GSPartners
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Volume XVIII | No. 22 | May 27, 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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0.35%
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5 Yr US Treasury
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2.19%
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5 Yr Swaps
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2.54%
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12-MAT
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1.85%
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3 Month LIBOR
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0.54%
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10 Yr US Treasury
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3.36%
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10 Yr Swaps
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3.48%
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11th Dist COFI
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0.41%
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6 Month LIBOR
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0.76%
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30 Yr US Treasury
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4.26%
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| | | Transaction Description: | | 90% of Cost Financing for Owner User Industrial Property-Transaction Closed 38 Days From Submission Raffi Sarkissian has arranged his first transaction at George Smith Partners. Mr. Sarkissian is a veteran banker specializing in owner/user and SBA. The subject property is a 14,000 s.f. warehouse in Southern California. The loan is made up of two tranches (as is customary with these types of transactions): a 1st TD with a 10 year initial fixed term and 20 year amortization priced at 5.44% and a 2nd TD (20 year term and amort) which will rate lock in 2-3 months, but would be priced today at about 5.52%. Mr. Sarkissian has a very active pipeline and will be appearing in FinFacts regularly with transactions and market updates. |
| | Rate: 5.44% 1st, approx 5.5% 2nd | | Term: 10 years/20 years (the 1st TD rate resets in 10 years) | | Amort: 20 | | LTV: 90% | | LTC: 90% | | Broker: Raffi Sarkissian |
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| | | Transaction Description: | | Revolving Line of Credit for General Contractor GSP arranged a small revolving credit facility for a General Contractor. The borrower is seeing increasing construction opportunities, but needs to show liquidity in order to qualify for required completion bonding. GSP evaluated the borrower’s assets for opportunities to enhance liquidity and presented several alternatives. Ultimately the line structure provided greatest flexibility and lowest costs. GSP introduced a private regional bank that agreed to accept a personal repayment guaranty and transfer of an operating account as security for the line. The borrower is free to draw-down and repay the loan at anytime without fee or penalty. However the lender reserves the right to approve the use of funds before releasing them outside the bank. Deposits required: Primary operating account for the GC entity. |
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| | | Note that last week's Transaction of the Week was brokered by Marc Shillinger. | | | | GSP has identified the most aggressive owner user program from strong national lender looking for local presence and larger "footprint" in Southern California This program is benefitting from a massive US Government committment to help small businesses. This is the highest possible leverage in the marketplace.
Current Spreads over weekly Treasury Constant Maturity Index (TCM) are between 2.00-2.50 basis points depending on overall internal risk rating after underwriting.
Maximum LTV is 75% on conventional but up to 90% with SBA component. Partial principal paydown allowed during fixed term with no penalty. Borrower also has the option to lock interest rates prior to close for 0.50 fee.
This particular lender is looking for heathly 2 years trailing income on corporate and personal returns. They do not require depository relationship like a majority of other lenders near this spread level
Current Interest Rates are as follows based on weekly Treasury Constant Maturity Index.
5 year fixed: 4.10-4.60%
7 year fixed: 4.78-5.28%
10 year fixed: 5.33-5.83%
For the 90% transactions, the SBA adds a 2nd TD priced at the SBA debenture rate. Currently it is approximately 5.52% for 20 year fixed amortized over 20 years.
| | Transaction Size: $750,000-$10,000,000 | | Loan Term: 20 years (10 years fixed with reset) | | Amort: 20-25 years | | Max LTV: 75% for conventional, 90% with SBA component | | Property Types: Owner User (usually industrial or office) | | Prepayment: 5-4-3-2-1 | | Fees: Par |
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| | | Hot Money | 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 | | | 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 | Focus on LIBOR: LIBOR rates have been creeping up lately from their all time lows, but it is not reminiscent of 2008's full on credit market seizure in the wake of Lehman Brothers' bankruptcy. The rise is showing signs of a slight flattening, not steepening. Credit and equity markets rallied this week on China's affirmation of their faith in Europe and some clarifications on the Financial Regulation legislations, specifically on derivatives. Korean tensions lurk and could spike the fear factor at any time.....Stay tuned....David R. Pascale, Jr. | | | Press Box | GSP's Gary E. Mozer was quoted in Bloomberg Business Week in a story on upcoming loan note sales. To read the story, click here. |
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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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