GSPartners
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Volume XVIII | No. 25 | June 17, 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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1.98%
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5 Yr Swaps
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2.27%
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12-MAT
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1.83%
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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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3.19%
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10 Yr Swaps
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3.28%
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11th Dist COFI
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0.40%
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6 Month LIBOR
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0.75%
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30 Yr US Treasury
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4.12%
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| | | Transaction Description: | | $15,000,000 (65% LTV, 9.7% Debt Yield) Senior Permanent Loan for 724,800 sf Industrial buildings in San Joaquin Valley, California
GSP secured senior permanent financing for two cross-docked warehouse distribution buildings totaling 724,800 sf. The buildings are 100% leased to four tenants with leases expiring from 2012-2014.
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Challenge: The San Joaquin Valley industrial market is 15% vacant. The loan needed to close 30 days from execution of the application. |
Solution: GSP worked with the lender distinguish the true competitive set from the general market, and thereby established market vacancy at 1% vacancy, and thereby allowed the lender to underwrite 5% vacancy. GSP also helped the lender get comfortable with the strength of the tenants and the low probability that they would vacate at lease expiration. Finally, GSP identified a lender with a high-quality closing staff that was prepared to close in 30 days. |
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| | | Hot Money | Well Capitalized "Low Profile" Bank Funding Transactions $5,000,000 and Up Lender likes large transactions, as they have no maximum on loan amount. This is traditional bank lending for cash flowing properties, ie flexible prepayment, floating rate. For retail, office, and Industrial they underwrite to 65% LTV, 1.20 – 1.25 DCR. They will lend on select hotels, at a 1.5 DCR. Typical pricing is 6 month LIBOR (floored at 2.5%) + 2.5%, 5 year term, 25 year amort, no prepayment penalty. Southern California preferred. Borrower can opt to swap or buy a LIBOR cap in order to fix the rate. | | | Hot Money | Mezzanine Financing Update Secondary financing is returning as part of the ongoing rebound of the capital markets. Senior loans are more conservative than before, so mezzanine can raise leverage and be thought of as "cheap equity" GSP has met with an oppportunity fund providing mezzanine financing for cash flowing properties including: apartment, office retail, industrial and rented condos. Typical uses inclde paydown of existing financing, partner buy-outs, equity recapture, tenant improvements, etc. Lender can structure extensions, earnouts and tailor made pre-payment options. Loan Size: $2,000,000-$10,000,000; Loan Terms: 2-5 years (co-terminus with senior); Rate: Transaction specific, competitive, usually "current pay"; Amort: Transaction specific, can be interest only in some cases. | | | Hot Money | New Single Tenant Non Recourse Financing Program This lender looks at tenant strength and real estate, they will lend on sub-investment grade single tenant properties with strong real estate attributes. Lender will consider lease terms as short as 7 or 8 years. Note that the loan terms are shorter than lease. Examples: 3 year loan term for 7-8 years of lease term, 6-10 year loan term for 15-20 years of lease term. Pricing is floating over LIBOR with cap or swap available. Some loans may be interest only depending on transaction strength. Rate: 30 day LIBOR + 3.50-5.00%; Loan Term: 3-10 years; Prepayment: Lockout minimum of 18 months, then combination of set prepayments (1-2%) or defeasance; Lender Fees: up to 1% | | | 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 Linked In | 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 | Both Credit Markets have rallied this week, buoyed by Spain's successful bond sale as the "fear factor" eases. It seems that investors are becoming more confident that Europe's troubles will be contained. The panic last month was mainly due to concern that "it was 2008 all over again" Now the perception is that there are major differences between the subprime meltdown and the Europe debt crisis and that markets overreacted. Large US banks raised over $4 billion in the bond market today as they rush issues out before the financial regulation overhaul takes effect. Hopefully, this should add liquidity to the real estate market and aid CMBS.......Stay tuned...... David R. Pascale, Jr. | | | Press Box | | | | CMBS Pool Sells, What it Means (Blog by Nick Silbergeld) | The fate of CMBS seemed to have turned with the pricing and sale of the RBS pool in May.....click here to read entire post |
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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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