New For Sale Residential Equity Partner - FINfacts

KEY RATE INDICES

FANNIE MAE RATES *

Prime Rate	5.00%
CODI*	1.277%
3 Mo. T’s (YTM)	2.22%
6 Mo. T’s (YTM)	2.43%

5 Yr. U.S. T’s	3.69%
10 Yr. US T’s	4.35%
30 Yr. US T’s	5.01%
12-MAT	1.677%

LIBOR - 1 mo.	2.29%
LIBOR - 3 mo.	2.41%
LIBOR - 6 mo.	2.64%
LIBOR - 1 yr.	2.98%

Tier 2+ (80% LTV)	5.42%
Tier 3+ (65% LTV)	5.28%
Tier 4+ (55% LTV)	5.14%
10 yr. term/30 yr. amort.

TRANSACTION OF THE WEEK

$52,000,000 Cash Out Refinance (LIBOR +1.25%; Interest Only; 78% LTV) of Two Garden Apartment Complexes: These two well-located 250 and 140 unit apartment complexes in Southern California were built in the mid-1970’s and mid-1960’s respectively. Lender is a major commercial bank who has a limited pocket of funds available for quality, stabilized assets. The projects are perennially well kept, fully occupied and owner-managed by a very hands-on, high net worth, long-time owner. Loan amount represents approximately $133,000 per unit. Terms: (1) Rate: 1-mo LIBOR +1.25%, no floor; (2) Term: 3-year term with two one-year options for a total of five years; (3) Amort: Interest Only in years 1-2, 30 year amortization in year 3, 25 year amortization in years 4-5; (4) LTV: 78%; (5) DCR: 1.25; (6) Prepayment: Open to prepayment at any time without penalty; (7) Recourse: Top 25% only; (8) Lender Fee: 0.50%; (9) Other Provisions: Cross defaulted/cross collateralized with partial release at 110% pay down of remaining property. (Mike Gottlieb)

$9,300,000 Acquisition Financing for 65,000 s.f. Office Building in Boston for Tenant-in-Common Investor Group: The 4-story, class A, 100% occupied property is located in the Davis Square submarket, near Harvard, Tufts and Lesley Universities. Building includes a 92 space parking garage. The submarket (which contains only 4 buildings) is virtually 100% occupied with barriers to entry. However, overall vacancy for Boston is 16%. One of the tenants, occupying 30% of the space, is paying rent 25% above market. Also, a ground floor office tenant is vacating in early-2005; borrower will convert the space to retail. Due to the TIC structure, borrower did not want any monthly TI/LC reserves. Therefore, they funded a one-time rollover reserve at closing as part of the capital structure. The “sponsor entity” is a 1% owner; the 15 TIC’s own 99%. This is the sponsor’s first TIC transaction. Terms: (1) Rate: 7 year T +1.45%; (2) Term/Amort: 10/30; (3) LTV: 68%; (4) DCR: 1.50; (5) Non-recourse; (6) Lender Fee: Par. (Steve Bram, David R. Pascale, Jr, Shlomi Ronen)

$2,800,000 Acquisition Loan on a Beverly Hills Office Center: GSP arranged financing for the acquisition of a 4-story, 49,333 s.f., office building in a prime Beverly Hills location. The borrower is converting the top floor to an office suite which he will occupy with one other tenant. Once the owner takes occupancy the property will be 100% leased. The building is on a 99-year ground lease, expiring in 2086. Terms: (1) Rate: T +1.35%; (2) Term/Amort: 10/30; (3) LTV: 75%; (4) DCR: 1.25; (5) Lender Fee: Par; (6) Non-Recourse; (7) Prepayment: Defeasance; (8) Closing Costs: Capped at $12,500 including all 3rd party reports, legal fees and ground lease review. (David Stepanchak, Allison Higgins, George Smith).

HOT MONEY!

New “For Sale” Residential Equity Partner: George Smith Partners is working with a new institutional equity fund who is looking to invest up to 95% of the required equity in to-be-built single family residential developments including condos and condo conversion located in low and middle income areas. This fund will provide equity from as low as $1 million/project up to $7 million. The units should sell for no more than $500,000. They are very comfortable in inner city, low and very low income areas. This investor is prepared to take entitlement risk and can also serve, if required, as the lead developer of the project. Their deal structure is up to 95% of the required equity with a 5% sponsor co-invest. The money receives a 10% preferred return, then profits are split 70%/30% to the investor up to a 20% IRR, then split 50/50 thereafter.

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