GSPartners
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Volume XV | No. 25 | July 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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4.91%
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5 Yr Swaps
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5.49%
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12-MAT
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5.01%
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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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5.02%
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10 Yr Swaps
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5.68%
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11th Dist COFI
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4.29%
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6 Month LIBOR
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5.39%
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30 Yr US Treasury
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5.11%
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| | | Transaction Description: | | $22,100,000 Cash-out Permanent Financing for a 126-unit Apartment Building in Studio City, CA. GSP arranged permanent financing for a well-maintained, 99% occupied apartment building in Sherman Oaks. The Borrower developed the property in the early 1990s and has managed it since. Capitalizing on the favorable conditions of the marketplace, GSP secured the loan in early 2007 with a free 5-month forward commitment, allowing the borrower to prepay the existing loan at par upon funding in June 2007. |
| | Rate: 5.58% (10 Yr T + 0.85%) | | Term: 10 yrs | | Amort: Interest Only | | LTV: 79% | | DCR: 1.13 | | Prepayment: YM | | Non-recourse | | Lender Fee: Par | Reserves: Waived
Key Players: Steve Bram, Omer Ben-Zur
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| | | Transaction Description: | | $4,800,000 Bridge Loan for the Acquisition of a 98 Unit Senior Housing Complex in Mesa, AZ. |
Challenge: (1.) Cash flows were insufficient to service the debt.
(2.) The property had been operated seasonally, without a history of year round occupancy.
(3.) The Borrower wanted to maximize leverage. |
Solution: (1.) GSP demonstrated that the property was only operated seasonally and that rents were significantly below market. By obtaining a bridge loan with a one year interest reserve, the Borrower will be afforded sufficient time to stabilize the property before obtaining a permanent loan.
(2.) By focusing on the stabilized value of the property rather than the cost, GSP was able to show the lender that this loan had a low LTV, even at an 85% LTC.
(3.) Because the Borrower had a strong net worth, GSP brought the Borrower to a relationship bank that wanted to win this transaction in order to establish a new banking customer. Accordingly, GSP was able to generate an offer from the bank which was at significantly better terms than other lenders who were less relationship driven.
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| | Rate: LIBOR + 1.75 | | Term: 12 mos + two 6 mo extensions | | Amort: Interest Only | | LTC: 85% | | Recourse | | Lender Fee: 0.75% |
Key Players: Gary M. Tenzer, Bryan Berkett
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| | | Nationwide Fund offering High Leverage Mezzanine Debt and Equity for Acquisition, Development, Repositioning and/or Re-capitalization of Assets. Up to 95% of total capitalization for mezzanine debt and up to 99% for equity.
Primary Property Types: Moderately Priced Residential (for-sale and for-rent) and Workforce Housing and Mixed Use Residential and Developments
Secondary Property Types: Retail, Office, Industrial, Hotel and Land Development
| | Transaction Size: $2-20M | | Loan Term: 2-5 yrs | | Max LTC: Mezz: 95%, Equity: 99% | | Non-recourse | | Geography: Nationwide, especially areas with high population and job growth. | Targeted First Mortgage Debt: 70-85%
Leveraged IRR Target: 19% + |
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| | | Interest Rate/CMBS Update | Treasuries: The 10 Year T is at 5.08% today. Yesterday and Last Week: Treasuries benefited from a recent “flight to quality” as credit spreads widened on corporate, residential and commercial mortgage bonds. Today: The market is now indicating that the consternation over the sub-prime problems may be “overblown”, as strong corporate earnings and a record setting Dow dominate the market news. Merrill Lynch’s positive earnings report garnered attention as they are heavily invested in residential mortgage bonds. CMBS: Commercial spreads widened last week as the rating agencies downgraded several residential bonds causing some buyers to shun all types of commercial bonds. The downgrade combined with the usual summer “sidelines” stance of some major CMBS buyers caused the “break even” to widen to T + 115-120 for a typical full leverage 10 year transaction. However, some originators are predicting market “normalcy” by the end of the year, after the market finishes clearing much of the backlog of loosely underwritten loan pools. Stay tuned… (David R. Pascale, Jr.) | | | In the Press | David Rifkind, GSP Principal/Managing Director, was quoted in a CNN article about the Cushman & Wakefield acquisition of Sonnenblick-Goldman. To read the article, click here. | | | 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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