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| KEY RATE INDICES |
FANNIE MAE RATES * |
| Prime Rate |
6.50% |
| CODI* |
1.693% |
| 3 Mo. T’s (YTM) |
3.51%
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| 6 Mo. T’s (YTM) |
3.78% |
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| 5 Yr. U.S. T’s |
4.23% |
| 10 Yr. US T’s |
4.39% |
| 30 Yr. US T’s |
4.57% |
| 12-MAT |
2.737% |
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| LIBOR - 1 mo. |
3.57% |
| LIBOR - 3 mo. |
3.78% |
| LIBOR - 6 mo. |
4.02% |
| LIBOR - 1 yr. |
4.32% |
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| Tier 2+ (80% LTV) |
5.64% |
| Tier 3+ (65% LTV) |
5.50% |
| Tier 4+ (55% LTV) |
5.36% |
| 10 yr. term/30 yr. amort. |
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TRANSACTION OF THE WEEK
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$13,700,000 Land Loan on 3,200 Acres in California This property is well located in a “rural” area in the path of growth. The land was purchased 5 years ago by our borrower. Purchase price plus entitlement costs equals approximately $19,700,000. Note that the loan amount represents 70% of total costs to date. The new financing took out higher priced senior debt plus “high-octane” mezzanine debt. Loan was structured with a floor funding with future draws to cover all entitlement and pre-development costs. The approved Specific Plan calls for development consisting of approximately 2,000 single family detached homes in varying lot sizes, two golf courses and up to 1,000 hotel rooms. Tentative Map is not in place but is “procedural based” on a template set forth in the Specific Plan. Borrower’s experience in entitling land and strong financial capabilities helped get the major regional bank comfortable with this transaction, which is the first between the client and the bank. Terms: (1) Pricing: Prime + 1%; (2) LTV: 40%; (3) LTC: 70%; (4) Fully funded interest reserve; (5) Loan Term: 24 months with a 6 month extension option (for extra 25 bps); 6) Recourse: Full recourse to Managing Member; (7) Lender Fee: 1.0% (Mike Gottlieb, Henry Bryan, Chad Coluccio)
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| $11,200,000 Structured Permanent Financing for 112,277 SF Retail Center in Victorville, CA that was 85% Occupied (And 100% Leased) at Time of Loan Closing This early 80’s vintage, 4 building mixed-use center is anchored by an 18,000 s.f. Dollar Tree and includes a bingo parlor, Army recruiting space, and a newspaper distribution warehouse. The borrower is the original developer and continuous owner/manager of both properties. The financing also involved another property which is cross-collateralized. Both properties are at the end of major renovations financed with repositioning loans placed by GSP. Loan was structured with an earn out and a TI holdback. Terms: (1) Rate: 10 year T + 1.28%; (2) Term: 10 years, (3) Amort: 30 years, (4) LTV: 75%, (5) Insurance escrow waived; (6) Loans will be uncrossed when each property stands on its own with a 1.30 DCR. (Michael Schwartz) |
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| $9,280,000 Construction Financing for 31 Condominium Units in the San Fernando Valley The subject financing will be used to demolish two existing apartment buildings and construct 31 for-sale condominiums averaging 1,150 square feet. Borrower already owned the land—the financing provided $500,000 of cash out. Projected sales average $373 per square foot. Loan proceeds were constrained to 85% of costs by the lender’s estimated discounted bulk-sale value. Terms: (1) Rate: LIBOR + 2.30%; (2) Term: 24 months; (3) Amort: Interest Only; (4) LTC: 90%; (5) LTV: 80%; (6) Lender Fee: 0.50%; (7) Recourse: Full Guaranty; (8) Release Pricing: Greater of Net Proceeds or 120% of allocated loan amount (Steven C. Orchard, David Bierman) |
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HOT MONEY
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| George Smith Partners is Working with a Land Finance Company that Focuses on Providing Debt and Equity Capital for Large Land Tracts, both Entitled and Unentitled. This capital provider seeks experienced, local land development professionals with land parcels in proven growth corridors, and is able to provide up to 99% of the capital needed for land acquisition, entitlement, land development, and interest reserve. The sponsor also receives a monthly overhead allocation. This capital provider can structure the investment as a long term, non-recourse, fixed rate loan or as joint venture equity. Terms: (1) Deals sizes: $5 million and up are preferred; (2) Rate: 16-23%; (3) Term: up to 10 years on debt, 30 year partnership on equity; (4) Amort: interest only; (5) Non-recourse; (6) LTC: up to 99%; (7) No lender fee. |
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PRESS BOX
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Noah Hahn was interviewed on July 27, 2005 regarding condominium financing in Las Vegas for an article in Community Property News. To read the entire article, click here. If you have any problems with the link to the article, please email Dinah Hall at dhall@gspartners.com
Lee T. Norman, Senior Vice President of George Smith Partners, Inc., was interviewed this week for a “Stars to Watch” article which will be published in September in Commercial Property News. Look for a link in an upcoming FinFax.
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Interest Rate/CMBS Update
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| Interest Rate/CMBS Update: Bond buyers read a “benign” slant in the Fed message accompanying another .25% rate hike. The 10 year T rallied from a high of 4.43% early in the week to 4.37% today. Some borrowers are “shell-shocked” after months of the 10 year hovering in the 4.00% range. Note that rates are still at relative historic lows and many gurus and strategists feel we are in a rising rate environment. Many borrowers are asking about early rate lock and the availability/pricing of forward commitments. The yield curve has flattened considerably. Last winter borrowers took advantage of a steep yield curve to lock in cash flow. Many opted for 5 year loans as the difference between the 5 and 10 year treasury was .85-1.00%. Now that difference is .15% and 5 year loans deals are actually being priced at or higher than 10 year loans (due to the typical pricing premium for the 5 year term). CMBS originators are watching the 10 year Swap (a component in the spread) closely as it widened 4-5 bps starting last week, but has started to contract slightly yesterday. Most are holding spreads tight in the face as more competitors enter the market…..Stay tuned…… (David R. Pascale, Jr.) |
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11th Annual GSP Real Estate Luncheon
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To Benefit the A-T Medical Research Foundation
Wed., September 21, 2005
Westin Century Plaza Hotel & Spa
FEATURED GUEST SPEAKERS
Bruce Karatz
KB Homes
Itamar Rabinovich
President of Tel Aviv University
Register at www.gspartners.com
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