FINfacts Newsletter XVI-17

Volume XVI  |  No. 17  |  June 11, 2008   Letter to the Editor   Print PDF KEY RATE INDICES Prime Rate  5.00% 1 Month LIBOR  2.48% 5 Yr US Treasury  3.46% 5 Yr Swaps  4.41% 12-MAT  3.29% 3 Month LIBOR  2.79% 10 Yr US Treasury  4.05% 10 Yr Swaps  4.78% 11th Dist COFI  3.11% 6 Month LIBOR  3.37% 30 Yr US Treasury  4.66%     Transaction of the Week Transaction Description: $4,410,000 (60% LTV, Non-Recourse) for the Refinance of a Flex-Industrial Complex in Oceanside, CA. GSP secured financing for a very experienced property owner/developer for the refinance of a 93% occupied flex-industrial complex totaling 70,399 sq. ft. in Oceanside, CA. Challenge: A perceived softening of the industrial market in Oceanside by many debt providers made it difficult to give lenders comfort, in spite of the high quality of sponsorship. Additionally, an appraisal which valued the property well below the lender’s underwritten value cut into loan proceeds. Solution: GSP identified a lender with an extremely competitive quote and gave the lender comfort with the market by working with the borrower to provide thorough market comparables. Additionally, GSP analyzed the appraiser’s underwriting and identified flawed assumptions to improve loan proceeds. Rate: 6.10% “All-In” Rate Term: 7 yrs Amort: 5 yrs I/O, followed by 30 yrs LTV: 60% Non-recourse Lender Fee: Par Key Players: Scott Bottles, Joshua Roseman, Kaleb Keller Hot Money HIGHLIGHTS Permanent, Fixed-Rate Loans Secured by Multi-Family Rental Properties, as well as Other Income-Producing Properties.  Property types include multifamily, medical office, retail, industrial, and special purpose properties on a limited basis. Normally recourse, but non-recourse or partial recourse available for the right transactions. Minimum floor interest rates are currently (6/10/08): - - - - - - - - - Multi-family - - - - - - Retail & Industrial 3 yrs - - - - - - 5.750%- - - - - - - - - 6.000% 5 yrs - - - - - - 6.000%- - - - - - - - - 6.250% 7 yrs - - - - - - 6.375%- - - - - - - - - 6.625% 10 yrs - - - - - 6.500%- - - - - - - - - 6.875% Transaction Size: $1-60M Rate: Floor rates starting at 5.625% Loan Term: 3, 5, 7, 10 yrs Amort: up to 30 yrs Max LTV: 70% Min DCR: 1.20 Recourse Negotiable Prepayment: declining with the last 6-12 mos at par Fees: 0-1% Geography: CA, AZ Interest Rate Update Treasury rates continued to rise this week above 4.10% (on the 10 Year) as the Fed Chairman indicated that not only is the Fed done cutting, but an interest rate hike is on the horizon due to continued inflation concerns. The Fed futures market and market consensus is not anticipating a hike until the Fall. The 10 Year T is at 4.12% as of Tuesday morning.   LIBOR: The British Bankers Association is contemplating new procedures to add transparency and “boost confidence in accuracy” as the methodology for calculating the index (based upon a survey) has come under fire during the credit crunch. LIBOR is used to calculate rates on $360 trillion of financial products from company bonds and derivatives to US mortgages. Some suggestions include more surveying of US Banks, basing the rate on actual trades, publishing the rate later in the day or making the survey responses “anonymous.” Interestingly, the index jumped 10 bps on the day the BBA made the announcement. 30 Day LIBOR is still low compared to recent history, 30 Day is at 2.50%. Stay tuned… (David R. Pascale, Jr.) Speakers Corner Coming Up:   June 13, 2008, Friday 9am-10am (PST)   Eric Better, GSP Vice President, will review today’s financing environment in a Sperry Van Ness National Conference Call / Capital Market Update.  Eric will address the questions: “How did we get here?” and “what financing opportunities are available today?”   Please RSVP to your GSP representative   * * *   June 18, 2008   Gary M. Tenzer, GSP Principal/Senior Director, will be a panelist at the JUNE 2008 ECONOMIC OUTLOOK + REAL ESTATE CONFERENCE presented by UCLA Anderson Forecast and The Ziman Center for Real Estate.   Conference Theme: What Will it Take to Get Real Estate Moving Again?   Ackerman Grand Ballroom Wednesday, June 18, 2008  7:00am - 12:00pm   Registration Fee: $350 VIP Table of 6: $1200 (Includes corporate placard) Important: The deadline for pre-registration is 11:59pm, June 15, 2008. Registration fees thereafter will be $395 for Individual registrations and $1200 for Tables of Six. This event will sell out so register early!   Real Estate Panel In what ways is this Credit/Housing Recession different from previous downturns What will it take to loosen the mortgage market credit crunch? Will it take more than an accelerating economy to reverse the tsunami of foreclosures and turn the housing market around? Will intervention from Washington help or hurt? What is the impact of the credit crunch on commercial valuations? What are the early warning signs that the bottom of this capital markets cycle is near? - Charlotte Chamberlain, Special Consultant, National Economic Research Associates (moderator) - David Doupe, International Director, Jones Lang LaSalle Americas, Inc. - Robert H. Osbrink, Executive Vice President and Chairman, Transaction Services, Grubb & Ellis - Renata Simril, Senior Vice President, Forest City Development - Gary M. Tenzer, Principal and Senior Director, George Smith Partners   * * *   June 26, 2008, Thursday  11:30am – 1:00pm   Eric Better, GSP Vice President, will present a capital market update at a Bi-monthly Investor Forum Luncheon Presented by Sperry Van Ness / Corridor Investment Group.    The Luncheon will also include an update on "The State of the San Fernando and Conejo Valley Commercial Markets"   Sperry Van Ness/CIG 21800 Oxnard Street, Suite 320 (Third Floor Conference Room) Woodland Hills, CA   Please RSVP to your GSP representative    Seating is limited   * * * * * * Catch 'Em Next Time:   Steve Bram, GSP Principal/Senior Director, has shared his expertise in two classroom settings this month. On June 4, he taught a class for UCLA Extension Advanced Real Estate Program entitled financing the Deal, from soup to nuts. He spoke to 55 students about “Financing the Deal” from beginning acquisition, the equity portion and/or debt for any particular development deal, the construction process, and then takeout.   On June 7 Mr. Bram taught a class for the Urban Land Institute Real Estate School entitled Advanced Commercial Development Process. He spoke about how to get financing from a developers perspective and how to maximize existing banking relationships.   David Rifkind, GSP Principal/Managing Director, is presenting a Private Briefing Series. His program is designed to inform at a high level and address the State of the US Commercial Real Estate Capital Markets as seen from an industry insider. His presentation is geared toward industry professionals whose practice is in Commercial Real Estate, Law, Accounting or Government. His program is qualified for MCLE credits. For more information, please contact your GSP representative.  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 your GSP representative. ©2008 George Smith Partners, Inc. FINfacts is an ePublication of George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.