Portfolio Lender Hungry for Business

KEY RATE INDICES FANNIE MAE RATES * Prime Rate 4.00% 11th District 1.909% 3 Mo. T’s (YTM) 0.91% 6 Mo. T’s (YTM) 1.00% 5 Yr. U.S. T’s 3.20% 10 Yr. US T’s 4.22% 30 Yr. US T’s 5.05% 12-MAT 1.256% LIBOR - 1 mo. 1.17% LIBOR - 3 mo. 1.18% LIBOR - 6 mo. 1.26% LIBOR - 1 yr. 1.58% Tier 2+ (80% LTV) 5.73% Tier 3+ (65% LTV) 5.55% Tier 4+ (55% LTV) 5.35% 10 yr. term/30 yr. amort. TRANSACTION OF THE WEEK! $20,000,000 Acquisition Financing (80% of Cost) for 194,500 s.f. Bed Bath and Beyond Anchored Shopping Center in Secondary Market in the Southeastern U.S.: GSP has arranged financing for this 100% occupied, 1 year old retail center. The 11 tenants include Old Navy, Party City, Goody’s and Comp USA. Challenges: (1) Several tenants have kick-out clauses based upon minimum sales thresholds, and also co-tenancy kick-out clauses with Bed Bath and Beyond. Many lenders were not able to quote due to these clauses. GSP identified a lender who got comfortable with the viability of the location and tenancy. (2) Site has environmental contamination which is being remediated with funds from the State. Mitigated through a combination of a holdback (to be released upon execution of an NFA letter) and seller indemnifications (Seller is a strong financial entity). This is Michael Schwartz’s 10th transaction with the same borrower. Since the “template” was in place, borrower was able to waive financing contingencies within 45 days of purchase LOI with a written commitment in hand from the lender. Seller has therefore engaged GSP for the financing of a large retail center. Terms: (1) Rate: T + 1.50%; (2) Term/Amort: 10/30; (3) LTV: 80%; (4) DCR: 1.25; (5) Non-recourse; (6) Leasing and Tenant Improvement Reserves capped at $225,000 ($1.16 per s.f.); (7) No service charges for escrow disbursements. (Michael Schwartz) $3,100,000 2nd Mortgage Land Loan! Secured by Partially Entitled Assemblage in the Midwest: Our borrower obtained secondary financing which allowed him to: (1) Pay off a maturing 2nd; (2) Fund additional costs to finalize entitlements; (3) Fund an interest reserve to carry the existing 1st and 2nd mortgages for 18 months. Collateral: 75 acre contiguous land assemblage located near a well-known Midwestern suburb. Land assemblage was amassed over a 15 year period. The anticipated final use is an “urban village” (SFR, retail, office, theaters, hotel, medical office) to be developed over the next 2-7 years. Terms: (1) Pricing: 16%; (2) Term: 18 months; (3) Amort: Interest Only; (4) Combined LTV: 30%, Combined Loan-to-Cost: 65%; (5) Recourse; (6) Lender Fee: 4.0%; (7) An inter-creditor agreement was worked out between the existing 1st and 2nd lenders. (Michael Schwartz) EQUITY TRANSACTION OF THE WEEK! $5,275,000 Equity Financing for 97,500 s.f. Class A Office Building in Bakersfield, CA: George Smith Partners has obtained a commitment of $5,275,000 of equity financing for the acquisition and repositioning of a 97,500 s.f. Class A office property in Bakersfield, CA. The property was 41% leased at closing to four tenants. Key deal points included: (1) 95% of the equity committed; (2) investor comfort with vacancy levels and leasing velocity in tertiary market; (3) financing structure in which committed but not funded balances do not earn a preferred return and (4) investor self-management of the property. Financing: (1) Preferred Return: 10.50%; (2) Profit Participation: 75%/25%; (3) Lender Fee: Par. (Gary Mozer, Lee Norman, Larry Wilemon) HOT MONEY! Portfolio Lender “Hungry for Business” Funding $25,000,000+ Fixed Rate Loans Nationwide: George Smith recently discussed programs with the Director of National Lending for this institution. Lender is willing to consider “deals with a little hair” in order to get their yield requirements. Unique feature: Lender is willing to allow floating rate (app LIBOR + 1.50%) for 6 months and then convert to fixed rate that has been locked at application. Highlights: (1) Loan Size: $25,000,000 to no limit; (2) Loan Terms: 7-10 years; (3) Typical Pricing: T + 1.50%; (4) Max LTV: 75%; (5) Min DCR: 1.25 (may go lower!); (6) Non-recourse; (7) Lender Fee: Par.