West Coast Regional Bank Steps Up

$42,000,000 Commitment Issued in 24 hours to Purchase Apartment Site Subject to Entitlements (100% financing): In an earlier edition of eFinFax, we described a bank that starts its banking relationships with lines of credit and then does fast financing commitments to facilitate purchases. For example, the purchase may not occur, not because of financing, but lack of full disclosure by the land seller. Line of Credit: GSP arranged a $15 million unsecured line of credit for developer client. The process to receive approval took approximately 3 months during which the lender developed a comfort level with the client’s business capability and a comprehensive understanding of his financial condition. The criteria include 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. The approval process is highly personal and includes several social meetings with the bank President and Chairman. Land Loan Financing: The lender was asked how fast it could commit on a proposed $42 million land acquisition on a surplus site adjacent to a mall being repositioned. Within 24 hours, a commitment letter was issued at (1) $27 million (65% of purchase) with (2) the balance of the purchase coming from the credit line. Pricing: Prime + 0%, Loan Term: 18 months. This was the estimated time period to complete entitlements and break ground. This lender is selective on clients and then extremely responsive to financing requirements. (George Smith, Gary M. Tenzer, David Buxton)

West Coast Regional Bank “Steps Up” Low-Spread LIBOR Loans with Rates as Low as 3.5%: Bank has expanded lending areas to most West Coast metropolitan areas, having opened several satellite offices. In our opinion, their pricing is cutting edge for LIBOR intermediate term loans. Loan Terms: (1) Size: $2mm to $20mm; (2) Product Categories: Apartments, multi-tenant industrial, owner/user industrial, anchored retail and office buildings (lower LTV ratios); (3) Pricing: LIBOR +2% to 2.5% (lower spreads with lower LTV’s); (4) Minimum Rate: 3.5%; (5) Term: 5, 7, 10 yrs. (they recommend shorter term loans where there is lease rollover in the 6th to 10th years which would require underwriting rollover reserves); (6) Lender Origination Fee: ¼ pt; (7) Recourse: Top 25% of the loan. Negotiable at lower LTVs; (8) LTV: Up to 75% except for office - 65%; (9) Amortization: 25 to 30 years; (10) Rate Cap: None required.

George Smith: “Many of our competitors have accused us of using ‘ringers’ in the annual Broker’s Challenge athletic competition in Santa Monica. We plan to hold on to the trophy this year. Please take note of the following announcement.”

1984 Olympic Volley Ball Gold Medalist Jon Root has joined George Smith Partners! Jon will be working with Michael Gottlieb and Henry Bryan. Prior to joining GSP, Jon co-founded Omega Networks, an Internet streaming media company targeting the acquisition, exclusive production and distribution of Broadcast and Broadband content for Olympic Sports. Jon has an extensive history with the US Olympic Program. He was the Program Director of the Atlanta Centennial Olympic Properties Group whose clients and accounts included several Fortune 500 companies. A West Los Angeles native, Jon attended Loyola High School and holds degrees from Stanford University in Economics and Political Science. Always involved in community service, he is an Advisory Board Member for the Santa Monica YMCA, and an active Big Brother with the Venice Boy’s Club.

Jon Root is reachable at ext 114 or jroot@gspartners.com