GSPartners
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Volume XV | No. 13 | April 18, 2007
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KEY RATE INDICES
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Prime Rate
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8.25%
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1 Month LIBOR
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5.32%
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5 Yr US Treasury
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4.57%
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5 Yr Swaps
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5.02%
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12-MAT
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5.03%
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3 Month LIBOR
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5.36%
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10 Yr US Treasury
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4.66%
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10 Yr Swaps
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5.18%
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11th Dist COFI
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4.38%
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6 Month LIBOR
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5.37%
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30 Yr US Treasury
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4.82%
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| | George Smith Partners A-T Luncheon | We would like to thank everyone who supported the 12th George Smith Partners A-T Luncheon on April 17, 2007. It was a great success, with 1,100 people in attendance and over $400,000 raised for the A-T Medical Research Foundation and City of Hope. This was the first year that GSP and City of Hope teamed up to co-sponsor the event, an appropriate coalition since there is a proven connection between the presence of the mutated A-T gene and cancer. George Smith would have been very proud of how the real estate community stepped up, once again, to support the Foundation to which he had dedicated so much of his passion.
The Smith Family (Pam and their three children – Jim, Jill and Matthew) pointed out that A-T researchers are making great advances toward finding a cure and believe that commencement of clinical trials of potential treatments are now possible within the next three years. Now is the time to support a tremendous push toward the finish line; researchers at UCLA and Tel Aviv University continue to work to understand the disease and find a cure, but financial support is needed.
The keynote speaker, Frank McCourt, Jr., who has owned the Dodgers for three years, talked about philanthropy and the Dodger franchise’s commitment to the community. He described their Core Values, which include:
1. To field a championship caliber team year in and year out. As he said, winning isn’t everything, that is why there are three core values. But still, he wants to set the bar at excellence.
2. To provide Dodger fans the best experience in baseball. He discussed progress being made on the three biggest issues for fans: (1) Condition of the seats: all seats were removed and replaced last year as part of a total structure renovation; (2) Parking: A new system is being implemented. After some initial “bugs”, the new system has worked better during the last two sellouts; (3) Lines at the concession stands: The entire concourse will be renovated after this season with more “sale points” for food and more bathrooms. This will be done by opening day next year. He pointed out that it will take $100 Million to fix all three.
3. To be a model franchise for community involvement. The Dodgers partner with 3,400 non-profits and 1,400 schools, touching over 500,000 people a year. Their involvement focuses on youth sports and recreation, education and literacy, health and healthcare and the environment.
| | | | Transaction Description: | | $17,800,000 Fixed-Rate, Non-Recourse Acquisition Financing for a 468 Unit Apartment Complex in Phoenix, AZ. The property was built in 1986 and was at 94% occupancy when we went into application. |
Challenge: 1. The 2006 cash flow only supported a loan amount of $5,062,394.
2. There were crime issues at the property over the last few years.
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Solution: 1. GSP got the lender comfortable by detailing the significant rehab, re-tenanting, and the mismanagement by the seller throughout 2005-2006 which had crippled the property’s cash flow. GSP provided the lender with evidence that the property was swiftly moving towards meeting the new operating budget, such as weekly occupancy information showing the continuous increase in occupancy. Lender noted that the borrowers are very experienced and would properly manage the property.
2. GSP made the lender comfortable that the crime issues had been resolved. GSP provided the lender with documentation from the Phoenix Police Department showing the decrease in crime and the money and effort the property manager had spent with the Police Department to clean up the property.
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| | Rate: 5 Yr T + 1.10 | | Term: 5 yrs | | Amort: Interest Only | | Prepayment: 3 yr lock-out, then defeasance or yield maintenance (whichever is cheaper at the time of prepayment), then open last 6 mos for prepayment at par. | | Non-recourse | | Lender Fee: Par | |
Key Players: Steve Bram, Bret Victor, David R. Pascale, Jr.
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| | | Transaction Description: | | $8,075,000 Fixed Rate, Non Recourse Permanent Financing for 24,561 Sq. Ft. Shopping Center in San Juan Capistrano, CA. GSP arranged permanent financing for the acquisition of a two story neighborhood shopping center built in 1991. The property is located just east of Interstate 5, off Ortega Highway and Rancho Viejo Road near the Marbella Golf and Country Club and Rancho Madrina development. The successful tenants provide services and merchandise, including Ortega Market and Deli, skin care, sports med, dental, cleaning and storage. There is a moratorium preventing further commercial development in the city, so the location and competitive lock on the east side of the freeway have contributed to the success of this center. The borrower intends to raise rents to market. There are two vacant spaces that the seller has guaranteed to rent (NNN) for one year. Buyer signed a 10-year master lease for these spaces, which will terminate upon new tenants being found. |
| | Rate: 10 Yr T + 1% | | Term: 10 yrs | | Amort: Interest Only | | LTV: 80% | | DCR: 1.15 | | Prepayment: Defeasance | | Non-recourse | | Lender Fee: Par | Other: Subordinate Financing Allowed
Key Players: Andrew Levant, Gilda Rivera |
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| | | Interest Rate/CMBS Update | Treasuries rallied over the last few days on surprisingly tame inflation reports and industrial output coming in below expectations. The market still doesn’t know if the Fed is cutting or raising as the “consensus” has veered back and forth over the past few weeks. What else is new? CMBS continues to stabilize as new supply has been absorbed without any significant widening. However, the rating agencies are discussing increasing subordination levels on the bonds in order to reign in aggressive underwriting, which may result in more conservative loan quotes. Stay tuned… (David R. Pascale, Jr.) | | | Speakers Corner | May 1, 2007
Gary M. Tenzer, GSP Principal/Senior Director, will moderate a panel discussion entitled “New Kids on the Block: An Introduction to New Capital Sources” at the West Coast Structured Finance Conference onTuesday, May 1, 2007. The event is sponsored by the Los Angeles Mortgage Association (LAMA) and will be at the Skirball Cultural Center, Los Angeles, CA. Panelists include:
· Joan Kramer, Managing Director, Marathon Asset Management
· Jay Rollins, President & CEO, JCR Capital
· Douglas Vikser, President, Coress Capital
· John C. Bauer, Senior Director, Tremont Realty Capital
May 17, 2007
Steve Bram, GSP Principal and Senior Director, will participate in a panel discussion on “The Apartment Market in 2007: Can a good thing last forever?” at the 2007 San Fernando Valley Economic Summit. Other panelists include:
· Steve Heimler, President and CEO, Stratus Real Estate
· John Walsh, Vice President/Investments, Marcus & Milichap
· Rick Entin, Principal, Entin Properties (moderating)
The panel will explore current market conditions and the near and long term outlook for the multi-family sector in the Greater San Fernando Valley. Panel experts will discuss topics including investment sales activity, management issues, development and conversion activity, and the related debt and equity markets.
The conference is on Thursday May 17th 7:30 am – 1:30 pm at the Sheraton Universal Hotel. | | | 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 inquiries to Todd August, Chief Operating Officer, at (310) 557-8336, Ext. 125.
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©2007 George Smith Partners, Inc. FINfacts is an ePublication of
George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
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