GSPartners
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Volume XVII | No. 17 | July 1, 2009
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KEY RATE INDICES
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Prime Rate
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3.25%
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1 Month LIBOR
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0.31%
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5 Yr US Treasury
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2.54%
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5 Yr Swaps
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2.90%
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12-MAT
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1.21%
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3 Month LIBOR
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0.60%
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10 Yr US Treasury
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3.56%
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10 Yr Swaps
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3.7%
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11th Dist COFI
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1.38%
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6 Month LIBOR
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1.09%
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30 Yr US Treasury
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4.35%
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| | | Interim Bridge Lender Providing Attractive Rates for California Assets. GSP has identified a private investor providing competitive interim financing for a variety of California asset classes including: land, vacant lots, residential, commercial (four major asset classes) and mixed use. The lender is able to approve and close loans in a very tight time frame and is currently quoting rates as low a 9.00%. Cash-out refinances are available and the credit quality of the borrower is of lesser importance. The lender can also contemplate providing secondary financing behind senior debt. | | Rate: Starting at 9.00% | | Loan Term: 1 to 3 years | | Amort: Interest Only | | Recourse | | Property Types: Land, Commercial, Residential and Mixed Use | | Prepayment: None | | Fees: 1% to 3% | | Geography: California |
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| | | Hot Money 06/24/2009 - Foreign Bank Providing Competitive Financing for Stabilized Income Producing Properties - Including Hospitality. GSP has identified a foreign bank currently lending on all major income producing asset classes in California. The bank is actively looking to lend on stabilized properties in larger metropolitan areas of California (i.e. populations centers). The lender is typically seeking a deposit relationship with the borrower and currently pricing their loans to float over prime (with a 6.00% floor and 7.00% ceiling). Currently the banks parameters are as follows: deal sizes of $2 - $20 million; 5 year term amortized over 25 years; 60% max LTV and subject to a 1.35 DCR. The bank will also finance stabilized flagged hospitality properties at the same pricing subject to a 1.50 DCR ratio. | | | Hot Money 06/17/2009 - Local Non-Bank Direct Lender Currently Financing Small Balance Retail, Office, Industrial and Selective Special-Use Properties. GSP has identified a local (California) non-bank direct lender and correspondent actively making loans on a wide variety of asset classes. The lender is willing to look at office and retail assets that have been tougher to get financed recently. Pricing is determined on a deal-by-deal basis, but competitive for the strip malls and small office properties. Currently the lender is offering up to 25 year terms priced from 5.75% - 8.50% varying by deal and asset class. The lender also has an active owner-user program, providing 90% leverage for deals that fit their parameters. | | | If you have an inquiry regarding George Smith Partners' commercial real estate financing, asset sales or advisory services please contact your GSP representative or Todd August, Chief Operating Officer, at (310) 867-2995 or taugust@gspartners.com. | | | | Transaction Description: | | $4,210,000 Permanent Financing for a Condo turned Multi-Family Complex in Valley Village, CA. This asset included 19 for-sale condo units in a solid Los Angeles sub-market. GSP successfully negotiated a discount with the construction lender, extended the loan with a mini-perm, and secured new debt once apartment stabilization was complete. |
Challenge: (1) The asset was a premiere loan in a troubled bank’s portfolio. The lender was actively entertaining offers to sell the note to groups who intended to take over and foreclose the original Borrower. (2) Once the mini-perm was achieved, GSP worked to find a lender who was willing to provide perm debt. However, the ownership structure included a foreign based Principal with 80% ownership in the Borrowing entity. (3) The property was achieving above market rents in a time when appraisers have become increasingly conservative while underwriting rents. |
Solution: (1) GSP successfully negotiated with the bank to take a discount on the note for surety of close. The borrower paid down the now discounted note and received a six month extension with a mini-perm. The deal was consummated five days before the construction lender was taken over by the FDIC. (2) GSP helped to re-structure the partnership to protect the foreign based partner and give comfort to potential lenders. (3) GSP located a lender that was comfortable with a former condominium project with above market rents, as well as a domestic borrowing entity with 80% ownership held by a foreigner. The lender provided a 10 year fixed rate, non-recourse loan. |
| | Rate: 5.87% | | Term: 10 years | | Amort: 30 | | DCR: 1.25 | | Prepayment: Yield Maintenance | | Non-recourse | | Lender Fee: 0.75% | | Key Players: Jonathan Lee, Steve Bram |
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| | | Pascale's Perspective | by David R. Pascale, Jr.
LIBOR rates remain very low along with Prime rate. Treasuries have backed off their highs with the 10 year at 3.53% after hitting 4.00% last month. The Fed’s two day meeting last week ended with well received policy statements: (1) Rates: No pressure to raise rates anytime soon. They don’t see inflation or deflation as near term threats to the economy; (2) Quantitative easing: Fed to continue to buy longer term treasuries. They changed the schedule from five purchases every two weeks to four purchases every two weeks. This will allow the $300 billion allocation to last until late September; (3) Emergency lending programs: The Fed trimmed some of the liquidity programs instituted in the wake of the Bear Stearns and Lehman Brothers collapses last year. Most of these programs concern providing day to day liquidity in the overall system which are less necessary as money market pressures have eased off their crisis levels. Note that the Fed and Treasury still have the toxic asset issues to deal with and are now concentrating on TALF and PPIP programs… Stay tuned… | | | In the Press | Steve Bram, GSP Principal and Senior Director, was recently interviewed by Multi-Housing News regarding the current state of the multi-family finance market. The interview, published on June 26th, is also featured on Commercial Prperty News' website. To read the full interview please click on the following link: Multi-Housing News: Q&A with Steve Bram | | | Come Grow With Us |
George Smith Partners is expanding its team of top-notch mortgage brokers/originators. 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 Todd August, Chief Operating Officer, at (310) 867-2995.
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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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