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| KEY RATE INDICES |
FANNIE MAE RATES * |
| Prime Rate |
4.00% |
| 11th District |
2.113% |
| 3 Mo. T’s (YTM) |
0.96%
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| 6 Mo. T’s (YTM) |
1.04% |
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| 5 Yr. U.S. T’s |
3.45% |
| 10 Yr. US T’s |
4.47% |
| 30 Yr. US T’s |
5.26% |
| 12-MAT |
1.379% |
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| LIBOR - 1 mo. |
1.11% |
| LIBOR - 3 mo. |
1.14% |
| LIBOR - 6 mo. |
1.20% |
| LIBOR - 1 yr. |
1.45% |
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| Tier 2+ (80% LTV) |
6.03% |
| Tier 3+ (65% LTV) |
5.85% |
| Tier 4+ (55% LTV) |
5.65% |
| 10 yr. term/30 yr. amort. |
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TRANSACTION OF THE WEEK!
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$42,300,000 Acquisition Financing (80% of Purchase) for 219,000 s.f. Mixed Use (Grocery/Drug/Fitness Anchored Retail and Office) Center: GSP arranged fixed rate, non-recourse financing for this newly developed property located in Ventura. The project opened in September 2002 and was still in lease-up at the time of funding. The key to the transaction was identifying a lender willing to structure and fund a fixed rate perm on a property still in the final stages of stabilization. Property Specs: 219,000 total s.f. (186,000 s.f. of retail and 33,000 s.f. of office), 11 buildings, 20 acre site. Pedestrian friendly environment includes a “linear park”, bike path and fountain square. Occupancy: 91%. Retail tenants include 58,000 s.f. grocery store, 23,000 s.f. drug store, 46,000 s.f. fitness center, restaurants, video store, etc. Office tenants include a surgery center (under construction), other medical and to-be-leased executive suites. Challenges to Financing: Property was 85% leased during initial marketing to lenders and leased up to 91% shortly after funding. Lender funded “early” to meet the acquisition schedule and held back some funds until 2 pending leases were finalized 2 weeks after funding. Also, there were complex title issues including ground lease from a utility with electric lines over buildings requiring utility company SNDA and two Reciprocal Easement Agreements with a to-be-built adjacent residential property, which required anchor tenant approval. Terms: (1) Rate: 10 yr T + 160, (borrower used early rate lock at 5.16%); (2) Term/Amort: 10 term, 2 yr interest only, then 28 yr amort; (3) LTV: 80%; (4) DCR: 1.20 (lender broke Stress Constant); (5) Non-recourse; (6) Lender Fee: Par. (Steve Bram, David Pascale, Shlomi Ronen)
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LOANS UNDER APPLICATION
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In this section, we will describe newly signed applications which are indicative of cutting edge pricing and terms available in the market and may be of interest to our readers:
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| $52,500,000 for Acquisition of Urban Core Class A Office Building: (1) Rate: LIBOR + 135 (LIBOR periods at borrower’s option with ability to mix–and–match, i.e. portions of loan amounts can have different LIBOR Periods); (2) Term: 7 yrs/25 yr amort; (3) Lender Origination Fee: ¼ pt.; (4) Rate Cap Purchase: None; (5) Pre-Payment: Open without penalty; (6) Loan to Value: 70%; (7) Lender Category: International Money Center Bank. (George Smith, Joel Simaie) |
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| $8,000,000 Unsecured Revolving Credit Line for Short Term Capital Needs for LA County Based Developer: This particular lender develops a comfort level with the client's business capability and a comprehensive understanding of his financial condition. The criteria includes a mix of: (1) Liquidity; (2) Predictable operating cash flow; (3) Net worth; (4) Asset control, i.e. sole ownership or LLC interests; (5) Credit worthiness and (6) Deposit potential. Terms: (1) Rate: Confidential (Indexed to Prime) (2) Term: Annual renewal (3) Deposit Requirement: Confidential (4) Lender Fee: $25,000. (Gene Brunkhardt) |
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| Commitment in Closing at LIBOR +225: Virtually a single tenant office building in Hollywood. Anchor occupies 88% of space with heavy entertainment technology production facilities. 7 years remaining on lease. Terms: (1) Loan Amount: $5,700,000; (2) LTV: 75%; (3) Term/Amort: 7/25; (4) LIBOR + 2.25%, no floor, open to prepay with penalty, 1 pt fee, limited recourse; (5) Lender: Major money center bank. (George Smith, David Stepanchak) |
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| $12,000,000 Apartment Mezzanine Debt (90% LTV at LIBOR +850): GSP marketed a mezzanine debt request to more than 20 investors. An application has been issued on the following terms: Property: a major West Los Angeles apartment community with more than 400 units that went through a three year repositioning including significant interior and exterior upgrade and significant repositioning of the rental income. Existing Debt: GSP placed a $63.75 million LIBOR based floating rate loan, 10 year, 75% LTV, non-recourse. Mezzanine Debt: The winning bid priced and sized the loan as follows: (1) Amount: $12 million; (2) Interest rate: LIBOR +8.5%; (3) Overall LTV: 90%; (4) Interest only; (5) Co-terminus with senior debt; (6) Non-recourse; (7) 18-month lockout to prepayment, open thereafter at par. Comments: Issues identified by various lenders included: (1) reluctance to do a floating mezzanine loan behind a floating rate senior secured first mortgage, (2) new financing was “cash out” in excess of borrower cost and (3) high ratio senior debt at 75% LTV. The favorable terms were a combination of: (1) upside potential in the rent, i.e. lofts to lease of approximately $600,000 and (2) low rate senior debt with overall debt service coverage of nearly 2:1 providing manageable risk in the event of increase in short term rate. (Lee Norman, George Smith, Joel Simaie) |
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SPEAKER'S CORNER
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| George Smith will be delivering a yearly update on the capital markets to the Kaye Scholer law firm on September 24, 2003. For more information on Mr. Smith’s speaking availability, please contact your GSP representative. |
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