GSPartners
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Volume XVIII | No. 12 | March 24, 2010
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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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2.61%
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5 Yr Swaps
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2.79%
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12-MAT
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0.44%
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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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3.83%
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10 Yr Swaps
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3.76%
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11th Dist COFI
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1.83%
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6 Month LIBOR
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0.44%
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30 Yr US Treasury
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4.72%
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| | | Transaction Description: | | Owner User Refinance GSP arranged Cash Out Financing for Single Tenant Owner User Medical Office Building in Culver City. The client wanted to take the cash out to purchase a surgery center and have more flexible prepayment structure.
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Challenge: Client had an existing yield maintenance prepayment penalty and the purpose of the cash out for to acquire an unidentified property. Lenders are reluctant to extend a large amount of cash out unless they can underwrite the cash flows on a post close basis. The borrower was very well qualified so the main challenge was timing the payoff demand with the new rate lock. As time passed it became increasingly difficult to keep the file active and approved due to massive fluctuations of treasuries at the beginning of the year. |
Solution: GSP created a program to correlate the estimated prepayment penalty with the current all in rate with the subject lender for 6 months to ensure that there was benefit to the borrower to transact. Borrower elected to proceed once previously established differential was achieved. |
| | Rate: 5.60% | | Term: 5 years | | Amort: 25 years | | LTV: 70% | | DCR: 1.01 coverage on trailing income | | Prepayment: Step down | | Recourse | | Lender Fee: 0.5% |
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| | | Hot Money | Attn Apartment Owners! High leverage, non-recourse, money with a step-down prepayment penalty is back. The competitive advantages to this new multi-family program include: 1.15 DCR on Cash Out Refis or Acquisitions, Ability to Lock Rate at Application, Non-recourse, and 75% LTV. Hot Buttons: This lender is very sensitive to recent (6 month trailing) rent decline, location, condition of building, and actual expenses. On the borrower's side they are focused on minimum thresholds for borrower's net worth, liquidity, experience, and outside income. GSP has been interfacing with this lender to assure that loans are structured and packaged correctly in accordance to these new guidelines. We have a longstanding relationship with senior decision makers. So to all who own multifamily buildings, your time has come, rates are low. Loan Size: $500,000 and up. Pricing: Current ARM rates in the low 4% range for Libor based floaters, 30 year terms; 5 year fixed rates in Mid 5% range, no lender fee, loan is a 30/30 with a reset after 5 years; Small premium in rate for loans under $1,000,000. Also, 7 and 10 year fixed rate loans priced within 25 bps of Fannie and Freddie with no PML requirement for most properties. Primary markets preferred. | | | Hot Money | Capital provider with over $3.0 billion to purchase/originate debt on all major real estate product types throughout North America. Structures include senior debt, mezzanine debt, preferred equity and note purchase financing. Minimum size investment is $40 million which could be on a single asset or on a portfolio of assets. Preferable term is 3 to 5 years but could do more and pricing is 8% to 15%+ with LTV’s capping in the 75% to 80% range. Not a buyer of distressed “loan to own” debt but capable of providing the note purchase financing for others employing this strategy. | | | Hot Money | Nationwide Bank Program Funding Well Priced Bridge Loans With construction lending still very slow, banks are using their balance sheets to fund cash flowing bridge loans or flexible mini perms. This bank is large enough to lend based on LIBOR, will look the 4 basic product types and some (very limited) hospitality. Ideal customer is a repeat borrower, but lender is not pushing lending program to attract deposits. Leverage is moderate, 65%, but pricing can start at 5.5% interest only. Transaction sizes range fromn $15,000,000 to $50,000,000 with no co-lender syndication required. Partial recourse required; Rate: LIBOR + 3.50-5.00%, 2% floor on LIBOR; Loan Term: 3-4 years; Amort: Int only; Max LTV: 60-65%; Min DCR: 1.0; Property Types: Apartments, retail, industrial, office, some hotel; Prepayment: Open after short lockout period; Fees: 1% (negotiable) 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. | | | Join Us on LinkedIn | George Smith Partners is now on LinkedIn.....Click here to join the George Smith Partners group to get access to current conversations and topics. | | | Pascale's Perspective | First off, it is not a typo in the rate section above.....the 10 year swap spread is actually negative, ie. the swap rate is less than the corresponding treasury for the first time ever. This is due to massive government and corporate debt issuance and the complex hedging surrounding the supply. There is also concern about sovereign debt, Portugal's rating was downgraded and the US held a record auction of treasuries....Yields spiked, the 10 year T is 3.83%. A question on negative swaps: how does this affect CMBS pricing?....more on that next week...David R. Pascale, Jr. | | | Press Box | David Rifkind was quoted in the Las Vegas Review Journal discussing foreclosures and loan workout strategies. Click here to read the story. |
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©2010 George Smith Partners, Inc. DRE # 00822654 FINfacts is an ePublication of
George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
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