GSPartners
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Volume XVI | No. 7 | February 21, 2008
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KEY RATE INDICES
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Prime Rate
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6.0%
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1 Month LIBOR
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3.12%
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5 Yr US Treasury
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2.85%
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5 Yr Swaps
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3.75%
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12-MAT
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4.33%
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3 Month LIBOR
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3.08%
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10 Yr US Treasury
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3.78%
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10 Yr Swaps
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4.48%
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11th Dist COFI
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4.07%
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6 Month LIBOR
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3.02%
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30 Yr US Treasury
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4.53%
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| | | Transaction Description: | | $22,500,000 (77% LTC, Non-Recourse) Bridge Loan for the Acquisition and Reposition of a 197-Unit Apartment Complex in San Bernardino, CA. GSP secured bridge financing for the acquisition and reposition of a 197-unit apartment complex totaling 164,770 net rentable sq. ft. in San Bernardino, CA. The lender funded below a breakeven debt coverage ratio with an interest reserve to cover the cash flow shortfall. |
Challenge: The borrower put this property under contract as the market was turning in mid 2007. Debt and equity financing became increasingly conservative and lenders were taking a “wait and see” approach on the Inland Empire. Lenders were also concerned about the future strength of the multi-family market as new single-family homes were hitting the rental market. The Sponsor was seeking debt and equity in order to maintain liquidity to continue growing their multi-family portfolio. |
Solution: With the Sponsor’s track record of successfully repositioning large apartment projects in the Inland Empire, GSP secured bridge debt up to 77% of the total project cost as well as a joint venture equity partner providing 90% of the equity requirement. |
| | Rate: LIBOR + 3.05% | | Term: 36 mos | | LTC: 77% | | Prepayment: Open after mo 12 | | Non-recourse | | Lender Fee: 1% |
Key Players: Steve Bram, Allison Higgins
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| | | | National Lender Providing Non-Recourse Financing for Transitional Loan Opportunities. Quick decision process and short closing timeframe. Balance sheet program. No minimum debt service requirements. Some construction elements allowed. Most Institutional Real Estate, especially office, retail, hotel, multifamily and mixed use. Primary markets and strong sponsorship are necessary. | | Transaction Size: $20M+ | | Rate: 30 Day LIBOR + 3%-3.5% | | Loan Term: 24 mos + up to 3 - 1yr extensions | | Max LTC: 80% | | Non-recourse | | Prepayment: open after 1 yr lockout | | Fees: 1.5% in, 0.5% out (waived if lender provides perm) | | Geography: Nationwide, Major Metropolitan Areas only |
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| | | Interest Rate Update | Recent Fed rate cutting is affecting the short and long Bond yields in different ways, resulting in a steepening yield curve. Yields are low on the short end, the 6 month to 2 year Treasuries rally on the Fed’s actions. However, 5, 10 and 30 year Bonds yields are up on inflation concerns. The market is reacting to $100 per barrel oil prices and this week’s consumer price index rising faster than expected. Today’s Fed release predicted slower growth and inflation, i.e. the dreaded “stagflation” of the 1970’s. Credit Spreads: All-in coupon quotes from portfolio lenders moved above 6.00% for 10 year transactions as spreads widened and the index rose. Sub 6.00% is available for 5 year transactions. CMBS is still on life support, very little activity. Stay tuned… (David R. Pascale, Jr.)
| | | In the Press | | | | 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.
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©2008 George Smith Partners, Inc. FINfacts is an ePublication of
George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
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