GSPartners
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Volume XVI | No. 19 | July 2, 2008
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KEY RATE INDICES
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Prime Rate
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5.00%
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1 Month LIBOR
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2.46%
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5 Yr US Treasury
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3.29%
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5 Yr Swaps
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4.25%
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12-MAT
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3.29%
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3 Month LIBOR
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2.79%
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10 Yr US Treasury
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3.97%
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10 Yr Swaps
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4.68%
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11th Dist COFI
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2.92%
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6 Month LIBOR
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3.12%
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30 Yr US Treasury
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4.51%
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| | | Transaction Description: | | $3,900,000, 65% LTC Construction Loan, Small Lot Sub-Division, Eagle Rock CA. GSP secured financing for the ground up construction of a 15 lot sub-division on a 1.5 acre in-fill site, one of the first projects approved as such in the City of Los Angeles. Because of the current housing market, lenders were anxious committing to a loan for for-sale housing. GSP created a market for the loan by emphasizing the project's strengths as a small lot subdivision. These included the fact each lot has its own APN, the units are on separate poured pads to avoid designation as condos, and that the project will have no HOA. With lenders still reluctant to commit, GSP located a lender that agreed to mitigate their risk with a multi-phase development. Phase I will include all site improvements as well as the construction of eight units. Upon the sale of five units, the bank will release committed funds for the remaining seven units. The Borrower is an experienced in-fill developer who sought a local bank to establish a long term relationship. |
| | Rate: Prime + 1% | | Term: 18 mos, plus one 6 mo extension | | LTC: 65% | | Recourse | | Lender Fee: 1.5% |
Key Players: Jonathan Lee
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| | | | $1 Billion Fund Seeking Distressed Opportunities in In-Fill Locations Nationwide. The fund seeks experienced developers to joint venture on distressed opportunities. Depending on the new acquisition basis, the fund will lend up to 100% of cost at a rate of Prime + 1.00%. Upon completion of build-out, the fund looks for returns north of 20% over the hold period, and a 50/50 split thereafter. They are actively bidding transactions on behalf of current borrowers who are re-negotiating with their banks. |
| | | Reflections on the State of Residential Development: Equity, Loan Negotiations and Outlook | by Jonathan Lee, GSP Vice President
The Pacific Coast Builders Conference (PCBC) in San Francisco, CA concluded last week with somber fortitude. Attendees signed up in markedly lower number- a full 50% less when compared to 2007. While participation waned, the premiere West Coast event for residential developers lived up to its solid billing and reputation by providing poignant economic data, candid industry insight from the highest levels, and forecasts on a go-forward basis. This FINfacts is dedicated to the public insight shared at the event and the information garnered from GSP’s participation in the Meet the Money forum.
Of particular note we want to cover the following:
1. “Where is all that equity I heard about that was looking for distressed land? And where will it be at the end of the year?”
2. “How much further will this market drop, and what can I do about it?”
| | | Interest Rate/CMBS Update | The 10 Year T dipped below 4.00% last week as weakness in the overall economy triggered a sell off in the stock markets and credit market concerns sent fixed income buyers to the safe haven of Treasuries. The bond market is unsure of when the Fed will start raising rates to attempt to mitigate inflation. The Fed has one eye on inflation and the other on weak economic growth forecasts. The 10 Year closed at 4.00% exactly on Tuesday, July 1. Credit markets: The credit crisis peaked on March 17 with the Bear Stearns sale to JP Morgan and saw some “daylight” during April and May. However, June has brought renewed credit concerns as financial institutions and analysts predict more write-downs and pain in the second half of 2008. Stay tuned… (David R. Pascale, Jr.)
| | | Speakers Corner |
July 9, 2008, Wednesday 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
Seating is limited
* * *
7/31/08, Thursday 7:00 am - 5:00 pm
Panel Topic: State of the Market - Roundtable forum discussing trends and emerging valuation issues impacting Real Estate Markets.
Participants Include:
· Greg Harris, The Harris Group/Marcus & Millichap
· Jim Myers, Cushman Wakefield
· David Zoraster, CB Richard Ellis
· John Ellis, Integra Realty Resources
· Christian Lawrence, George Smith Partners
· Michael Warner, George Elkins Company
Cerritos Sheraton Hotel
12725 Center Court Drive
Cerritos, CA 90703
| | | 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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