FINfacts Newsletter XVI-6

Volume XVI  |  No. 6  |  February 14, 2008   Letter to the Editor   Print PDF KEY RATE INDICES Prime Rate  6.0% 1 Month LIBOR  3.12% 5 Yr US Treasury  2.75% 5 Yr Swaps  3.62% 12-MAT  4.33% 3 Month LIBOR  3.06% 10 Yr US Treasury  3.77% 10 Yr Swaps  4.48% 11th Dist COFI  4.07% 6 Month LIBOR  2.96% 30 Yr US Treasury  4.59%     Transactions of the Week Transaction Description: $6,500,000 Permanent Financing for Multi-Tenant Office Building in West Los Angeles, CA. GSP has arranged a 68% LTV loan for the acquisition of a fully-stabilized, 24,110 sq. ft. office building in West LA with potential upside in rents. Borrower originally locked the rate at application at 6.15%. Just prior to closing, based on falling treasuries and the borrower’s willingness to set up a banking relationship with the lender, GSP was able to negotiate a rate reduction to 6.00%. The property was built in 1988 and is comprised of 18 suites, averaging 1,300 sq. ft., in a 3-story Mediterranean courtyard building. Tenant mix is comprised of mostly therapists on short term leases. Rate: 6.0% Term: 10 yr fixed Amort: 30 yrs LTV: 68% DCR: 1.20 Prepayment: 1% for the first 4 yrs; open thereafter Recourse Lender Fee: 0.75% Lender Closing Costs: sub $10,000 60-day rate lock at application Key Players:  Andrew Levant, Nick Bridges Hot Money HIGHLIGHTS Portfolio Lender Staying the Course. Because of historic conservative underwriting, some lenders have not been adversely affected by the recent market volatility While their programs may not seem like “hot money” (it’s really just "business as usual"), the fact that they are actively quoting and closing transactions makes them important players in today’s market. Here is typical underwriting for one such lender. Transaction Size: $30M + Rate: 10 Yr T + 2.10-2.50 (30/360) Loan Term: 7-30 yrs Amort: 10-30 yrs, limited I/O Max LTV: 75% Min DCR: 1.28 on 10/30 Non-recourse Property Types: Most Prepayment: YM, flexible Fees: Par Geography: Nationwide Interest Rate/CMBS Update Treasury yields have risen over the past few days as some positive economic news (including Warren Buffet offering to “reinsure” muni bonds, higher than expected Retail Sales figures) caused some selling out the safe haven of Treasuries. The 10 Year is at 3.65% as of Wednesday early morning. LIBOR remains in the 3.00% range. Credit Spreads: Extreme “record setting” volatility in the CMBS market as hedge funds short the CMBX index, more mortgage related write downs by large institutions, etc. In the words of one Investment Bank senior originator, “no one is doing deals, some are quoting, but no one is closing.” Break evens are T + 4.50%; quotes are in the 4.75% range! Life companies are sticking to tight underwriting standards (conservative leverage) and quoting in the T + 2.30-2.60% range. Fixed rate loans by Banks are pricing approximately Swaps + 2.10-2.40%, ie approximately T + 2.70%. Stay tuned… (David R. Pascale, Jr.) GSP Welcomes Shahin Yazdi Mr. Yazdi has joined George Smith Partners after several years of commercial banking experience. Currently, he is active in a number of professional organizations, including ICSC as well as various charities. His diligence and commitment to his work helped him become one the youngest independent brokers in George Smith Partners’ history. Mr. Yazdi holds a Bachelor of Arts Degree from the University of California, Santa Barbara. 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.