The high leverage financing allowed them to acquire all the land without an equity partner before the option expiration. The borrowers now completely control the entire assemblage and have 3 years to either sell or joint venture the development. Loan Terms: (1) Rate: 12.00%; (2) Term/Amort: 3 years/interest only; (3) LTC: 89% of total costs (including all closing costs and a 12 month interest reserve). (4) LTV: 55.0% of "as-is" site value; (5) Lender Fee: 4.0% (6) Exit Fee: $1,000,000; (7) Open to prepay at anytime; (8) Non-Recourse. (George Smith, Joel Simaie)
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| $7,210,000 Acquisition Financing for 32,950 s.f. Mixed Use Center on Leasehold in La Jolla, California: GSP's Michael Schwartz: "This deal had more moving parts than any other CMBS deal I have worked on in my career." Property Specs: 1984 built; major rehab in 2000; 3 stories (ground floor art galleries and specialty retail, 2nd floor restaurants, 3rd floor office suites); 85 years remaining on unsubordinated ground lease. Challenges to Financing: (1) All of the tenants are local, private companies; (2) Rents average $3.11/s.f. (high end of market, obtaining comps was difficult); (3) A restaurant tenant (3,050 s.f.) is not occupying until November due to permitting issues. GSP negotiated a $60,000 holdback until occupancy; (4) In order to meet DCR constraint, no TI's were underwritten. (This is true within the submarket, but a bitter pill for the "B piece" buyers to swallow); (5) Due to 9/11, two gallery tenants were given rent concessions through mid-2002. They continue to pay half rent, and lender underwrote at the lower numbers. (6) 2nd floor restaurant tenant changed ownership during closing process and converted to a nightclub, lender continued to recognize the income; (7) Gallery tenant vacated during closing process, seller master leased space for 2 years, lender recognized income; (8) Ground lessor refused to sign lender's estoppel. Borrower negotiated a watered down certificate of good standing--lender accepted the language. Overall, lender was comfortable due to irreplaceable prime location in A+ demographic submarket. Terms: (1) Rate: 6.79%; (2) Term/Amort: 10/30; (3) LTV: 70%; (4) DCR: 1.35; (5) Non-recourse; (6) Lender Fee: par. (Michael Schwartz) |
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| $5,250,000 Non Recourse Acquisition/Bridge Financing (30 Day Close) for Vacant 80,000 s.f. Mid-Wilshire Office Building (to be converted to Mixed-Use Retail/Multifamily): Our client purchased this early 60's vintage, 4-story building (over 2 levels of subterranean parking), located on Wilshire Blvd near the historic Bullock's Wilshire. Business plan calls for redevelopment into 126 loft and townhome style apartments over 6,000 s.f. of ground floor retail. GSP arranged acquisition financing with the high yield, bridge lending arm of a life company. No third party reports were required--lender performed its own inspection and market analysis, enabling the loan to close in 30 days from application to funding. This financing will be taken out with a new construction/rehab loan. Terms: (1) Rate: 9.25% fixed; (2) Term/Amort: 12 months/interest only-plus 2 six month extension options; (3) LTC: 85%; (4) DCR: n/a (empty building); (5) Interest Reserve: 12 months of debt service; (6) No reserves for TI, LC, or insurance; (7) Open to prepayment at par with 30 days notice; (8) Non-Recourse; (9) Lender Fee: 1.75%. (Andrew Levant, Shlomi Ronen) |
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| Treasuries/CMBS Update: The 10 year T spent the week in the 4.00% range-lowest level in 40 years! Dismal economic reports and continuing lack of demand for corporate bonds have fueled a major rally in the Treasury market. CMBS Floors Have Dropped Significantly: Due to fierce competition for transactions among the investment banks and overwhelming demand for CMBS bonds, we are currently seeing floors for full leverage transactions in the 5.75% to 6.00% range. For lower leverage transactions, we have seen floors as low as 5.20%! Real Time Data: Today, Michael Schwartz rate-locked a transaction at 6.00% (75% leverage, single tenant, BBB- credit). Stay tuned... (David R. Pascale, Jr.) |
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