GSPartners
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Volume XVII | No. 34 | November 4, 2009
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KEY RATE INDICES
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Prime Rate
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3.50%
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1 Month LIBOR
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0.24%
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5 Yr US Treasury
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2.38%
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5 Yr Swaps
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2.72%
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12-MAT
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0.54%
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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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3.51%
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10 Yr Swaps
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3.64%
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11th Dist COFI
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1.272%
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6 Month LIBOR
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0.56%
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30 Yr US Treasury
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4.37%
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| | | Transaction Description: | | $100,000,000+ Permanent Loan George Smith Partners closed more than $100 million of permanent senior debt for an institutional client collateralized by a portfolio of institutional assets. The deal was funded by a single life company. GSP established “market” deal terms among a carefully selected and pre-qualified group of lenders. The borrower chose a portfolio lender with competitive rates and proceeds, and high certainty of execution. The loan is non-recourse with a prevailing market fixed-rate of interest and a 10 year term.
Some lenders were precluded from lending by nuances in asset attributes, tenant credit, and lease rollover. However GSP satisfied objections by carefully defining and mitigating risk issues, then competitively pricing the mitigation provisions in the market.
The lender locked rate at application and provided a commitment less than 30 days after the borrower executed the application. The deal closed on the terms stipulated in the application.
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| | | | New Financing Source Tied to Immigration Providing "Cheap Equity" for Development Projects in LA This program was started by congress in 1990 to allow high net worth foreign individuals to invest in the US and thereby qualify for citizenship. Segregated by industry and geography. “Pilot” program allows for a regional center to pool these investors. Equity wants only 5-8% yield, so is priced like debt.
Program Highlights:
LA County only; Census tracts with 150% of national average unemployment rate
Construction is best; Hotels, manufacturing, retail, medical office/hospital, and ALF/SNF;
This zone specifically targets medical and ALF/SNF;
Multifamily projects are not eligible (does not create jobs);
Project must create at least 10 long-term jobs, either directly or indirectly;
Can fund projects with 100% equity, or levered | | Transaction Size: $1,000,000-$30,000,000 | | Geography: LA County |
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| | | Hot Money | 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; Recourse; Geography: Southern California and Arizona | | | 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 | | | 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 | Fed announcement today indicated that rates will remain at rock bottom levels "for an extended period" if necessary. However, bond investors focussed on the part of the statement that said economic conditions are improving and the 10 year T yield jumped 7 bps to 3.54%. Unemployment reports indicated the pace of layoffs is slowing. The economy is expected to shed jobs through the end of the year with the unemployment rate peaking above 10%. Hiring will resume in 2010, but the "new normal" is expected to be a slow recovery. Employement is key to commercial real estate fundamentals. Note that "full employment" (defined as 5% unemployment) not anticipated until 2013 or 2014....Stay tuned....David R. Pascale Jr. | | | 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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