FINfacts Newsletter XV-42

Volume XV  |  No. 42  |  November 15, 2007   Letter to the Editor   Print PDF KEY RATE INDICES Prime Rate  7.50% 1 Month LIBOR  4.66% 5 Yr US Treasury  3.77% 5 Yr Swaps  4.57% 12-MAT  4.79% 3 Month LIBOR  4.88% 10 Yr US Treasury  4.23% 10 Yr Swaps  4.96% 11th Dist COFI  4.38% 6 Month LIBOR  4.78% 30 Yr US Treasury  4.59%     Transactions of the Week Transaction Description: $20,175,000 Bridge Financing for the Acquisition of a 212 Unit Multifamily Property in Moreno Valley, California. GSP arranged financing for the acquisition of an apartment complex, built in 1989, consisting of 171,120 net rentable sq. ft. on 11.79 acres. The subject property had suffered from low occupancy and deteriorating net operating income during the last 18 months, largely because of the application for a tentative tract map which would allow the subject to be converted to condominiums. Additionally, a major rehabilitation project in 2006 on the main road leading to the site severely restricted access to the subject. The business plan anticipates a 2-3 year hold and the borrower intends to implement an aggressive management program coupled with an extensive renovation plan at a total cost of $1,558,000 with $3,618 being allocated to each unit interior to bring rents up to current market levels. Due to the limited cash flow going in, the lender structured a $500,000 interest reserve and $175,000 debt service reserve. Rate: Greater of 8% or 30 Day LIBOR + 3% Term: 24 mos with one 12 mo extension option Amort: Interest Only LTC: 65% DCR: .65 Non-recourse Lender Fee: 1% Key Players: Steve Bram, Steven Yazdani Transaction Description: $6,700,000 Loan Joint Venture GSP arranged a $6.7 Million joint venture between a Los Angeles based “Hard Money” lender, and an Investment Bank. This venture structure provided a 95% advance rate, significantly higher leverage usually available to hard money lenders which are typically financed by more conservative warehouse lines or other credit facilities at 75% to 80% advance rates. The joint venture financed a $6.7 Million first mortgage to an experienced renovator of high end homes, to acquire and significantly rehabilitate and expand an 8,500 square foot home in Malibu. Rate: 12% Term: 1.5 yrs Amort: Interest Only LTV: 50% (completed value) LTC: 70% Prepayment: 3 mos minimum interest Recourse Lender Fee: 1.5% Key Players: Nathan Auslander, Gary M. Tenzer  Hot Money HIGHLIGHTS Nationwide Portfolio Lender Offering Non-recourse Permanent Financing at Par. Competitive Treasury-based rates, locked at application. Creative structuring including unfunded reserves and amortization tied to rental bumps. Lender also offers non-recourse bridge and mezz financing. Transaction Size: $20-150M Rate: T + 160-190 Loan Term: 10-30 yrs Amort: I/O available Max LTV: 70% Min DCR: 1.25 Non-recourse Property Types: apartments, retail, office, industrial, full service hotels, medical office if near hospital campus Prepayment: Flexible Fees: Par Geography: Nationwide Interest Rate/CMBS Update The bond market rallied last week in a “flight to quality” as equity markets crashed. The 10 Year Treasury reached a low of 4.20%; today it is hovering in the 4.23% range. Investors are split on whether we have seen the worst of the subprime losses or just the tip of the iceberg? Some Good news for floating rate borrowers: After spiking to over 5.80% during a European bank liquidity crunch in September, 30 Day LIBOR has dropped to 4.65%, the lowest since early 2006. LIBOR has benefited from rate cutting and liquidity infusions by the ECB and the US Federal Reserve. CMBS: Another “crash” last week on overall mortgage market concerns demonstrated by the resignation of Citibank’s Chairman and continuing write downs among big financial institutions. After the dust settled, originators (those that are quoting) indicated that full loan 10 year spreads are in the 2.50% range. Stay tuned… (David R. Pascale, Jr.) Join Us As We Reach New Heights At George Smith Partners, we are looking to expand our team of top-notch mortgage brokers – originators and assistants. We offer highly competitive compensation and an excellent environment in which to work, learn and be supported. GSP is committed to providing our employees with cutting edge market information, resources for identifying the best capital sources for each transaction, training opportunities and peer support whenever it is needed.   We invite you to consider a career with George Smith Partners. Please direct confidential inquiries to Todd August, Chief Operating Officer, at (310) 557-8336, Ext. 125. Thanksgiving Break Due to the Thanksgiving Holiday, there will be no FINfacts next week. We wish you and your family a pleasant holiday. ©2007 George Smith Partners, Inc. FINfacts is an ePublication of George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.