GSPartners
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Volume XV | No. 18 | May 23, 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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4.77%
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5 Yr Swaps
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5.26%
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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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4.84%
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10 Yr Swaps
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5.40%
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11th Dist COFI
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4.30%
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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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4.99%
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| | | Transaction Description: | $37,090,000 (95% LTC) Financing for 141,310 Sq. Ft. Grocery Anchored Retail Center in Folsom (Sacramento), California. GSP arranged $33,190,000 of senior permanent financing (85% LTC) and $3,900,000 of mezzanine financing (95% LTC) for the acquisition of a 141,310 sq. ft. grocery-anchored retail center in Folsom (Sacramento), California. The 1980’s built property is currently 97.5% leased, including 42.5% leased to a single tenant through December 2017.
Unique Characteristics: The same lender is providing five year permanent debt financing at 95% of total costs. |
| | Rate: Senior: 5 Yr T + 1.40%; Mezz: 10% cumulative pref return + 35% pari passu profit participation | | Term: 5 yrs | | Amort: Interest Only | | LTC: Senior: 85%; Mezz: 95% | | DCR: 1.20 actual | | Non-recourse | | Lender Fee: Senior: Par; Mezz: 1% |
Key Players: Gary E. Mozer, Steven Orchard, Joshua Roseman
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| | | Transaction Description: | | $7,300,000 Permanent Financing for a Mixed Use Property in Downtown Los Angeles. GSP arranged permanent financing for a property consisting of 58 artist live-work units in four buildings and a 20,200 sq. ft. storage facility. The property is located south of the I-10 and east of the 110 freeway by the city of Vernon. |
Challenge: The buildings are very old, built from 1908 to 1954, and include little if any amenities. The property was originally used as industrial/warehouse space and is located in a primarily industrial neighborhood. |
Solution: GSP was able to present the request as an apartment, even though the tenants operate their businesses from the property. With the property’s 100% historical occupancy and below market rents, GSP found a lender who aggressively priced and underwrote this property. |
| | Rate: 5.49% (10 Yr T + 0.95%) | | Term: 10 yrs | | Amort: Interest Only | | LTV: 78% | | DCR: 1.05 (30-Yr Am) | | Non-recourse | | Lender Fee: Par |
Key Players: Steve Bram, Omer Ben-Zur
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| | | Transaction Description: | | $3,400,000 Bridge Loan for a 30,000 Sq. Ft. Office Building in Santa Ana, California. GSP arranged bridge financing for the acquisition and reposition of a 30,000 sq. ft., Class “B” office building in Santa Ana, CA. The 1960’s built, three-story property has five spaces, two of which are vacant. |
Challenge: Mismanagement of the property produced significantly above-market vacancy. |
Solution: The sponsor will reposition the asset by leasing up the building at market rents. GSP structured the financing with an up-front leasing and tenant improvement reserve. |
| | Rate: Prime + .50% | | Term: 36 mos | | Amort: Interest Only | | LTC: 80% | | Recourse | | Lender Fee: 1% |
Key Players: Shlomi Ronen, Anna Saucier
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| | | | California Lender Offering Five Year Hybrid Loan with COFI Reset. For loans $1,000,000 and above, the spread over the 5-year Treasury is 1.55% (rounded up to nearest 0.125%) with 3 year prepayment charge (2-2-1). After fixed rate period, interest rate is COFI plus 2.35% margin with monthly interest rate adjustments and annual payment adjustments. If the LTV is 50% or less, the margin can be as low as 2.15%. With strong sponsorship, the margin can be 2.15% if the LTV is 60% or less. The loan can be interest only during the fixed rate period at no additional cost. It can be interest only for years 6-10 by adding 0.20% to the adjustable margin. The loan must be interest only for years 1-5 for the interest only option for years 6-10 to be available. 10.50% lifetime cap and the floor equals the margin. | | Transaction Size: $1M + | | Rate: 5 Yr T + 1.55% (rounded up to nearest 0.125%) | | Loan Term: 30 yrs (Fixed for 5 yrs; Floating for 25 yrs) | | Amort: Interest Only | | Max LTV: 75% | | Min DCR: 1.20 | | Recourse Negotiable | | Property Types: Apartments only (5+ units) | | Fees: Par | | Geography: California |
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| | | Interest Rate/CMBS Update | The 10 Year Treasury hit 4.80% this week for the first time since early February 2007. The $3 billion investment in a private equity fund by China’s central bank concerns the bond market for good reason. China is the second largest purchaser of US Treasuries (next to the Bank of Japan). CMBS: Credit standards continue to tighten. Lots of supply still unsold as some originators have received “no bids” on pools. Rating agencies are re-rating some existing pools, leaving existing bond holders with lower rated bonds and affecting liquidity in the re-sale market. Stay tuned… (David R. Pascale, Jr.) | | | Speakers Corner | Steve Bram, GSP Principal/Senior Director, will be guest speaker at a Real Estate Finance class for the Urban Land Institute’s Developer Training Program on June 9, 2007. The course, titled The Advanced Development Process: Commercial, presents a detailed look at commercial development and redevelopment, with an emphasis on office buildings. Participants will learn about successful projects that found a niche in the market, and the process their developers went through from conception to completion.
The class is June 8-11, 8:15am – 6:00 pm.
Faculty:
Mark S. Hassinger
President, WestDulles Properties
Louis H. Masotti
President, Louis H. Masotti, Ltd.
| | | 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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