GSPartners
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Volume XVII | No. 33 | October 21, 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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0.25%
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5 Yr US Treasury
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2.98%
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5 Yr Swaps
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2.65%
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12-MAT
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0.632%
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3 Month LIBOR
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0.28%
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10 Yr US Treasury
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3.38%
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10 Yr Swaps
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3.51%
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11th Dist COFI
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1.412%
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6 Month LIBOR
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0.60%
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30 Yr US Treasury
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4.20%
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| | | Transaction Description: | | $1,750,000 Loan for Apple Valley Retail Center GSP arranged financing for a 7,700 s.f., newly built, multi tenant outparcel pad. Property is 100% occupied and sits on 1.49 acres. The property is fully stabilized and located in Apple Valley, CA. Tenant base consisted of food oriented tenants and the overall credit of the tenant base was minimal. Loan has 15 year term (3 years fixed and then floating at 6 month LIBOR + 3.125%) |
Challenge: Apple Valley is located in the desert, east of Victorville and Hesperia, with a very small population within a 5 mile radius.
There was also a time crunch as the existing loan was coming due. A majority of the lenders that were presented the deal were constrained by product type, timing, location. There was also a lack of operating history (opened in 2008) and high vacancy rate in that market.
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Solution: GSP contacted every lender who had financed a commercial real estate transaction in that vicinity within the past 18 months. From this list, GSP was able to negotiate a deliverable loan within the timeframes of the maturity. Once a lender was selected, GSP was able to negotiate a 15 year term and a step down prepay in order to provide the borrower with as much flexibility as possible in the future.
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| | Rate: 7.75% | | Term: 15 years (3 years fixed, then reset) | | Amort: 30 | | LTV: 65% | | DCR: 1.35 | | Prepayment: 3-2-1 | | Recourse | | Lender Fee: 0.75% | Marc Shillinger |
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| | | | Bank funding Apartment Construction Loans. Transactions must "make land sense", meaning that the land cost cannot be at mid-2000's condo land prices. A good benchmark is $20,000 per unit or below. Based upon solid "real world" pro forma income projections, lender will fund up to 75% of cost. Pricing is LIBOR based with a 6.00% floor on the all-in rate. | | Transaction Size: $3,000,000-$10,000,000 | | Rate: 6.00% floor | | Loan Term: 2-3 years | | Amort: Interest Only | | Recourse | | Geography: Southern California and Arizona |
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| | | Hot Money | New Bank Program Funding Nationwide Loans for "Tier 1" Investors This lender will consider Perms and some Construction. This bank has a clean balance sheet, no legacy issues. Focus is on good borrowers in primary and secondary markets. Lender will consider "some" non-recourse, but most loans will be recourse. Lender underwrites to a 10.5% debt yield, which is fairly aggressive in today's environment. Will consider single tenant with long lease term. Transaction Size: Up to $7,000,000; Rate: 6.5%; Loan Term: 3-5 years; Amort: 25 years Max LTV: 60-65% Max LTC: 50% Min DCR: 10.5% debt yield. Property Types: Office, Industrial, some Retail; Fees: 1.0% Geography: Nationwide | | | Hot Money | Equity Fund Offering Unique Program for Properties in Need of Capital This program is targeted at properties in this "example" situation: An owner of a multi-tenant property has an opportunity to sign a new major tenant which will add value to the property. The owner needs capital to fund tenant improvements, leasing commissions, etc. The existing lender either will not or cannot fund the new capital required. The equity fund will enter into a joint venture with the owner and fund the needed capital. The fund's return is calculated based upon "before and after" valuations. This is ideal for borrowers who can't obtain bridge financing to pay off existing debt and fund improvements, but have an opportunity to increase value. | | | 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 | Spotlight on Government Programs: Top officials at the Treasury and Fed are discussing "exit strategy" for the massive array of government aid programs targeted at the financial and credit markets. They don't want to "take the training wheels off" too early or too quickly, but sooner or later the economy needs to find its own footing. Some of the major elements of TARP will be shut down by year end: (1) Capital Purchase Program that pumped funds into the money center banks; (2) Capital Assistance Program (never tapped); (3) Targed Assistance Program that put capital into the most troubled large banks. In light of improved bank earnings and investor confidence, the powers that be have determined these programs are no longer necessary. Also, the Federal Reserve of New York is formulating the process of "reverse repurchase" agreements. In a reverse repo, the Fed loans securities for a set period, temporarily decreasing the amount of money available in the banking system. At maturity, the securities are returned to the Fed, and the cash to the dealers. This allows the Fed to begin to extract the huge amount of cash injected into the system. Also, note that a consensus is emerging as to when the Fed will start to raise rates again: August 2010.....Stay tuned... David R. Pascale, Jr. | | | Speakers Corner | David Rifkind, GSP Principal, spoke at the Multifamily Executive Apartments 2009 Conference at the Bellagio Hotel in Las Vegas last Tuesday. Mr. Rifkind was on the Workout and Restructure Panel. He talked about strategies for working out securitized debt, how to position your asset for workout and the current mindset of the special servicers. |
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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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