GSPartners
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Volume XV | No. 36 | September 27, 2007
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KEY RATE INDICES
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Prime Rate
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7.75%
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1 Month LIBOR
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5.13%
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5 Yr US Treasury
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4.24%
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5 Yr Swaps
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4.87%
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12-MAT
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4.93%
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3 Month LIBOR
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5.23%
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10 Yr US Treasury
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4.59%
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10 Yr Swaps
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5.22%
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11th Dist COFI
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4.28%
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6 Month LIBOR
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5.14%
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30 Yr US Treasury
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4.85%
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| | | Transaction Description: | | $5,130,000 Cash-Out Refinance for a Three-Tenant Industrial Building in Downtown Los Angeles. GSP arranged $5,130,000 of permanent financing with $2,600,000 of cash out to the borrower. The borrower occupies nearly two-thirds of the 64,500 sq. ft. building. GSP negotiated a cap on tenant improvement/leasing commission reserves, a waiver of insurance reserves, and no management contract. |
Challenge:
1) All three tenants are non-investment grade with weak financials.
2) Borrower had locked rate prior to the August change in market conditions. |
Solution:
1) GSP focused the lender's attention on the strength of the market and stable track record of the borrower.
2) Due to market turmoil post rate-lock, the borrower faced two margin calls imposed by the lender. GSP negotiated favorable terms on the first, and had the second waived altogether. |
| | Rate: 10 Yr Swaps + .89% | | Term: 10 yrs | | Amort: 30 yrs | | LTV: 60% | | DCR: 1.20 | | Prepayment: Free for 60 Days | | Non-recourse | | Lender Fee: Par |
Key Players: Farzin Emrani, Anna Saucier
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| | | | Floating Rate Lender Offering Bridge, Mezzanine, Financing, and Secured Lines of Credit. Can do fixed rate financing through interest rate swaps. Bridge loans for any real estate product type, including hotels, medical, storage and landfill and with limited entitlement risk. Flat, efficient decision process means more certainty of execution. Preferred transaction size: Senior $10-100M; Mezz $5-50M, but can go higher on both. | | Transaction Size: Senior $10-200M; Mezz $5-75M | | Rate: Senior L+200-350; Mezz 12-18% | | Max LTV: 80% | | Max LTC: 90% | | Recourse Negotiable | | Property Types: All but SFR and condos | | Prepayment: Open with 1% exit in first 18 mos | | Fees: 0.75 – 1% | | Geography: Western States, East Coast, Chicago |
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| | | Interest Rate/CMBS Update | One week after the Fed's surprising 1/2 point rate cut, the market reaction is a reminder that the Fed has control of short term rates, not long term. Prime Rate and LIBOR fell, and 5, 10 and 30 Year Treasuries rose. Why? The long bond market interpreted the Fed cut as inflationary (as one pundit put it: "More dollars chasing the same amount of commodities such as oil"). So there was a selling of Treasuries based on a weaker dollar. CMBS: Good news: AAA spreads firmed up and tightened slightly. Bad News: BBB spreads (and the surrounding tranches) widened, so all-in pricing stayed in the T + 200 range. Stay tuned... (David R. Pascale, Jr.)
| | | Speakers Corner | Gary E. Mozer, GSP Principal/Managing Director, will be speaker/moderator for the CRCGreen Council at the ULI Fall Meeting in Las Vegas, NV on October 24, 2007. The session title is “Capital Markets – Debt Market in Disarray!”
| | | Join Us As We Reach New Heights | George Smith Partners is in the midst of a record-setting period of growth. Aswe 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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