GSPartners
|
|
|
|
Volume XV | No. 1 | January 10, 2008
|
|
|
|
|
|
|
|
|
|
KEY RATE INDICES
|
|
Prime Rate
|
7.25%
|
1 Month LIBOR
|
4.37%
|
5 Yr US Treasury
|
3.14%
|
5 Yr Swaps
|
3.89%
|
|
12-MAT
|
4.52%
|
3 Month LIBOR
|
4.44%
|
10 Yr US Treasury
|
3.83%
|
10 Yr Swaps
|
4.47%
|
|
11th Dist COFI
|
4.17%
|
6 Month LIBOR
|
4.26%
|
30 Yr US Treasury
|
4.34%
|
|
|
|
| | An “Interesting” Year in Real Estate Finance |
All things considered, it was a good year.
Everything was going great… until July, when the turmoil in the subprime market made its way into commercial mortgages, LIBOR shot up, spreads rose, and suddenly getting loans placed required new strategies and finding the “needle in the haystack” lender. By August, CMBS lenders were, for the most part, out of the market and banks and insurance companies became the primary capital sources they had once been. (See articles in previous editions of FINfacts for a complete summary and analysis of the market meltdown – links below) But despite the challenges of a real estate market in crisis, George Smith Partners was able to continue placing loans and providing the same top-notch service to our clients that we have built our reputation on. In fact, our expertise became critical to investors and developers who needed guidance through the rocky waters. Here’s how our loan placements shook out:
Lender Types: While CMBS remained our largest lender category in 2007, most of those loans (82% of them) were placed in the first half of the year and represented 41% of our total loan placement in the first half of the year. In the second half of the year, commercial banks replaced CMBS as our primary capital source. Credit companies, private funds and life companies remained strong sources throughout the year.
Financing Types: Almost half of the loans GSP placed in 2007 were permanent financing – refinancing, acquisitions and take outs. Bridge and Construction loans were the next largest categories.
Property Types: Multifamily and retail properties were the most popular this year, followed by office and land. We actually saw an increase in industrial and residential transactions in 2007.
Our financing volume and the respect that we have achieved throughout the lending industry allows us to access the most senior decision makers at lending institutions, and many of these relationships have been strengthened during these difficult times in commercial real estate finance. Our lender database, weekly all-staff meetings, and daily communication about capital sources and strategies for finding the right financing continue to make George Smith Partners a leader in finding the smartest money for developers and real estate investors.
While the jury is still out about how the market will trend in 2008, we look forward to facing whatever challenges it offers and guiding our valued clients to the best possible financing available. We also look forward to providing our FINfacts readers with important market and rate information.
We thank you for trusting us with your financing needs. Here’s to a happy and prosperous 2008!
|
GSP 2007 PRODUCTION TOTALS
|
|
LENDER TYPE
|
|
|
PROPERTY CATEGORY
|
|
|
FINANCING TYPE
|
|
|
CMBS
|
36.00%
|
|
Apartment
|
30.50%
|
|
Perm
|
46.50%
|
|
Bank
|
28.00%
|
|
Retail
|
29.50%
|
|
Bridge
|
29.00%
|
|
Credit Co
|
19.00%
|
|
Office
|
11.00%
|
|
Construction
|
21.00%
|
|
Private
|
5.00%
|
|
Land
|
8.90%
|
|
Equity
|
1.80%
|
|
Life Co
|
5.00%
|
|
Industrial
|
6.00%
|
|
Mezz
|
0.70%
|
|
Mort REIT
|
3.00%
|
|
Condo
|
5.50%
|
|
int rate swap
|
0.50%
|
|
Opp Fund
|
3.00%
|
|
Mixed Use
|
5.70%
|
|
Forward
|
0.30%
|
|
FNMA
|
0.50%
|
|
Hotel
|
2.00%
|
|
Line of Credit
|
0.80%
|
|
int rate swap
|
0.50%
|
|
SFR
|
1.60%
|
|
|
|
|
|
|
|
int rate swap
|
0.50%
|
|
|
|
|
|
|
|
Restaurant
|
0.30%
|
|
|
|
|
|
|
|
Gas Station
|
0.10%
|
FINfacts issues reporting on the credit crisis:
"Uncertainty" 8/16/07
When Will it be Safe to go Back in the Water? 8/30/07
Conference Call Tackles a Deeper Understanding of the Debt Crisis 9/19/07
Market Trends 10/11/07
When is it Safe to go Back in the Water? Part II 10/25/07
| | | | Transaction Description: | | $9,770,000 (56% LTV) permanent financing of an office building in Irvine, CA. GSP secured permanent financing for a single-tenant, 47,088 square foot office building located in Irvine, CA. |
Challenge: The property is 100% leased to a credit tenant with significant subprime mortgage exposure on a lease which expires in 2010. In addition, the softening of the local office market created by the mortgage meltdown increased the rollover risk at lease expiration. |
Solution: GSP identified a bank willing to provide a non-recourse loan based on a combination of strong sponsorship and loan structure to provide protection in the case the tenant vacates. The lender was also able to maintain the rate in spite of market turmoil affecting both the tenant specifically and the credit markets in general. |
| |
|
| | | National Program to Originate and Service Small Balance Commercial Loans. Straightforward documents, low costs. Close loans in 45 days or less. Servicing retained by lender for life of the loan. On commercial properties, no estoppel/SNDA certificates are required on tenants representing less than 75% of rental income. No tenant financial statements required. Lender does not underwrite to TI/LC’s. No personal tax returns required. Free up front rate lock. Only 90 day rent/occupancy seasoning required prior to funding. No cash out limitation. $3,000 for third party reports, processing, underwriting, legal, loan documents, and the cost of a 60-day interest rate lock.
Property Types: Office, Industrial, Retail, Multifamily, Mixed Use, Self Storage, Manufactured Housing | | Transaction Size: $1-5M | | Rate: Corresponding T + 2.00% and above | | Loan Term: Fixed 3,5,7.10 yrs | | Amort: 30 yrs | | Max LTV: 80% for Multifamily; 75% for Comm | | Min DCR: 1.20 based on 30 yr amort | | Prepayment: YM | | Geography: Nationwide | Full Recourse, with exceptions for sub 60% LTV transactions |
|
| | | Interest Rate/CMBS Update | 10 Year T at 3.82% on bearish economic news as the “R word” is invoked on a daily basis. The market is definitely pricing in multiple rate cuts by the Fed. One major investment bank predicts the Fed Funds rate (4.25% today) will be at 2.50% by third quarter 2008. Next Fed meeting is January 29 and 30. CMBS: No big pools have securitized yet this year. Originators are “cautiously optimistic” with some quoting in the low to mid 200’s for new transactions. Stay tuned… (David R. Pascale, Jr.) | | | Speakers Corner | 1/24/08 Steve Bram, GSP Principal/Senior Director will participate in a panel discussion at the Central City Association’s Annual Luncheon on January 24, 2008. The theme will be “The Southern California Housing Market - How will Downtown Los Angeles Fare Compared to the Region in 2008?” Over 200 people are expected to attend.
Moderator:
Michael Gottlieb, Editor, California Real Estate Journal
Panel:
James Atkins, Principal, Williams & Dame
Deborah Beveridge, Senior Vice President, East West Bank
Steve Bram, Principal/Senior Director, George Smith Partners
Mark Tarczynski, Senior Vice President, Urban Redevelopment Group, CB Richard Ellis
Date: Thursday, January 24, 2008
Time: 11:30am -1:45pm
Place: Downtown Los Angeles Marriott - 333 S Figueroa St. | | | 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.
|
|
|
|
|
©2008 George Smith Partners, Inc. FINfacts is an ePublication of
George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
|
|
|
|
|
|
|
|
