CMBS/INTEREST RATE UPDATE - FINfacts

KEY RATE INDICES

FANNIE MAE RATES *

Prime Rate	6.00%
CODI*	1.693%
3 Mo. T’s (YTM)	2.97%
6 Mo. T’s (YTM)	3.21%

5 Yr. U.S. T’s	3.86%
10 Yr. US T’s	4.07%
30 Yr. US T’s	4.36%
12-MAT	2.633%

LIBOR - 1 mo.	3.27%
LIBOR - 3 mo.	3.44%
LIBOR - 6 mo.	3.64%
LIBOR - 1 yr.	3.86%

Tier 2+ (80% LTV)	5.28%
Tier 3+ (65% LTV)	5.14%
Tier 4+ (55% LTV)	5.00%
10 yr. term/30 yr. amort.

TRANSACTION OF THE WEEK

$30,000,000 Refinance of a 1926 Multi-Tenant Office Building Located in a West Coast City: Borrower had 5½ years left on current loan with large defeasance penalty. GSP was able to show borrower the future value on the new cash out financing, including debt service savings, which demonstrated a substantial benefit for refinancing. We made the lender comfortable with the vacancy of 5% and a $187 loan/s.f. by using the immediate sub-market comparables that outperformed the overall market. Terms: (1) Pricing: 10-year T +1.15%; (2) Term: 10 years; (3) Amort: 30 years; (4) LTV: 80%; (5) DCR: 1.25; (6) Non-recourse; (7) Lender Fee: Par. (Mike Gottlieb, Henry Bryan, Chad Coluccio)

$5,200,000 Refinance for 84,500 s.f, Single Tenant Office Building in Anchorage, AK: Borrower had an existing portfolio loan with yield maintenance. GSP consulted with the borrower and determined that new financing would allow them to take substantial cash out and lower the interest rate. Tenant is a government entity with 7 years remaining on the lease term. Terms: (1) Rate: 5-year T +1.28%; (2) Term: 5 year, 8 months; (3) Amort: 15 years; (4) LTV: 60%; (5) DCR: 1.57; (6) Non-recourse; (7) Lender Fee: 0.50%. (J. Jay Brooks)

$4,650,000 Acquisition Financing (80% of Cost, T +.90%) for 77,083 s.f, Industrial Building in Tampa, FL: GSP arranged aggressively priced financing for this acquisition. The 1985 built property is “flex” industrial with some office build-out in each of the 20 tenant spaces. Occupancy is 95%. The challenge was to find a lender willing to underwrite and price this asset as regular industrial. Terms: (1) Rate: 10-year T +0.90%; (2) Term: 10 years; (3) Amort: 30 years; (4) LTV: 80%; (5) DCR: 1.63; (6) Non-recourse; (7) Lender Fee: Par. (J. Jay Brooks)

$13,500,000 Permanent Loan Refinance for an 88% Leased, “Fashion-Anchored-Value-Oriented” Shopping Center in Sacramento, CA: This former K-Mart anchored center was recently repositioned after Kmart went dark in 2002, leaving the center 20% occupied. The K-Mart space was subdivided into 4 “small box” retail spaces and 3 in line spaces. Although the center is currently 88% leased, cash flow only supports a 0.70 DCR due to free rent and fixturization periods for some tenants. Furthermore, after loan closing, a pad building is going to be demolished and rebuilt to accommodate four new food tenants. GSP helped the lender to create risk mitigants including a $1,500,000 holdback based upon a DCR threshold. Terms: (1) Pricing: 10 year T + 1.35%; (2) Term: 10 years; (3) Amort: 30 years; (4) Non-recourse; (5) Lender Fee: Par. (Michael Schwartz)

CMBS/INTEREST RATE UPDATE

The 10-year T closed today at 4.07%. Even with Greenspan raising the short end several times, long rates remain at historic lows. The “sea change” is that the long rates are being controlled by Asian central banks appetite for treasuries, which remains strong. CMBS spreads are still very tight as competition among originators = lower margins. Slightly tongue-in-cheek quote from veteran CMBS loan officer today: “I’ve been in this business since the mid-1990’s, back when it actually made money for the bank”. Both spread components remain tight, 10-year Swap is at 41, while the 10 year AAA’s are 31 over the Swap, after dipping as low as 22 over. Originators have virtually stopped pricing premiums in for TIC deals and other unusual structures, as they are “pricing everything straight” to win business. Look for a detailed CMBS state of the industry write up in next week’s FinFax. (David R. Pascale, Jr.)

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