GSPartners
|
|
|
Volume XV | No. 8 | March 14, 2007
|
|
|
|
KEY RATE INDICES
|
|
Prime Rate
|
8.25%
|
1 Month LIBOR
|
5.32%
|
5 Yr US Treasury
|
4.39%
|
5 Yr Swaps
|
4.86%
|
|
12-MAT
|
5.01%
|
3 Month LIBOR
|
5.35%
|
10 Yr US Treasury
|
4.48%
|
10 Yr Swaps
|
5.01%
|
|
11th Dist COFI
|
4.39%
|
6 Month LIBOR
|
5.33%
|
30 Yr US Treasury
|
4.65%
|
|
|
|
| | | Transaction Description: | | $13,680,000 in Equity and Debt (99% LTC) for the Acquisition and Reposition of a 27,282 Sq. Ft. Office Building in Los Angeles, CA. GSP arranged equity and bridge financing for the acquisition of a 27,282 sq. ft. Class B office building located in a Los Angeles beach community. |
Challenge: (1) large number of small tenants; (2) tenant roll over, and; (3) aggressive rents that were being underwritten/projected by our Client. The property is leased to 42 tenants with an average lease totaling a mere 654 sq. ft. and 70% of the leases expire by December 2007. |
Solution: The seller of the property did not charge the tenants a load factor, so in addition to aggressively increasing the rents at the property, our Client is planning to charge the tenants a common area load factor, further increasing the underwritten rent collections.
Financing: StructureDebt: GSP structured the debt financing based on 85% of the future stabilized value at market rents allowing for the added common area load factor. This enabled the borrower to finance future tenant improvement leasing commission costs as well as an interest reserve; Resulting in the financing of all the costs relating to repositioning the building. Furthermore, in order to take advantage of the inverted Yield Curve GSP marketed the transaction to Lenders as a Fixed Rate Bridge loan priced over Swaps, saving the Borrower approximately .20% (1 Month Libor vs. 5 Year Swaps) at the time of funding. Equity: GSP raised 95% of the required equity from a Los Angeles based institutional equity partner. The transaction structure enables our client to invest a small percentage of the capital and retain a substantial portion of the profits. |
| | Rate: 5 Yr Swaps + 2% | | Term: 5 yrs | | Amort: Interest Only | | LTC: 88.5% | | DCR: 0.63 | | Prepayment: 18-mo lockout, then YM on the index | | Non-recourse | | Lender Fee: 1% | Equity Terms: Confidential
Key Players: Shlomi Ronen, Anna Saucier |
|
|
| | | Transaction Description: | | $7,760,000 Fixed Rate Permanent Financing (80% LTC) for 66,840 Sq. Ft. Grocery-Anchored Shopping Center in Houston, TX. GSP arranged permanent financing for the acquisition of a 66,840 sq. ft. shopping center in Houston, TX. The property is 82% leased with four of ten leases expiring within the next two years. The Borrower is an experienced real estate owner, developer and operator. This is the second grocery-anchored shopping center the Borrower has acquired in the past three months; both transactions were closed with the same lender. |
Challenge: Obtaining full funding at closing despite the property’s high vacancy rate. The seller provided the Borrower with rent guarantees to mitigate some recent new vacancies; however, the lender would not underwrite this rent as income and intended to structure an earnout. |
Solution: Initially GSP arranged for the Borrower to post a letter of credit equal to three years of lost cash flow, (which was substantially less than the amount the Borrower would have had to earn out); however, GSP ultimately negotiated a full funding at closing without the need for the additional credit support. |
| | Rate: 10 Yr T + 1% | | Term: 10 yrs | | Amort: Interest Only | | LTC: 80% | | DCR: 1.36 | | Prepayment: Defeasance | | Non-recourse | | Lender Fee: Par |
Key Players:
Gary M. Tenzer, Bryan Berkett
|
|
|
| | | Transaction Description: | | $3,185,000 Fixed Rate, Non-Recourse Permanent Financing for 39,910 Sq. Ft. Auto Repair Facility in Murrieta, CA. GSP arranged permanent financing for the acquisition of an auto repair facility built approximately five years ago. The property consists of two buildings with 16 units totaling 39,910 sq. ft. and is 100% leased. As the borrower was interested in reducing the prepayment penalty, GSP structured yield maintenance with a security instrument with interest rate .25% over Treasuries. |
| | Rate: 10 Yr T + 1.14% | | Term: 10 yrs | | Amort: Interest Only | | LTV: 57% | | DCR: 1.52 | | Prepayment: Locked out for the latter of 3 yrs from closing date or 2 yrs after securitization. YM thereafter. | | Non-recourse | | Lender Fee: Par | Reserves: Waived
Secondary Financing: Permitted
Key Players: Steve
Bram, David R, Pascale, Jr., Omer Ben-Zur |
|
|
| | | Hot Money | | Floating Rate Bridge, Construction and Permanent Loans with Tight Spreads! Nationwide lender providing floating rate financing for value-add and stabilized transactions. Will fund non-performing properties (below 1.0 DCR) and reward performance hurdles; i.e. spread is lowered as property is stabilized. Very competitive spreads. Most property types, including multifamily, condo construction, senior and student housing. | | HIGHLIGHTS | | Transaction Size: $25M+ | | Rate: LIBOR based | | Loan Term: Bridge: 1-3 yrs; Construction: 3 yrs + two 1 yr extension options; Perm: up to 12 yrs | | Amort: Up to 5 yrs Interest Only; up to 30 yrs amort. | | Max LTV: 75% | | Max LTC: 80% | | Min DCR: 1.15 at stabilization | | Recourse Negotiable | | Fees: Average 1% | | Geography: Nationwide, Canada |
|
| | | Interest Rate/CMBS Update | The bond market has been rallying on concerns over the residential “subprime” lending market. The concerns are causing a sell-off in equities. The 10 Year T is at 4.50%. Fixed rate spreads have stabilized. All lenders are quoting. The all-in coupons for borrowers are very attractive based upon the low treasury and spreads - only 5 bps above their recent lows. Floating Rates: As fixed rates drop, LIBOR is stubbornly remaining in the 5.32% range, where it has sat for over a year. Prime remains at 8.25%. All eyes on the Fed next week as the open market committee meets March 20 and 21. Will they cut rates based upon the recent economic uncertainty? The consensus is split between a cut and “no change.” Stay tuned… David R. Pascale, Jr. | | | Networking Event of the Year! | GSP is honored to co-sponsor the Annual A-T Luncheon with City of Hope this year. The event will take place on April 17, 2007 at the Hyatt Regency Century Plaza.
The Ataxia-Telangiectasia Medical Research Foundation (A-TMRF) was founded in 1984 by Pam and George Smith. Their daughter Becca died from this disorder in 2005. A-T is a rare degenerative and life-shortening genetic disorder. The A-T Medical Research Foundation is a private, non-profit organization whose sole purpose is to fund medical research and find a cure for A-T.
In addition to being a fundraiser for an important cause, the Annual A-T Luncheon has also become the “real estate networking event of the year” in Southern California. With over 1,000 real estate professionals attending and an inspirational program, the event draws attendance from near and far.
If you haven’t already purchased a table for the Luncheon, we encourage you to do so. There is a link in the following ad. We would also like to thank those who have already bought tables for the luncheon. They include:
|
Platinum Sponsor:
American Value Partners
|
Tables of 10:
Arden Realty Limited Partnership
Business Partners, LLC
CB Richard Ellis
City National Bank
Curtis-Rosenthal, Inc.
Cushman & Wakefield, Inc.
EJM Development Company
Gibson, Dunn & Crutcher LLP
Greenberg Glusker
Greenberg Traurig LLP
ING Clarion
Merrill Lynch Mortgage Lending
Pircher, Nichols & Meeks
Playa Capital Company, LLC
Prudential Mortgage Capital Co.
Shamrock Holdings of California
Washington Mutual Home Loan Center
Watt Commercial Properties
Lois Rosen
Haskell & Davis CPA
|
|
Gold Sponsors:
Athena Parking, Inc.
Brown, Winfield & Canzoneri Inc.
Center West
Chicago Title Company
Cox, Castle & Nicholson LLP
First American Title Insurance Company
Fremont Investment & Loan
Goodwin Procter LLP
Loeb & Loeb LLP
Lowe Enterprises, Inc.
Marcus & Millichap
RaboBank
SCI Real Estate Investments
Pam Smith
ValleyCrest Companies
|
| | | | | | Speakers Corner | GSP Principal/Senior Director Gary M. Tenzer will be participating in the Real Estate 2007 conference on March 27, 2007 at the Los Angeles Convention Center. Gary will moderate the finance panel discussion entitled Today's Capital Markets and Finance Environment: How to Maintain Leverage & Returns through Creative Debt and Equity Structures. Panelists include:
· Jason Choulochas, Regional Director, Wrightwood Capital
· Warren deHaan, Managing Director, Countrywide Commercial Real Estate Finance, Inc.
· Barbara Dugas-Patterson, Senior Vice President & Regional Director, Citibank
· Farrell Ender, Vice President, RAIT Financial Trust
· William Hughes, Managing Director, Marcus & Millichap Capital Corporation
· Tony Jaffee, Managing Director, IXIS Real Estate Capital Inc.
· Lesley Love, Vice President, Regional Manager, Fremont Investment & Loan
· Leslie Lundin, Senior Vice President - National Director of Originations, Inland Mortgage Capital Corporation
| | | GSP Welcomes our Newest Staff Member | Wayne Choi, CFA: Mr. Choi joined George Smith Partners in 2007. Since graduating from the University of Southern California in 1993 he has held positions in real estate groups at money center banks. Most recently, he served as Senior Vice President at US Bank’s Los Angeles real estate office. | | | Join Us As We Reach New Heights | George Smith Partners is in the midst of a record-setting period of growth. As we continue to reach new heights, we are selectively seeking several seasoned and successful financial professionals to join our team. Please direct confidential inquires to Todd August, Chief Operating Officer, at (310) 557-8336, Ext. 125.
|
|
|
©2007 George Smith Partners, Inc. FINfacts is an ePublication of
George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
|
|
|
|
|
|
|
|
