GSPartners
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Volume XVIII | No. 35 | September 22, 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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1.32%
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5 Yr Swaps
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1.68%
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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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2.56%
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10 Yr Swaps
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2.68%
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11th Dist COFI
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1.75%
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6 Month LIBOR
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0.47%
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30 Yr US Treasury
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3.75%
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| | | Transaction Description: | | $8,000,000 Multi-Family Construction Loan (62% LTC, 4.5% Interest Rate, Recourse Burn-Off) in Pacific Northwest.
GSP arranged financing for the ground-up development of a 144-unit apartment community in a tertiary market in Eastern Washington State.
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Challenge: Lenders are still struggling with troubled loan portfolios and economic uncertainty, and as such maintain a general aversion to construction financing. This transaction was further challenged by the tertiary location of the project, and the speculative leasing typical in apartment development. In addition, the sponsor required a limited recourse execution and the option to convert to an extended fixed-rate term upon completion.
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Solution: GSP demonstrated a massive and long-term supply/demand imbalance; Unusually high job creation in the submarket distinguishes the location. The sponsors’ ample local experience and strong financial capacity provided further assurance. In light of the market, product, and sponsorship, GSP secured a repayment guaranty that completely burns-off in tranches upon specified delivery hurdles. |
| | Rate: LIBOR + 3.50% with a 4.50% Floor | | Term: 2 years, plus 2 x 6 month extensions and 5 year mini perm option | | Amort: Interest Only | | LTC: 65% | | Prepayment: None | | Recourse | | Lender Fee: 0.25% and 0.50% mini perm exit fee | | Brokers: Gary E. Mozer, Steven Orchard, Josh Roseman |
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| | | Transaction Description: | | $680,000 Private Money Loan on Fox Hills Lofts, Partially Completed Residential Duplex, Los Angeles CA. The borrower engaged GSP for funds to complete a spec residential duplex in West Los Angeles, CA. |
Challenge: The Borrower had purchased the property for development using their own funds, then used additional self-funds to get the project to 60% completion. The Borrower needed outside funds to complete the duplex and achieve C of O. Additionally the Borrower required a non-recourse loan for a project where lender would have to contend with broken priority on title.
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Solution: GSP demonstrated the excellent location and concept for the property, and determined viable exit strategies for a lender. GSP established the lender’s low risk position using both for-sale and rental information on like product in the area. Because of the market due diligence, the lender did not require an appraisal and was comfortable making the 50% LTV loan.
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| | Rate: 11.00% | | Term: 1 year (extensions available) | | Amort: Interest Only | | LTV: 50% | | Prepayment: Open to prepay | | Non-recourse | | Lender Fee: 2.00% | | Broker: Jonathan Lee |
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| | | Hot Money | Nationwide Lender Raises New Bridge Loan Fund, Lending up to 80-85% LTV Lender is long time institutional owner of real estate and has raised a large new fund to take advantage of present market opportunities. Property must have some cash flow in place. Value add plays ok, lender will consider future fundings Loan sizes considered: $10,000,000 to $40,000,000; "Sweet Spot": $20,000,000 to $25,000,000; LTV: 80-85%; Geography: Nationwide, large markets; Interest Rate: 8%; Loan Term: 3-5 years; Non recourse. Lender Fee: 1.0% plus 1.0% exit fee | | | 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. | | | 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 economy seems to be at an inflection point with debate raging within the Fed and Congress over what actions (if anything) Government and the central bank should take. The effects of the 2009 stimulus are waning and the 2001-2003 tax cuts are set to expire. The Fed now seems to see deflation and stagnant growth as more of a threat than inflation. It seems the Fed will continue quantitative easing, ie using proceeeds from maturing mortgage bonds to purchase treasuries. Some Fed governors and members of congress feel it is time to shrink the Fed's balance sheet. The Fed seems to be saying "not quite yet, the economy needs help" Also, it seems that the next rate increase may be put off until 2011. More stimulus or less taxes and regulation? This is a basic philosophical debate about the role of government. Republicans are saying that small businesses are reluctant to hire with uncertain regulatory environment and imminent tax increases. Most Democrats are pushing some minor stimulus measures and extending tax cuts on everyone except the top brackets. Most everyone agrees something needs to be done before accross the board tax increases take effect during a fragile recovery. The upcoming mid-term elections have served to politicize the entire process. The major decisions may be put off until the post election "lame duck" session....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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