Southern California Bank Offering Fixed Rate - FINfacts

KEY RATE INDICES

FANNIE MAE RATES *

Prime Rate	7.50%
3 Mo. T’s (YTM)	4.60%
6 Mo. T’s (YTM)	4.76%

5 Yr. U.S. T’s	4.59%
10 Yr. US T’s	4.64%
30 Yr. US T’s	4.69%
12-MAT	3.88%

LIBOR - 1 mo.	4.78%
LIBOR - 3 mo.	4.93%
LIBOR - 6 mo.	5.06%
LIBOR - 1 yr.	5.17%

Tier 2++ (80% LTV)	5.89%
Tier 3++ (65% LTV)	5.75%
Tier 4++ (55% LTV)	5.61%
10 yr. term/30 yr. amort.

TRANSACTION OF THE WEEK!

$9,700,000 Condo Construction Financing for 30-Unit Complex in Van Nuys, California. GSP arranged $9,700,000 of senior construction financing (87.8% of total project cost) to develop a 30-unit, 4-story condominium complex in Van Nuys, CA. The total project includes 61 units in two adjacent buildings. Units average 1,241 s.f. and are valued at an average sale price of $375 per s.f. The project is strategically located near public transportation arterials, and targets a relatively low price point to serve the San Fernando Valley’s high demand for work-force housing. Terms: (1) Rate: 30 Day LIBOR + 2.25%; (2) Term: 18 Months + Options; (3) LTC: 87.80%; (4) Recourse; (5) Lender Fee: 0.75%; (6) Personal Repayment Guaranty; (7) Release Prices: The greater of net proceeds or 120% of allocated loan amount. (Steven C. Orchard, David Bierman)

$8,000,000 Refinance for 284 Room Full Service Hotel on Leasehold in Phoenix. The borrower, an experienced “turnaround” hotel owner/operator, purchased the property in early 2005 from a foreign owner. The hotel had been run with excessive management and other expenses. Our borrower cut expenses, running the hotel much more efficiently. (Examples: shutting down the restaurant between lunch and dinner, consolidating positions in the food and beverage departments, self-managing the hotel, etc.) The borrower also implemented a $3,000,000 renovation of the guest rooms and common areas. This was a cash-out refinance with very little stabilized income history for a borrower who had owned the hotel for just one year. Lender waived the usual “seasoning” requirement for hotels as the loan was done during rehab/turnaround. Also, the ground lessor sold the fee during loan processing. Lender required “double” cure period on ground lease. Terms: (1) Rate: 10 year T + 1.35%; (2) Term: 10 years; (3) Amort: 25 years; (4) LTV: 70%; (5) DCR: 1.40; (6) Non-recourse; (7) Lender Fee: Par; (8) FF&E Reserve schedule was negotiated in borrower’s favor due to ongoing rehab. (Steve Bram, David R. Pascale, Jr. Farz Emrani)

$7,000,000 Condo Conversion Loan for Garden Apartment Complex. Our borrower purchased this 64-unit garden apartment complex 10 years ago. The new loan amount was determined by 65% of bulk sale value, which sizes up to approximately 50% of net retail sellout based on market comparables. The loan was funded as a cash-out refinance with the cash out being sufficient to fund the condo conversion costs. Lender is a commercial bank. This aggressive loan was given to a very experienced borrower in the local market and a long time customer of the bank. Terms: (1) Rate: LIBOR + 2.25%, no floor; (2) Term/Amort: 24 months/Interest Only; (3) Release Provision: 80% of gross sales proceeds; (4) Recourse: Full repayment guarantee; (5) No prepayment penalty; (6) Lender Fee: 1%. (Mike Gottlieb)

$5,930,000 (65% of all-in-cost) Land Acquisition and Entitlement Financing for a 7.2 Acre Infill Residential Site in Southern California. A tentative tract map is expected within four months that will allow for 130 town homes. In addition to the land purchase, the financing provides funds for entitlement, interest reserve, and closing costs. Challenges: By the time the borrower determined his desired financial structure, there were only three weeks left on the purchase contract. The seller had previously indicated an extension would be forthcoming if necessary, but in the end did not grant it. Solution: GSP found a lender able to close within three weeks and that lender found an appraiser also willing to work within our timeframe. Terms: (1) Rate: Prime plus 1.0%, (2) LTV: 65%; (3) Loan Term: 2 years: (4) Amort: Interest Only; (5) Recourse; (6) Lender Fee: 1.0% Other info: The borrower originally sought an equity partner and GSP was able to find an equity partner, but also a second mortgage lender willing to lend up to 95% of the total capitalization for an approximate 18% interest rate and 3% lender fee. In the end, the borrower chose to use this deal for a 1031 exchange and just needed the senior debt. (Michael Schwartz )

HOT MONEY

Southern California Bank Offering Fixed Rate, Bridge and Construction Financing--Will price over LIBOR on small deals This is an alternative to Prime based pricing for small deals in major markets throughout the Western US Program Highlights: (1)Deal Size: $1,000,000 to $7,000,000; (2)Lending Area: California, Las Vegas, Reno, Phoenix, Tucson, Seattle, Portland; (3) Rate: Spread over LIBOR or Prime; (4) Loan Term: Fixed Rates and Bridge 1-10 yrs; Construction up to 24 months; (5) Amort: Up to 30 yrs; (6) LTV: Up to 80%; (7) DCR: 1.15; (8) Guarantee: Recourse negotiable; (9) Prepayment: Fixed Rates: YM for 7, 10 Years; 5-4-3-2-1 for 5 Years; 3-2-1- for 3 Years; Floating Rate 1%, Par.

SPEAKERS CORNER

Shlomi Ronen, GSP Vice President, spoke about the real estate financial market at a DLA Piper Rudnick Gray Cary luncheon on March 15, 2006. About 25 attorneys attended.