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| KEY RATE INDICES |
FANNIE MAE RATES * |
| Prime Rate |
4.00% |
| 11th District |
1.946% |
| 3 Mo. T’s (YTM) |
0.92%
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| 6 Mo. T’s (YTM) |
1.01% |
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| 5 Yr. U.S. T’s |
3.33% |
| 10 Yr. US T’s |
4.39% |
| 30 Yr. US T’s |
5.25% |
| 12-MAT |
1.302% |
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| LIBOR - 1 mo. |
1.12% |
| LIBOR - 3 mo. |
1.17% |
| LIBOR - 6 mo. |
1.24% |
| LIBOR - 1 yr. |
1.50% |
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| Tier 2+ (80% LTV) |
5.91% |
| Tier 3+ (65% LTV) |
5.73% |
| Tier 4+ (55% LTV) |
5.53% |
| 10 yr. term/30 yr. amort. |
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TRANSACTION OF THE WEEK!
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| $109,330,000 Acquisition of 3 Industrial Facilities Leased to Nestle Holdings, Inc. (AA Shadow Rating): GSP facilitated the acquisition of a 2,167,756 s.f. portfolio of three Class "A" warehouse properties located in Fort Worth, Texas; De Kalb, Illinois, and Midland, Georgia. The leases run for 8 more years, with six 5 year options to renew. The leases are true NNN leases where the tenant pays for everything. The seller was a Fortune 500 company who originally set this up as a tax shelter, with very unusual lease payments which were only paid twice per year. When the tax benefits ran out the owner decided to sell. This was a unique transaction that was not broadly marketed, and GSP was able to find the ideal buyer in a short window before it would get broadly marketed. The buying entity is a partnership of high net worth individuals led by George Hicker and the Cardinal Company, who specialize in high quality, NNN industrial properties. The transaction was very complicated due to the intricacies of the lease, but ultimately, all parties, including the lender, got comfortable. Buyer was able to get a loan of 80% of acquisition price, which will yield an annual cash on cash return of approximately 15%. Amortization on the three properties varied from 30, 25 and 23 years based on the lender's perception of each property in relation to its submarket. Lender required no reserves, except a $5,700,000 leasing reserve in the last year if the tenant does not renew. What is important is that in the last year of the lease, net operating income is $14,000,000 so there is plenty of cash flow, and this gave the lender a good comfort level. Buyer locked rate 30 days before closing to guarantee proceeds would not be cut by rising treasuries. This was critical because the seller's prepayment penalty on its original debt fluctuated until closing based upon treasuries. Lender was a CMBS major institution. Loan Terms: (1) Interest Rate: 5.94%, (8 year interpolated treasury + 1.81%); (2) Amortization: 30,25 and 23 years (3) DCR: 1.20; (4) LTV/Loan to Purchase Price: 80%; (5) Non-Recourse; (6) Lender Fee: Par. (Mike Gottlieb, Steve Bram, Shlomi Ronen) |
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MULTI-CITY PORTFOLIO OF SPECIAL PURPOSE, HARD-TO-FINANCE PROPERTIES
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| $19,500,000 Acquisition for Portfolio of Skilled Nursing Facilities: Client presented the following "needs list" to GSP: (1) Max leverage financing for acquisition of health care portfolio; (2) 60 days to close, which rules out HUD financing due to extended processing time; (3) Firm, written commitment in 2 weeks to comply with purchase contract; (4) Ability to prepay individual facilities at a 1.0 release price. We identified a portfolio lender that could meet all of the client's requirements. Lender provided 75% of cost financing, allowed secondary financing, provided the commitment two weeks from loan submission and funded in a timely fashion. Client plans to refinance the portfolio with HUD over the next year. Terms: (1) Rate: 6.25%; (2) Term/Amort: 5/30; (3) LTV: 75%; (4) DCR: 1.50; (5) Lender Fee: 1.25%; (6) Recourse; (7) Open to prepay at any time. (Gary E. Mozer, Lee Norman, Mark Wintner) |
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| $4,400,000 Cash-out Refinance for 108-Unit, 1920's Vintage, Mid-Wilshire "Bricker" Apartment Building: Borrower purchased this 6-story building 15 months ago and has substantially rehabbed it. Unit mix: 33 1 bedroom, 66 singles, 6 bachelors. Borrower's all in costs (including acquisition and rehab is under $4,000,000). Property is now 99% occupied with new paint, flooring, landscaping, lobby fixtures, management office, etc. Terms: (1) Rate: T + 1.50%; (2) Term/Amort: 10/30; (3) LTV: 80%; (4) DCR: 1.25; (5) Lender Fee: Par; (6) Non-recourse. (Gary E. Mozer, Lee Norman, Mark Wintner, Steve Orchard) |
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HOT MONEY!
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| Mezzanine Lender will consider higher risk properties nationwide. This fund's typical transaction is a mezzanine loan placed behind existing life company or bank debt. Borrower's can recapture "trapped equity" underneath fixed rate loans or just maximize leverage. This is standard mezzanine financing secured by pledge of partnership interest and requiring an intercreditor agreement with the senior lender. (1) Mezz Loan Size: $1,000,000-$10,000,000; (2) Combined loan to cost/value: up to 85-90%; (3) Term: 1 year - 10 years; (4) Main 4 Property types preferred; (5) Lender is looking at a 14-17% overall yield depending on risk profile. |
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