GSPartners
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Volume XVI | No. 28 | October 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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4.04%
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5 Yr US Treasury
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2.73%
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5 Yr Swaps
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3.91%
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12-MAT
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2.48%
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3 Month LIBOR
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4.21%
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10 Yr US Treasury
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3.67%
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10 Yr Swaps
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4.36%
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11th Dist COFI
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2.69%
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6 Month LIBOR
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3.98%
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30 Yr US Treasury
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4.18%
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| | | Transaction Description: | | $29,300,000 Permanent Loan with $15.7 Million Cash-out in Beverly Hills. GSP secured permanent financing for an 11-story office building in Beverly Hills, built in 1964. |
Challenge:
1. Environmental: A Phase I Assessment reported that USTs had been installed underneath the building in the 1970s, but there was no record of proper closure. Owner knew nothing about such USTs.
2. Zoning: Due to the age of the property, zoning regulations have since changed in Beverly Hills, requiring that buildings are no more than 4 stories tall.
3. Market: It is no secret that the capital markets have tumbled during the past few months, making this a very difficult time to close any large loans, let along one offering half cash-out to the borrower.
4. Defeasance: Due to the borrower’s desire to have commitment on the loan prior to engaging defeasance, the defeasance consultants were not engaged until 5 days prior to the anticipated closing date. Furthermore, a defeasance of this size requires rating agency approval, which usually takes 5-10 business days.
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Solution:
1. Environmental: GSP engaged a vendor relationship to quickly turn around a Phase II. Received verbal clearance of no contamination to the underground soils in 7 days from engagement.
2. Zoning: GSP was able to get the lender comfortable with an endorsement issued by title to cover the legal non-conforming height of the building.
3. Market: GSP maintained a close working relationship with the lender and all team members throughout the process of the loan in order to gain assurance that the deal would close.
4. Defeasance: GSP gained assurance that the defeasance could close in 5 days. Defeasance consultants obtained rating agency approval in 1 day.
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| | Rate: 6.05% fixed for 5 yrs | | Term: 10 yrs | | Amort: 30 yrs | | LTV: 58% | | DCR: 1.25 | | Prepayment: YM | | Lender Fee: Par | Recourse: 25%
No tax, insurance, TI or LC reserves
Lender held to all original terms.
Key Players:
Farzin Emrani, Anna Saucier
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| | | Market Update | As we go to press on Wednesday afternoon: All eyes on the US Congress after Monday’s no vote on the “Bailout” package and the subsequent worldwide market meltdown. Congress was torn between the markets “pre-approval” of the package (remember the huge Dow rally the day it was announced?) and overwhelming disapproval by their constituents. Although the Dow rallied again on hopes that a revised bill is passing, credit markets remain completely frozen despite massive efforts by all the major central banks (including the Fed). Several types of previously “routine” financings are either not available or priced at all time highs. Over $6 billion of municipal bonds went to market last week with virtually no bidding. Short term rates continue to rise with LIBOR over 4.00%. Treasuries remain low on flight to quality, but it is a mixed blessing as credit spreads are blown out. Fed watch: There is talk of another extraordinary “inter-meeting” rate cut in the next week, timed after the package is signed by the President. When will the markets thaw? Will it be when (if?) the package passes? Or when the newly empowered Treasury starts buying assets? Will that be enough? Stay tuned… (David R. Pascale, Jr.)
| | | $200,000,000 in Private Funds Available Now... |
GSP has secured commitments from several of our long time investors and capital partners for immediate First Trust Deed bridge financing available for most property types. The terms are loan specific but we can underwrite very quickly and have a qualified term sheet in a matter of one day. This program is excellent if there is an opportunity to buy distressed assets, pay down an existing loan at a discount or get some proceeds quickly from an low/no leverage asset.
| | | Private Briefing Series |
David Rifkind, GSP Principal/Managing Director, is presenting a Private Briefing Series to Cox, Castle & Nicholson LLP October 7, 2008. 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. If you are interested in having Mr. Rifkind and his team present to your firm, please contact Stella Debibi at 310-557-8336 Ext. 103 or sdebibi@gspartners.com.
| | | 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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