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TRANSACTION OF THE YEAR (2001)
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| $96,319,000 ARCS (Fannie Mae/DUS) Tier 3 & 4++ Portfolio Financing for 16 Apartment Buildings Totaling 1,943 Units Located Throughout Los Angeles (8 Fixed and 8 Floating), Fixed Rates Ranging From 6.21% to 6.78%; ARM's starting as low as 4.83%: GSP has arranged low leverage Fannie Mae refinancing for a major privately held real estate investment/property management firm. Low leverage: Portfolio average LTV: 58%, DCR: 1.45. Overall, the properties are in excellent condition, professionally managed with long term stabilized operating histories. Locations range from Santa Monica to Westwood, Westchester, the San Fernando Valley and as far away as Azusa. The appraised cap rates ranged from 7.00-7.50%. The process: (1) GSP did the initial underwriting, loan sizing and packaging for ARCS; (2) Timeline: Applications were issued for the entire portfolio in late September, first commitments received in late November, all properties closed and funded during December (right up through 12/31); (3) Numerous appraisers and environmental/engineering firms were engaged due to number of properties and geographic diversity; (4) Borrower had the option to float or fix on each property up until rate-lock (1-2 days before funding); (5) All loans are 10-year term/30-year amortization & non recourse; (6) Floating Rate Loans feature 3% lifetime cap (above start rate) with declining prepay (no yield maintenance or defeasance); (7) GSP is currently processing 3 additional FNMA apartment loans for same borrower. (Andrew Levant) |
| Property |
Units |
Loan Amount |
Interest Rate
|
Tier |
Type |
LTV |
| Property 1 |
170 |
$7,605,000 |
5.030%
|
3+ |
Floating |
65% |
| Property 2 |
28 |
$2,292,000 |
5.464%
|
3+ |
Floating |
62%
|
| Property 3 |
400 |
$1,746,000 |
4.870%
|
4+ |
Floating |
55% |
| Property 4 |
48 |
$5,344,000 |
4.891%
|
3+ |
Floating |
59%
|
| Property 5 |
51 |
$3,000,000 |
4.830%
|
4+ |
Floating |
51%
|
| Property 6 |
95 |
$3,000,000 |
4.870%
|
4+ |
Floating |
32%
|
| Property 7 |
430 |
$34,931,000 |
5.070%
|
3+ |
Floating |
65%
|
| Property 8 |
83 |
$2,500,000 |
4.870%
|
4+ |
Floating |
43%
|
| Property 9 |
77 |
$6,907,000
|
6.580%
|
4++ |
Fixed |
54% |
| Property 10 |
111 |
$7,989,000
|
6.780%
|
3++ |
Fixed |
59% |
| Property 11 |
95 |
$4,581,000
|
6.345%
|
4++ |
Fixed |
55% |
| Property 12 |
31 |
$1,399,000
|
6.410%
|
4++ |
Fixed |
55% |
| Property 13 |
175 |
$7,590,000
|
6.580%
|
4++ |
Fixed |
55% |
| Property 14 |
40 |
$1,320,000
|
6.280%
|
4++ |
Fixed |
55% |
| Property 15 |
68 |
$4,864,000
|
6.325%
|
3++ |
Fixed |
59% |
| Property 16 |
41 |
$1,251,000
|
6.210%
|
4++ |
Fixed |
55% |
*There is no "++" pricing for floating rate transactions
*(Note: GSP has a correspondency agreement with ARCS Commercial Mortgage and there is no incremental cost to originate FNMA loans through GSP) |
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| KEY RATE INDICES |
FANNIE MAE RATES * |
| Prime Rate |
4.75% |
| 11th District |
3.368% |
| 3 Mo. T’s (YTM) |
1.70%
|
| 6 Mo. T’s (YTM) |
1.82% |
|
| 5 Yr. U.S. T’s |
4.41% |
| 10 Yr. US T’s |
5.07% |
| 30 Yr. US T’s |
5.47% |
| 12-MAT |
3.481% |
|
| LIBOR - 1 mo. |
1.77% |
| LIBOR - 3 mo. |
1.81% |
| LIBOR - 6 mo. |
1.94% |
| LIBOR - 1 yr. |
2.38% |
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| Tier 2+ (80% LTV) |
6.89% |
| Tier 3+ (65% LTV) |
6.71% |
| Tier 4+ (55% LTV) |
6.51% |
| 10 yr. term/30 yr. amort. |
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$1,818,000 (80% Loan-To-Cost) Acquisition Financing for Two Industrial Buildings (54,000 s.f. total) in the Sun Belt: GSP arranged and closed (in 45 days) an acquisition loan for two 100% leased multi tenant industrial buildings, built in 1983. The property is located in a major city in the Southwest. It consists of two buildings with three tenants each and 63 total parking spaces. The buildings are constructed of concrete block with stucco accent panels on the exterior and fiberglass rolled roofing. The roof structure is wood truss joists with plywood decking, and 16 foot clear heights. Borrower took advantage of an early rate lock option - GSP negotiated a free 30 day rate lock period. The loan provided 80% of all costs including structural improvements (in advance), closing costs and financing fees. Terms: (1) Rate: 10 Year T + 2.35%; (2) Term/Amort: 10/30; (3) LTC: 80%; (4) DCR: 1.35; (5) Non-Recourse; (6) Lender Fee: Par. (Gary E. Mozer, Peter Smyslowski, Mark Wintner)
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INTEREST RATE/CMBS UPDATE
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| Treasuries: The bond market turned bearish as the "expert" consensus radically shifted from "The Fed is not finished lowering rates" to "We think the Fed is finished lowering rates"……Contributing to the shift were Greenspan's upbeat remarks on the economy on Thursday of this week. His outlook contrasted with his speech on January 11 in which he mentioned "significant risks" to the economy… U. S. Deficit: This week's auction of 2-year Treasury notes was the first sale impacted by the return of deficit spending brought on by tax cuts, recession, war on terrorism, etc. The volume of notes was doubled due to increased borrowing by the Treasury and yields spiked due to the oversupply… Next week, the treasury will announce the volume of the upcoming 10-year note auction, scheduled for Feb. 6….This issue will become the new "on the run" Treasury with a maturity of Feb 2012… The supply/demand dynamics will be closely watched as the yield may rise due to the supply… It's interesting to recall the speculation during 1999-2000 about the "scarcity factor" of the 10 year Treasury as it related to driving yields down. It was a period of surpluses and government buy backs and the CMBS market was concerned that it was losing the "benchmark"… |
| CMBS: Very little new issuance during January (just like the last few years), as activity isn't expected to return to normal until early March… Secondary trading spreads widened for the first time in months (10 year AAA's went from Swap+45 to Swap+50) due to: (1) Low activity overall; (2) Profit taking as returns were ripe after the double tightening of Swaps and CMBS spreads; (3) Concern over K-Mart's woes and how it will affect collateral and the overall retail picture… Also, both Treasuries and CMBS faced stiff competition from several corporates, such as Bank of America, who are rushing to issue debt before Treasuries widen further… 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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