GSPartners
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Volume XVIII | No. 21 | May 20, 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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0.34%
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5 Yr US Treasury
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2.02%
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5 Yr Swaps
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2.40%
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12-MAT
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0.41%
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3 Month LIBOR
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0.48%
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10 Yr US Treasury
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3.25%
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10 Yr Swaps
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3.35%
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11th Dist COFI
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1.86%
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6 Month LIBOR
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0.66%
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30 Yr US Treasury
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4.12%
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| | | Transaction Description: | | Cash Out Refinance for 5 Parcel Veterinary Office and Kennel in Prime Marina Del Rey Location |
Challenge: The most challenging aspect of this transaction was the determination of value for the kennel portion of the subject property. There was also a maturing loan that needed to be paid off within 35 days and GSP accepted the challenge to close the transaction in time. Borrower requested a 10 year term with a step down prepay which limited the number of lenders that could accommodate that request.
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Solution: GSP contacted a number other owner user veterinary offices and kennels in Los Angeles and gathered information from them to provide to the lender. Due to fluctuations in rate prior to close, the borrower elected to wait an additional week past the maturity deadline to get a lower rate locked. This ended up saving the client an additional 15 bps. The borrower's financial strength and long history in the property were compensating factors that contributed to a fast execution and a very low rate.
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| | Rate: 5.56% | | Term: 5 years then floating for 5 years | | Amort: 25 | | Prepayment: 5-4-3-2-1 |
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| | | | California Bank Offering Secured Lines of Credit with No Annual "Cleanup" Provision This well capitalized bank does not have legacy residential issues and is seeking new borrower relationships. Credit lines are secured by 1st or 2nd Trust Deeds on borrower's real estate holdings. This allows borrower to act quickly on new acquisition opportunities. Unsecured lines usually have to be paid off for about 30 days each year, this secured line can stay "open" while borrower provides annual rent rolls and operating statements on the secured properties. Lender prices over "small bank Prime" which is slightly higher than the regular Prime rate (today it's at 4%). All in pricing today is in the 6.75-7.00% range. Lender prefers to stay within California. | | Transaction Size: $1,000,000-$10,000,000 | | Rate: 6.75-7.00% | | Amort: 25 years | | Max LTV: 70% | | Min DCR: 1.40 | | Recourse | | Property Types: Apartments, Retail, Office, Industrial | | Fees: 1.0% at Approval of Line | | Geography: California |
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| | | Hot Money | 100% LTV, 1.01 DCR For CVS Drug Stores Very short / narrow window to capitalize on this. Direct paper buyer has opened up for some CVS debt.
• New Bondable CVS leases, 25 year terms
• 25 year term • 25 year amort
• T+250 (approximately 6.25%)
• Underwritten to 1.01 DCR on actual
• No LTV constraint
• 1.00% lender fee
• Non-recourse | | | Hot Money | Multifamily Program Features 3 years of Interest Only at 5.40% or 5 years of Interest only at 5.75% Total loan term is 30 years with an interest only period of 3-5 years. Loan then converts to a 30 year amortization and floats at 12MAT + 2.55-2.70%. Loan features declining prepayment during the interest only period and then is prepayable at par. George Smith Partners is a correspondent to this lender and receives wholesale pricing with no fee to the lender. Lender underwrites to a 1.15-1.20 DCR on the start rate with a 30 year amortization. Max LTV's are 75% for purchase and 70% for refinances (65% for cash out refinances). Lender is usually recourse. For example on 5 year IO program: Lender Net Operating Income = $200,000; Underwrite at 1.15 Debt Coverage on 30 Year Amortization; Underwriting Rate is Start Rate = 5.75%; Estimated Loan Proceeds = $2,480,000; Monthly Payment = -$14,492 Transaction Size: $750,000-$5,000,000; Rate: Start rate for 3-5 years @ 5.40% to 5.75%; Loan Term: 30 years; Amort: 30 years; Max LTV: 75%; Max LTC: 75%; Min DCR: 1.15 on 30 year amortized constant; Recourse: Yes; Property Types: Apartments; Prepayment: 1.5,1.5,1.5,1.0,1.0, then None; Fees: Par; Geography: California | | | 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 | Markets are very volatile this week as the "fear factor" surges on continuing concerns regarding Europe. Here in the US, today's unemployment and manufacturing reports indicate a cooling recovery during the 2nd half of this year. Treasuries are rallying (yields dropping) on the flight to quality, while Swaps and credit spreads are widening. The 5 and 10 year swap spreads both widened about 10 bps in the last 48 hours. Why? Perhaps its due to LIBOR spiking as European interbank lending rates rise on counterparty risk (ie, which banks are holding sovereign debt that may default or restructure?)....The 10 year T is at 3.24% down 30 bps in the past few weeks, while LIBOR is up about 10 bps across the board. According to some CMBS lenders today, all-in pricing is "difficult to pin down" ......Stay tuned.....David R. Pascale, Jr. | | | Steven Orchard Blog | Steven Orchard discusses bridge financing programs in a new blog post. Click here to read. |
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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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