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| KEY RATE INDICES |
FANNIE MAE RATES * |
| Prime Rate |
4.75% |
| 11th District |
2.847% |
| 3 Mo. T’s (YTM) |
1.67%
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| 6 Mo. T’s (YTM) |
1.66% |
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| 5 Yr. U.S. T’s |
3.19% |
| 10 Yr. US T’s |
4.17% |
| 30 Yr. US T’s |
4.93% |
| 12-MAT |
2.414% |
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| LIBOR - 1 mo. |
1.82% |
| LIBOR - 3 mo. |
1.81% |
| LIBOR - 6 mo. |
1.80% |
| LIBOR - 1 yr. |
1.90% |
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| Tier 2+ (80% LTV) |
5.92% |
| Tier 3+ (65% LTV) |
5.74% |
| Tier 4+ (55% LTV) |
5.54% |
| 10 yr. term/30 yr. amort. |
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TRANSACTION OF THE WEEK!
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$9,650,000 Credit Re-Enhancement Financing (85% LTV) for 224-Unit, Class B Apartment Complex in Northern Los Angeles County: GSP has arranged credit re-enhancement and bond purchase financing for this late 70's vintage, 98% occupied apartment complex. Because a portion of the occupancy is set-aside for low/mod income tenants, the property qualifies for tax-exempt bond financing. Our borrower has owned the property for 14 years. The former credit enhancer recently indicated to the borrower that they wanted to terminate their credit enhancement. GSP's challenge was to identify an investment grade lender willing to lend 85% of value, provide ongoing credit enhancement and ultimately purchase the tax exempt bonds themselves-with no new cash required from borrower. (At closing, the new lender took over the bond enhancement, and will purchase the bonds in the next few months) Terms: (1) Rate: 80% of the 10 year T + 2.10% (floor: 6.10%); (2) Term/Amort: 10/30; (3) LTV: 85%; (4) DCR: 1.25; (5) Non-recourse; (6) Lender Fee: 1.0%. (Steven Hamermesh)
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| $7,725,000 Acquisition Loan (6.5% fixed, 30/360) for 372,000 s.f. Industrial Building in the City of Industry: Loan was committed in 10 business days from application to meet buyer's contingency requirements. Property Specs: 1 warehouse building (consisting of 4 separate industrial buildings that were "fused" together in the late 1970's, original construction dates range from 1920-1950), 15-24 foot clear heights. Seller is owner/user and planning to vacate in 2 months. However they have the right to remain in occupancy until July 2003. Our client has a new lease signed with a privately held electronics importer, commencing 30 days after seller vacates. Portfolio lender got creative on transaction "not-doable" in the CMBS world. The lender required execution of a 15 year, NNN lease with the new tenant. Other customizations include: (1) Limits to exculpatory carveouts; (2) Holdback of 125% of the cost to retrofit the building (PML is 30, post retrofit will be 19); (3) Real estate tax impounds waived. Terms: (1) Rate: 6.5% (30/360 calculation); (2) Term/Amort: 10/15; (3) LTC: 75%; (4) DCR: 1.25 (5) Non-Recourse; (6) Lender fee: par. (Michael Schwartz) |
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| $1,370,000 Acquisition Financing for 2 Adjacent Strip Shopping Centers Located in Las Vegas: Our client purchased two adjacent centers located in East Las Vegas. The two properties are occupied by small local tenants (500 s.f. to 3,500 s.f.). The centers are currently 100% occupied with all of the tenants on either 3 or 5 year leases. Due to the short lease terms, approximately 65% of the space is rolling over the next twelve months. Property Specs: 21,105 s.f. combined leaseable area; 100% occupied; market rents; 1970's vintage. Purpose of the financing was to acquire the two properties. Terms: (1) Rate: 7.5% Fixed for the first 5 years of the loan then adjustable for the remaining term at 6 Month LIBOR + 3.50% with a lifetime cap of 5% over the start rate and a semi-annual cap of 1%; (2) Term/Amort: 10/25; (3) LTV: 62%, the loan was approved at 70% the client elected to increase his equity position; (4) DCR: 1.93; (5) Full Recourse; (6) Lender Fee: 0.50%; (7) Prepayment penalty: 5,4,3,2,1 & Open thereafter (8) Impounds: $2,833 for the 1st 12 months to be released upon resigning tenants who's leases expire over the 12 month term or used for leasing commissions and TI's. (Andrew Levant; Shlomi Ronen) |
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HOT MONEY!
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5-Year Fixed Rate Interest Only Financing- All-in rates approximately 5.00%! This nationwide program is for loans from $2,000,000 to $75,000,000. The demand for 5 year AAA CMBS bonds has spurred this lender to get aggressive on 5 year deals with cutting edge pricing. Today's 5 yr T: 3.19%. Lender is pricing 80% LTV multifamily at 5 yr T +1.90%--full leverage office/industrial/retail approximately 20-30 bps wider. The interest rate "floor" is 15 bps below the application rate-Lender does not set an "artificial floor". Also, free 30 day rate lock, no lender fee. Bottom Line: Borrowers can benefit from "maximum cash flow" with full leverage, non-recourse financing, with mortgage constants as low as 4.90%.
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SPEAKER'S CORNER
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George Smith will be speaking at Real Estate Conference Group's "Apartments 2002" where several top executives will share their outlooks on the multifamily market. Date: September 19, 2002; Location: Beverly Hilton Hotel. For more information, go to www.realestateoutlook.com.
Gary E. Mozer will be speaking at the Richard S. Ziman Center for Real Estate at the Anderson School at UCLA for the Multi Family Housing Forecast Conference. Date: September 18, 2002; Location: Skirball Cultural Center. For more information, go to www.zimancenter.com/forecast.
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