GSPartners
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Volume XVIII | No. 34 | September 15, 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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0.26%
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5 Yr US Treasury
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1.44%
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5 Yr Swaps
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1.63%
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12-MAT
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0.35%
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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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2.71%
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10 Yr Swaps
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2.70%
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11th Dist COFI
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1.75%
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6 Month LIBOR
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0.48%
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30 Yr US Treasury
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3.87%
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| | | Transaction Description: | | $70,000,000 Non-Recourse Senior Permanent Loan (8.4% Avg. Debt Yield, 4.91% interest rate, 70% LTV) on a Mixed-Use Center in Phoenix, Arizona. The financing is secured by the fee interest (ground) only, with income for debt service generated by a 99-year NNN ground lease underlying retail and office improvements owned by a REIT (not part of the collateral).
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Challenge: Relative to the cash flow from ground lease rent, the financing is highly levered, as indicated by the loan’s going-in debt yield of 8.4% (NOI/loan amount). Furthermore, the improvements above the ground collateral are not stabilized and the Phoenix retail market is widely recognized as challenged.
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Solution: GSP demonstrated the excellent long-term prospects of the asset by evidencing leasing velocity, strong tenants and a uniquely advantaged submarket that is distinct from the rest of the City. GSP also established the lender’s low-risk position being secured by the ground lease, given that the $70 million loan is senior to $285 million of project costs invested by major institutions. The sponsor’s experience and financial capacity provided further comfort, despite the non-recourse structure of the loan.
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| | | Hot Money | Apartment Floaters at 3.07% Start Rate, Non Recourse, Step Down Prepay Yes, that's the rate! With LIBOR at rock bottom (see rates above), we are seeing agency financing at record low rates. The 3.07% start rate is for a full leverage 7 year floating rate loan with a 6.50% maximum for the entire loan term. Property must be stabilized, typically 90% minimum occupancy for 90 days. Underwriting is based on trailing 12 month income. Prepayment: 5,4,3,2,1,1,1. Minimum loan size is typically $5,000,000. Fixed rates are below 5.00%. Best rates in many years. | | | Hot Money | Opportunity Fund Looking to Purchase Minority Interests in Real Estate Assets This is ideal for junior partners in a good property to monetize their interest without a property sale. Fund interests will also be considered. Fund is looking for "A" assets in "A or B" locations in the $10,000,000 to $75,000,000 range, major markets. This fund will also fund Discounted Note Purchases where investors are buying back their own debt. Typical structure is a 12-15% lookback IRR with a promote schedule over a threshold. | | | Hot Money | Nationwide Porfolio Lender has $70,000,000 "Bucket of Mezz" to Place by End of Year Mezzanine loan amount: $15,000,000 to $40,000,000 (but will consider as low as $10,000,000 selectively). Lender will go to 85% LTV. Will go behind CMBS as preferred equity if needed. All major property types considered. Rates are in the low to mid teens with preferred transactions as low as 12%. | | | 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 | Two years ago this week, the Lehman Brothers bankruptcy triggered a worldwide financial crisis and a freeze up of credit markets. Banks hoarded cash and would not even lend to each other except at exorbitant rates. (Click here to see FinFacts from September 25, 2008). Some speculate that the crisis could have spread to all of the world's major currencies. Unprecedented emergency actions by governments and central banks eventually brought the credit markets back to relatively normal function. GDP is once again positive, although anemic. The main problem is that the "new normal" seems to include high unemployment, possible deflation, and a choppy housing market. The debate today is what should governments and central banks do now? Next week's issue will discuss this debate in more detail......Stay tuned.......David R. Pascale, Jr. | | | 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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