GSPartners
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Volume XV | No. 21 | June 13, 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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5.16%
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5 Yr Swaps
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5.68%
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12-MAT
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5.02%
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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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5.23%
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10 Yr Swaps
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5.85%
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11th Dist COFI
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4.22%
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6 Month LIBOR
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5.40%
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30 Yr US Treasury
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5.32%
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| | | Transaction Description: | $85,000,000 Fixed-Rate, Non-recourse Acquisition Financing for a 896 Unit Apartment Complex in Las Vegas, NV. The complex was built in 1986 and was 83% occupied when we went into application.
Property Specs: The subject property covers three parcels located in The Lakes Master Planned Community and is made up of two self-sustaining complexes operated as one large apartment building. The two separate, identical properties (448 units each) cover 39.68 acres (a net rentable area of 784,480 sq. ft.) and are divided by a public street. The common area amenities include five pools, three Jacuzzis, two playgrounds, built-in BBQ’s, picnic areas and a fitness center. The property contains approximately 834 covered and 470 open parking spaces.
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Challenge:
1. The 2006 cash flow supported a loan amount of $65,737,157.
2. In place cash flow underwrote to a 0.89 DCR.
3. Borrowing entity was comprised of 25 TICs.
4. In place occupancy at time of application was approximately 83%.
5. Borrower requested an additional $8,500,000 for property rehabilitation.
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Solution: Got lender comfortable with:
1. The new management company and their experience with rehabbing, re-tenanting and operating multi-family dwellings. GSP also provided evidence that the previous management company allowed a “less than desirable” tenant base to build up and thus the new management company had to evict and re-tenant approximately 150 units resulting in a loss of occupancy and income.
2. The significant rehab and re-tenanting that the sponsors and management company have planned which will result in substantial rental increases.
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| | Rate: 7 Yr T + 1.21 | | Term: 7 yrs | | Amort: Interest Only | | LTV: 80% | | LTC: 74% | | DCR: 0.89 | | Prepayment: 2 yr lock-out, then defeasance, 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: | $11,877,000 (85% LTC) Financing for 132,630 Sq. Ft. Retail Center in Sacramento, CA. GSP arranged $11,877,000 of senior permanent financing (85% LTC) for the acquisition of a five building, 132,630 sq. ft. Kmart and Big Lots anchored retail center in Sacramento, California. The property is currently 100% leased to 16 tenants, including 72.6% leased to a single tenant through January 2012.
Unique Characteristics: 72% leased to a BB+ credit tenant, with 23% of space sublet. |
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| | | | Attention Apartment Owners! Adjustable rate program featuring six month teaser rate of 4.07% with no negative amortization. Starting pay and accrual rate is 4.074% which is 2.50% below the fully indexed rate of 6.574% (current 11th District COFI - 4.224% + 2.35%). Semi-annual interest rate adjustments capped at 1%. No negative amortization. Processing fee is 10 basis points with a minimum of $750. Can offer Interest Only for three years with no price-up to the margin. | | Transaction Size: $1-20M | | Rate: 11th District COFI + 2.35% | | Loan Term: 30 yrs | | Amort: 30 yrs | | Max LTV: 75% | | Min DCR: 1.15 | | Recourse Negotiable | | Property Types: Apartments only (5+ units) | | Prepayment: 2-1-1 | | Fees: Par | |
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| | | Interest Rate/CMBS Update | The 10 Year Treasury is at 5.22%. Why? (1) All the anticipated Fed cuts that were “priced in” when the T was in the 4.50% range are gone as the US economy stays strong despite residential mortgage woes; (2) International economic activity and the related commodity crunch has led to worldwide inflation fears. Example: New Zealand’s central bank raised rates last week; (3) Hawkish comments from US Federal Reserve Governors; (4) Bond Guru Bill Gross (Pimco) says “bull market is over” and other traders have joined the exodus; (5) Sub-prime hedging strategies are unwinding, causing a bond sell off.
| | | 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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