GSPartners
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Volume XVI | No. 12 | April 9, 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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2.73%
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5 Yr US Treasury
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2.57%
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5 Yr Swaps
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3.38%
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12-MAT
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3.79%
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3 Month LIBOR
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2.72%
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10 Yr US Treasury
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3.45%
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10 Yr Swaps
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4.11%
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11th Dist COFI
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3.56%
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6 Month LIBOR
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2.70%
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30 Yr US Treasury
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4.30%
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| | | Transaction Description: | | $18,828,000 (62% LTC, Non-Recourse) Bridge Loan for the Reposition of a Vacant Office Building in Los Angeles, CA. GSP secured bridge financing for an experienced developer for the renovation of a 116,000 sq. ft. office building in Los Angeles, CA. |
Challenge: The sponsor acquired the property with the intention of converting to residential condominiums, vacating all tenants in the process. With the softening of the condominium market, the borrower was forced to shift their business plan and decided to renovate and re-tenant as an office building. The result was an aged office building with virtually no cash-flow in place. Additionally, a BOMA survey of the property significantly decreased rentable square footage and hurt the borrower’s projected NOI. |
Solution: GSP identified a lender who was comfortable with the quality of the sponsor and with their new business plan for the property. GSP worked to give the lender additional comfort with the strength of the office submarket, in spite of the declining economy. In light of the BOMA survey, GSP worked closely with the lender to see the deal through to close. |
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| | | Interest Rate Update | During the past week, Treasuries have traded in the 3.50-3.65% range. Yields move 3.60% as money flows into equities on good economic news. Yields then drop back down on troubling economic news and mentions of the “R word” among government officials and pundits. 30 Day LIBOR is 2.72%, it may drop more this month depending on the Fed. Credit Spreads: CMBS break even pricing for a 10 year transaction is approximately Swaps + 3.50% (or T + 4.20%). Pipelines are very dry among originators. Life companies are flooring 10 year coupons anywhere from 6.00-7.00%, the wide spreads on AAA CMBS and the high volume of submissions has affected their yield requirements. Stay tuned… (David R. Pascale, Jr.)
| | | 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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©2009 George Smith Partners, Inc. FINfacts is an ePublication of
George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
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