No-Cost Permanent Financing!

TRANSACTION OF THE WEEK!

$42,400,000 Financing Package Including Permanent, Mezzanine and Equity for a 330-Unit Multifamily Acquisition in Moreno Valley, CA. GSP arranged highly structured financing which included a $25,900,000 Fixed Rate Permanent Loan, an $8,250,000 Fixed Rate Mezzanine Loan and $8,520,000 of Joint Venture Equity for El Dorado Apartments in Moreno Valley, CA. The borrower acquired the subject property with an anticipated three to five year hold and intends to raise rents to market through aggressive management and the elimination of operational inefficiencies to reduce expenses. They also anticipate significant annual market growth as the region continues to see an enormous influx of residents. While this strategy and anticipated three year holding period would have typically utilized a LIBOR based Bridge Loan, since the property had some cash flow, GSP was able to secure fixed rate conduit financing and substantially lower rates with five years interest only and a flexible prepayment option. Debt Terms: (1) Rate: 5 Yr T +1.50% (blended including Mezz); all in rate of 6.13%; (2) Term: 5 yrs; (3) Amort: Interest Only; (4) LTV: 80%; (5) Non-Recourse; (6)Prepayment: Locked out for 2.5 years, yield maintenance thereafter; open at Par in yrs 4-5; (7) DCR: 1.05 (in place, interest only), 1.20 (stabilized cash flow, interest only); (8) Lender Fee: Par. Equity Terms: (1) Equity Investment: Sponsor 20%/Investor 80%; (2) Pref: 10% pari passu; (3) Investor Look-back: 16% IRR; (4) Splits: 60% to Sponsor, 40% to Investor; (5) Non Recourse; (6) Fee: 1.5%. (Steve Bram, Steve Yazdani)

$9,500,000 Permanent Financing for a 103,710 Sq. Ft. Retail Center in Broomfield, CO. GSP arranged $9,500,000 of senior financing (77% LTV) to finance the acquisition of a 103,710 sq. ft. retail center located in Broomfield, Colorado. The property is 94% leased, including 58% to a single tenant through September 2009. Unique Characteristics: The lender was picked due to its ability to close quickly – the process was less than 30 days due to requirements for a TIC exchange for the borrower. The loan includes capped reserves and a master lease to solve for the potential rollover of the anchor tenant. Terms: (1) Rate: 10 Yr T + 1.05%; (2) Term: 10 yrs; (3) Amort: 30 yrs; (3) LTV: 77%; (4) Non-Recourse; (5) DCR: 1.20; (6) Loan Fee: Par. (Gary E. Mozer, Lee Norman, Steven Orchard, Joshua Roseman)

HOT MONEY

No-Cost Permanent Financing! No lender fee and lender credits borrower for application, third parties and reasonable legal fees. This innovative program offers great flexibility for borrowers tired of defeasance and yield maintenance. Highlights: (1) Transaction Size: $1,000,000-$10,000,000; (2) Rate: Resets every 3 yrs at 2% over the 3-Yr Treasury. Floor rate is the initial start rate; (3) Loan Term: 9 yrs; (4) Amort: 3 yrs I/O, then 27 yrs; (5) Max LTV: 75% (80% Owner/User); (6) Min DCR: 1.25; (7) Recourse; (8) Property Types: Office, Retail (Single Tenant), Industrial, Mixed Use, Multi-Family, Self-Storage; (9) Prepayment: 1-1-1 (Open for the last 6-yrs); (10) Loan Fee: Par; (11) Other Fees: Credit back to the borrower at closing (lender will pick up the application, appraisal, phase 1 and legal fees up to $11,500.00; (12) Geography: Nationwide; (13) Closing: Typically within 45-60 days.

INTEREST RATE/CMBS UPDATE!

Interest Rate Update: Treasury yield curve remains inverted (with a slight up-tick at the high end), bond rally continued yesterday on remarkably benign inflation data. This morning’s 10 Year is 4.59%. The 10 year Swap is in the low 50’s. Along with tight pricing on AAA bonds, this is keeping CMBS spreads tight. Bridge loan borrowers are not thrilled at Prime and LIBOR indices at 10 year highs, but consensus is that they have peaked. Now, when will these rates start their predicted decline? Stay tuned…. (David R. Pascale, Jr.)