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| KEY RATE INDICES |
FANNIE MAE RATES * |
| Prime Rate |
4.00% |
| 11th District |
1.815% |
| 3 Mo. T’s (YTM) |
0.98%
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| 6 Mo. T’s (YTM) |
1.33% |
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| 5 Yr. U.S. T’s |
3.90% |
| 10 Yr. US T’s |
4.77% |
| 30 Yr. US T’s |
5.49% |
| 12-MAT |
1.238% |
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| LIBOR - 1 mo. |
1.10% |
| LIBOR - 3 mo. |
1.26% |
| LIBOR - 6 mo. |
1.56% |
| LIBOR - 1 yr. |
2.11% |
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| Tier 2+ (80% LTV) |
6.37% |
| Tier 3+ (65% LTV) |
6.19% |
| Tier 4+ (55% LTV) |
5.99% |
| 10 yr. term/30 yr. amort. |
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TRANSACTION OF THE WEEK
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$31,400,000 Refinance Four Property Retail Portfolio in Three Separate Markets: Three yield maintenance payoffs; one defeasance payoff; over one hundred tenant estoppels (100% of tenants); appraisals; engineering reports; environmental reports; a Phase II...all in 53 days! Time was of the essence to avoid paying double interest in the prepay process. Property Specs: (1) Santa Barbara, 50,000 s.f., two-investment grade tenants including grocery with event risk (one lease rolls during loan term); (2) Fresno, 57,134 s.f., unanchored, 24 tenants, 100% occupied; (3) Fresno, 39,190 s.f., unanchored, 14 tenants, 93% occupied; (4) Visalia, 76,062 s.f., grocery anchored, 8 tenants, 100% occupied. Structure: The three San Joaquin Valley properties were crossed to avoid collecting TI/LC reserves. Loan docs allow for a 1:1 release provision in event of a sale. Santa Barbara--no TI/LC reserve required due to market strength. Borrower will be required to post LC during notification period prior to lease termination if tenant does not extend. Borrower pulled cash out after all prepayment costs without significantly impacting cash flow. Borrower quote: “I’ve been waiting 35 years for these interest rates.” Terms: Anchored properties: (1) Rate: 10 year T + 1.25%; (2) LTV: 80%; (3) DCR: 1.20. Unanchored properties: (1) Rate: 10 year T + 1.45%; (2) LTV: 75%; (3) DCR: 1.25. All properties: (4) Term/Amort: 10/30; (5) Non-recourse; (6) Defeasance; (7) Lender Fee: Par. (David Stepanchak, Steven Hamermesh)
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| $10,150,000 Debt Financing for 130,000 s.f. Class B Office Building in San Francisco Bay Area: George Smith Partners has obtained $10,150,000 of senior debt financing, with a holdback for future tenant costs, for the acquisition and repositioning of a 130,000 s.f. Class B office property in San Francisco’s East Bay. Key aspects of the deal included: (a) 20%+ actual vacancy at the property, in the midst of the soft office market in Northern California, and (b) over 80 tenants with a majority having short-term leases. Financing: (1) Pricing: LIBOR + 2.75%, no floor; (2) Term: 3 years; (3) Amort: first year interest only, then 25 year schedule; (4) DCR: 1.25; (5) Prepayment: Open; (6) Non-Recourse; (7) Lender Fee: 1.00%. (Gary Mozer, Lee Norman, Larry Wilemon). |
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| $2,000,000 15-year Self Liquidating Refinance for Mobile Home Park in Santa Barbara, CA: This is truly a 5-star park- 1960’s vintage, 50 acre parcel, 334 pads, executive 9 hole golf course, 100% occupied for several years with waiting list. Borrower is four different TIC family groups. Purpose of financing- to buyout deceased partner’s estate per court order (thus the 17% LTV loan request). GSP “took the deal away” from a local bank favorite of lead partner; he was hesitant about CMBS, but liked 15/15 fixed and the spread. Challenge: The last survey was done in 1962. A new survey required 2 flyovers to plot interior roads and encroachments due to parcel size. Terms: (1) Rate: 10 year T + 90 bps; (2) Term/Amort: 15/15; (3) LTV: 17%; (4) DCR: 4.0 on the stress constant; (5) Non-recourse-no warm body required for the carve-outs; (6) Lender Fee: Par. (Gene Brunkhardt) |
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| Interest Rate/CMBS Update: 10 year Treasury yield at 4.77%, a full 1.0% over the recent low of 3.70% in March. This is the highest yield since July 2002. Several GSP borrowers have been rate locking ASAP during this run-up. One borrower was able to lock last Friday (May 7) at 5am (Pacific), 30 minutes before the jobs report sent rates up 25 bps. New auction of 10 year bonds went well this week, but not well enough to push rates downward. Swaps and corporate bond spreads have also widened, pushing fixed rate yields up across the board. CMBS originators have raised spreads for full leverage loans on all product types. Question: When will the run up in fixed rates drive cap rates up? Stay tuned…(David R. Pascale, Jr.) |
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