GSPartners
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Volume XVI | No. 10 | March 27, 2008
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KEY RATE INDICES
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Prime Rate
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5.25%
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1 Month LIBOR
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2.68%
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5 Yr US Treasury
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2.52%
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5 Yr Swaps
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3.41%
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12-MAT
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4.08%
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3 Month LIBOR
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2.67%
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10 Yr US Treasury
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3.49%
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10 Yr Swaps
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4.16%
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11th Dist COFI
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3.97%
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6 Month LIBOR
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2.63%
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30 Yr US Treasury
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4.35%
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| | | Transaction Description: | $50,000,000 Senior Secured Re-Discount Credit Facility for a Hard Money Lender. GSP arranged a $50,000,000 senior secured revolving credit facility for a hard money real estate lender located on the East Coast. The hard money lender created a new fund capitalized at $17,000,000 which was leveraged with the $50,000,000 credit facility, giving the lender a total capital pool of $67,000,000 to expand their loan activities. The credit line includes a provision for the credit provider to increase its line to a total of $100,000,000 through internal funds and/or syndication. The term of the credit facility is three years.
The hard money lender is very experienced, with excellent contacts in the New York financial community, and plans to grow substantially over the next several years making loans to what they consider to be the high end of hard money borrowers. They charge somewhat lower fees than many of their competitors, so access to reasonably priced capital is key to the execution of their business plan. This hard money lender makes bridge loans on commercial income producing real estate properties in the $1,000,000 to $5,000,000 range, located throughout the United States, where, for some reason, the project cannot be financed by a traditional bank or other conduit source.
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| | Rate: 1 Mo Libor +300 | | Term: 3 yrs | | Amort: I/O | | Prepayment: 2%-1%-0 | |
Recourse: Borrowing entity only
Lender Fee: 1%
Unused Line Fee: 0.25%
Key Players: Nathan Auslander, Gary M. Tenzer
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| | | Interest Rate/CMBS Update | The 10 Year Treasury has remained around 3.50% this week. The short end of the curve has seen unprecedented rallies with 3 and 6 month securities yielding less than 1%, the lowest yields since 1954. A combination of weak economic reports (the “R word” comes up regularly) and uncertainty across the credit spectrum is driving capital to the “safe haven” of Treasuries.
LIBOR rates follow, now well under 3.00%. Credit Spreads: CMBS staged a rally last week as yields on the bonds have reached unprecedented highs. BBB bonds traded for 25%! Buyers can double their money in 5 years even with defaults well above historics. So, time will tell if this is the “pent up demand” rally or another false start. Here we are at the end of the first quarter and some portfolio lenders are nearing their annual allocation. All-in coupons for full loans are 6.00-7.50%. Note that single tenant non-credit transaction spreads have “blown out” with coupons in the 7.25-8.00% range. Agency (Fannie and Freddie) spreads tightened on improved liquidity (thanks to some Fed manipulation and the “return of the implied guaranty”). Stay tuned… (David R. Pascale, Jr.)
| | | In The Press | | | | Come Grow With Us | George Smith Partners is expanding its 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 provides its 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 Stella Debibi, Director of Business Development and Recruitment, at (310) 557-8336, Ext. 103. |
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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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