Unique Structure- Land Loan! - FINfacts

KEY RATE INDICES

FANNIE MAE RATES *

Prime Rate	4.00%
11th District	1.923%
3 Mo. T’s (YTM)	0.94%
6 Mo. T’s (YTM)	1.06%

5 Yr. U.S. T’s	3.44%
10 Yr. US T’s	4.44%
30 Yr. US T’s	5.26%
12-MAT	1.268%

LIBOR - 1 mo.	1.12%
LIBOR - 3 mo.	1.17%
LIBOR - 6 mo.	1.26%
LIBOR - 1 yr.	1.56%

Tier 2+ (80% LTV)	5.98%
Tier 3+ (65% LTV)	5.80%
Tier 4+ (55% LTV)	5.60%
10 yr. term/30 yr. amort.

TRANSACTION OF THE WEEK!

$24,600,000 Fixed Rate, Acquisition Financing (5.53% Interest Only for First 2 Years) for 127,000 s.f. T.J. Maxx-Anchored Center in San Joaquin Valley: George Smith Partners has arranged fixed rate, non recourse financing for this late 80's vintage, 37 tenant retail center. Center features a traditional layout with anchor/in-line space plus pads. Occupancy: 96%. T.J. Maxx occupies 25,000 s.f. and has just over 4 years remaining on their lease. The remaining tenants are a mix of local and national tenants, with the largest occupying approximately 6.0% of the center. Most tenants are in the 1,000-2,500 s.f. range. Challenges/Solutions: (1) Non-traditional, value department store anchor plus significant event risk with 4+ years left on anchor lease. Lender became comfortable with investment grade anchor tenant, strong retail submarket and impressive store sales. (2) Borrower required cash flow in conjunction with maximum leverage. Loan was structured with 2 years interest only and proceeds were pushed to grocery/drug anchored retail limits for this non-traditionally anchored center. Loan officer: "We were ready to close well before the acquisition date." Terms: (1) Rate: 5 year T + 2.30% (Rate: 5.53%); (2) Loan Term: 5 years; (3) Amort: Interest only for 2 years then 28 year amort; (4) LTV: 80%; (5) DCR: 1.20; (6) Non-recourse; (7) Lender Fee: Par. (David Stepanchak, Steven Hamermesh)

Unique Structure- Land Loan!

$15,000,000 Acquisition (100% Financing) Via Letter of Credit for 4.5 Acre Site in Los Angeles: This infill site now contains a functionally obsolete building and extensive vacant land. The financing structure was created to accommodate both the Seller and buyer's needs. The seller occupies the building and owns the parcel. The seller will construct a new facility at a separate location (not on this parcel), and wants to remain in occupancy at the subject site until the new facility is built. Transaction Structure: (1) Borrower takes title to the land now and gives the seller a $15,000,000 Letter of Credit in lieu of cash; (2) Pursuant to the purchase agreement, the seller can remain as a tenant rent free for 3 years; (3) The Letter of Credit is irrevocable for 3 years, and the Seller can cash the LC at the later of 3 years or when they vacate the premises. Seller will be motivated to vacate after 3 year free rent period because they will be obligated to pay above market rent at that point. During 3 year period, borrower intends to re-entitle the land. Terms: (1) Letter of Credit Amount: $15,000,000; (2) LC is secured by: (a) A first trust deed on the land, note that land is appraised at $22,000,000 (65% LTV); (b) A personal guarantee from the borrower; (c) $1,500,000 of CDs; (3) Annual LC fee: 1.0% per year for the first 3 years, 1.25% for year 4; (4) Term of LC: 42 months; (5) Closing costs: $7,500. The cumulative effect was borrower received 100% of cost financing at a 1.0% interest rate! (Michael Schwartz)

$17,800,000 Permanent Financing for a Power Center Totaling 94,781 Rentable s.f.: GSP has arranged $17,800,000 of fixed rate financing for this Home Depot shadow-anchored center located in Northern California. Underwriting challenges to the transaction included substantial potential tenant rollover in year 10 of the loan term and borrower's desire to fund the construction and leasing costs of a small additional building at the property. The loan required extensive negotiation and structuring, including: (1) No TI/LC reserves until year 8 of the loan term, and then only until major tenant renewal; (2) Earnout of proceeds to complete construction and leasing of a 6,300+ s.f. building on the property; (3) Lender issuance of an unsecured line of credit to cover the construction earnout portion of the financing (Note: lender funded all proceeds on day one and required an LC for construction portion until that building is leased); (4) No requirement of a non-consolidation opinion; and (5) Yield maintenance in lieu of defeasance at no additional cost to borrower. Financing: (1) Pricing: 10-Year T + 1.55%; (2) Term/Amort: 10/30; (3) LTV: 80%; (4) Prepayment: Yield Maintenance; (5) Non-Recourse; (6) Lender Fee: Par. (Gary Mozer, Lee Norman, Larry Wilemon)

Treasuries/CMBS Update: Treasuries: The end of the long bull market in bonds may be near, especially if the labor numbers hold up. The drop in unemployment and rise in job creation evidenced by reports over the last few days has Fed watchers predicting an uptick in the Fed Funds rate as soon as 2nd Quarter 2004. Most economists see the 10 year T hovering in the 4.50% range for the rest of the year, with higher rates forecasted for 2004. CMBS: 2003 volume remains well ahead of last year. Both AAA bond spreads (29-33 over Swaps) and Swaps themselves (42-44 over Treasuries) are staying relatively tight, which translates to continuing competition among originators for good transactions...Stay tuned...(David R. Pascale, Jr)