GSPartners
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Volume XVIII | No. 14 | April 8, 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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2.63%
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5 Yr Swaps
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2.86%
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12-MAT
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0.42%
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3 Month LIBOR
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0.29%
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10 Yr US Treasury
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3.89%
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10 Yr Swaps
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3.96%
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11th Dist COFI
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1.61%
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6 Month LIBOR
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0.45%
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30 Yr US Treasury
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4.75%
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| | | Transaction Description: | | $89,722,000 Refinance of Multi-Family Apartment Complex in Los Angeles GSP arranged the financing for a 632 unit apartment complex. The proceeds were used to refinance the maturing loan.
GSP worked extensively with the Lender and Counsel to coordinate the funding of the loan. Due to the successful communication and execution, the borrower obtained a low rate just before rates rose significantly.
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| | | | Bridge Lending--There is a plethora of money for nearly every level of leverage, loan size and risk profile, much of it non-recourse Another group of high level veteran bridge lenders have formed a new fund.....Pricing is very attractive at LIBOR + 3.50% with a 4.00% floor on LIBOR.....basically the loan is "fixed" at 7.50% interest only for a good period of time. Leverage is 75-80% of the capital stack. No construction, lender is funding repositions of existing properties. Lender can fund draws with no neg arb. This is an "on book" lender who services their own loans, ie a real estate executive will be "home" during the term of the loan as opportunities or issues arise. Loan terms are 3-5 years, plenty of time to execute your business plan without incurring heavy interest costs. | | Transaction Size: $10,000,000-$30,000,000 | | Rate: LIBOR + 3.50% (4.00% LIBOR floor) | | Loan Term: 3-5 years | | Amort: Interest Only | | Max LTC: 75-80% | | Non-recourse | | Property Types: Basic 4 property types | | Prepayment: Prepayable after some lockout, deal specific | | Fees: 0.5%-1.0% | | Geography: Nationwide |
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| | | Hot Money--Breaking CMBS News--"Pricing is Tightening and the Strike Zone is Widening" | Price talk on the first multi-borrower pool of "CMBS 2.0" era is excellent: the AAA's are going out at approximately Swaps + 90 bps. Perspective: At the market peak in late 2006, the AAA's were trading at about Swaps + 27, they then widened all the way to over Swaps + 1600 during the meltdown. The new issue was oversubscribed, there is obviously pent up demand.....The question is how deep is that demand? Well the market should soon find out....What does this mean for borrowers? Originators are updating pricing grids "almost daily" and now pricing "has a 2 handle".....5 year term/30 year amort in the 5.50% range, 10 year term, same amort at about 6.00%......Originators hungry for transactions are considering "some hotels" and secondary markets.....The market is "very fluid" | | | 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. | | | 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 | The training wheels are coming off! The Fed is slowly taking down some of the massive emergency credit facilities and policies instituted in the wake of the credit crisis. Securitized debt has become an essential part of the US and worldwide economy. Simply put, there is not enough capital in portfolio lending institutions to meet the credit needs of consumers, businesses, investors, etc. So RBS (Residential Backed Securities) and CMBS (Commercial Mortgage Backed Securities) are key to a normally functioning real estate market. In the last few weeks, the Fed has stopped the policy of "Quanitative Easing" ie buying RBS and also has let the TALF program expire (which helped restart CMBS). CMBS seems to be off to a good restart without government assistance (see above), while investors are anxiously watching wheter the private sector will flock to the RBS market, which is many times the size of CMBS and also became very toxic, very quickly in 2007 due to the subprime meltdown. Will RBS again be able to stand alone?......Stay tuned.....David R. Pascale, Jr. | | | Speakers Corner | Gary E. Mozer is moderating a panel on Real Estate Finance at the CRC Council at Urban Land Institute (ULI) in Boston on Thursday, April 15. For more information on the ULI meeting, click here. | | | 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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©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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