GSPartners
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Volume XVII | No. 24 | August 19, 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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0.27%
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5 Yr US Treasury
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2.42%
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5 Yr Swaps
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2.84%
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12-MAT
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0.90%
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3 Month LIBOR
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0.42%
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10 Yr US Treasury
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3.48%
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10 Yr Swaps
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3.71%
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11th Dist COFI
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1.60%
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6 Month LIBOR
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0.81%
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30 Yr US Treasury
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4.32%
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| | | Transaction Description: | | $9,250,000 Refinance of Un-flagged Boutique Hotel in Los Angeles. GSP arranged the financing for a 98 room, five-story boutique hotel (with pool, recreation deck, and leased restaurant) located a few blocks from a major shopping district in Los Angeles. The in-place loan was coming due and the existing lender was unable to extend their loan. In addition, the borrower needed additional loan proceeds to renovate the hotel's bathrooms. |
Challenge: 1). During the current recession, room occupancy had fallen. 2). The leased restaurant was just renovated and sales had decreased dramatically. 3). With no comparable hotel sales in the area, the appraiser had a difficult time supporting the asset's value. |
Solution: 1). The lender was comfortable that the hotel could maintain sufficient occupancy to support the loan because of the excellent management team in place and the specific niche served by the hotel. 2). GSP got the lender comfortable that the restaurant lessee would be able to continue paying their rent. 3). GSP collected relevant comparables for the appraiser to support the asset's value. |
| | Rate: 7.25% | | Term: 5 years | | Amort: 30 years | | LTV: 65% | | DCR: 1.35 | | Prepayment: Open - no prepayment penalty | | Recourse | | Key Players: Steve Bram |
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| | | | Competitive Non-Recourse, Fixed-Rate Loan Program for Large Deals Nationwide. National lender is currently offering a competitive fixed-rate loan program for fully-stabilized, income-producing properties located in major metropolitan areas in the United States. The program is currently focused on anchored retail shopping centers, warehouse/distribution buildings, multi-family apartments and hotels (on a very selective basis), and provides borrowers with a good, non-recourse alternative to life company money. The lender is currently calibrating leverage by underwriting an asset's NOI to a 12% debt yield, with a maximum LTV ratio not to exceed 65%. | | Transaction Size: $25M minimum | | Rate: Approximately 8.5% | | Loan Term: 5 years fixed | | Amort: 30 years | | Max LTV: 65% | | Non-recourse | | Property Types: All major asset classes | | Prepayment: Open after 24 months (defeasance) | | Fees: 1.00% | | Geography: Major MSAs |
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| | | Pool of Private Money to Restructure Existing Loans. George Smith Partners has amassed a pool of private money to help our clients restructure existing loans on commercial and multi family properties nationwide. The emerging scenario is a borrower in default (or potential default) on a loan and the lender either offers the loan for sale or offers a discounted payoff directly to the borrower. Our private sources are willing to finance up to 90% of the discounted loan amount (requiring new sponsor equity of approximately 10%). The new loan will pay off the existing lender at the agreed upon discount with a new 1st mortgage on the property. Transaction Size: $3M - $100M; Rate: Low to mid teens; Loan Term: Up to 5 years; Property Types: All major asset classes; Geography: Nationwide; Non-recourse. | | | Southern California Bank Still Lending Aggressively on Multi-Family Properties. A local bank (correspondent relationship with GSP) is lending aggressively on multi-family properties in Southern California. Of particular interest is the bank's flexible underwriting, making the program appealing for multi-family properties and borrowers that do not fit the agency "box". The bank will also permit the borrower to rate lock 60 days for a 1.00% fee and will contemplate non-recourse financing. Transaction Size: $1M - $7M; Rate: 5.9% - 6.4%; Loan Term: 30 years; Amortization: 30 years; Max LTV: 75%; Min DCR: 1.25; Geography: California; Non-recourse. | | | 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. | | | Pascale's Perspective | by David R. Pascale, Jr.
Floating Rates: Prime is at rock bottom and will remain there at least until the end of the year as the Fed is expected to keep the discount rate steady at virtually zero. Next year? Rates will rise if the Fed sees inflation and/or robust economic growth. Right now, neither scenario is very likely as all signs point to an “anemic” recovery.
Fixed Rates: Treasuries are benefitting from the feeling that equity gains “overshot” reality as the July economic and sales data is tepid. The 10 year Treasury is at 3.43%, approaching its recent low of 3.30%. | | | Fed Extends TALF | On Monday, the Federal Reserve announced the extension of the Term Asset-Backed Securities Loan Facility (TALF) by three to six months. The TALF program, with a capacity of as much as $1 trillion, has been extended from its original expiration date of December 31, 2009 to June 30, 2010 for newly issued CMBS, and to March 31, 2010, for other asset-backed securities and CMBS sold before January 1 (a.k.a legacy assets). This move was lauded by the commercial real estate industry which insisted the extension was necessary; stating that the program needs more time to get going (citing the lag time of three to four months to package loans into mortgage-backed securities). Although the extension provides the commercial real estate industry with some breathing room, the program's ultimate success in the CMBS market is unknown - as no new deals have been sold in the entire first half of 2009. Although not expressed explicitly, the Federal Reserve left the door open for further extensions, stating that they would continue to monitor financial conditions and consider whether “unusual and exigent circumstances” warrant a further extension.
Currently, GSP is working with several investment banks on TALF related transactions. Stay tuned for more updates... (Sean Lurry). | | | 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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