GSPartners
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Volume XVIII | No. 39 | October 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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0.26%
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5 Yr US Treasury
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1.10%
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5 Yr Swaps
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1.36%
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12-MAT
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0.34%
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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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2.48%
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10 Yr Swaps
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2.55%
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11th Dist COFI
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1.71%
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6 Month LIBOR
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0.46%
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30 Yr US Treasury
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3.89%
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| | | Transaction Description: | | Multifamily Purchase - 12 Units in Winnetka
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Challenge: It was difficult to identify a lender for 6 first-time, but very strong, Apartment buyers. Seller had very short time window to close and a number of deferred maintenance issues prolonged closing.
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Solution: Agents and Lender involved worked hard to close the loan as soon as possible and accommodate all of the lender's requests. The delay actually worked in the borrower's favor as a decline in rates during the loan period was honored by the bank. Lender honored a drop in rates from initial application of over 60 basis points.
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| | Rate: 4.85% | | Term: 30 years (fixed for 5 years) | | Amort: 30 | | LTV: 70% | | Prepayment: 1.50,1.50,1.50,1.00,1.00 | | Recourse | | Broker: Marc Schillinger |
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| | | Transaction Description: | | Two Multifamily Purchases - Hollywood & Korea Town - 18 units |
Challenge: Borrower had very complex financial package and it was difficult to find a bank that wouldn't condition for items that would delay the purchase. Borrower approached George Smith Partners, after already being non-contingent and having 3rd parties for a different lender. It was also difficult to get more that 70% on non-A asset type.
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Solution: GSP was able to earn the business by identifying a high leverage local bank that did not condition for an enormous amount of corporate returns. This allowed the borrower to honor his purchase agreement and close both transactions in less than 30 days. This was also a first time apartment buyer with plenty of experience with other product types. The bank took this into account during underwriting and gave borrower 75% LTV.
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| | Rate: 5.25% | | Term: 30 years (fixed for 3 years, then 6m LIBOR + 2.75%) | | Amort: 30 years | | LTV: 75% | | Prepayment: 3,2,1 | | Recourse | Broker: Marc Schillinger. Analyst: Eric Silverman |
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| | | Hot Money | Institutional Real Estate Fund Making Mezzanine Debt, Preferred Equity and JV Equity Investments on Multi-Family Assets and Debt Nationwide Fund is actively investing mezzanine debt ($1 - $10 million) and equity ($5 - $50 million) in multifamily property nationwide. Capital source will supply joint venture equity to apartment investments in urban infill markets. They will make both direct real estate and hypothecated debt investments. They also offer preferred equity and mezzanine funds. Their funds are well utilized for acquisitions, note purchases, and recapitalizations. Target equity returns are high single-digit unleveraged IRR’s and low-to-mid teens leveraged IRR’s. Mezzanine debt is typically structured with an 8% - 9% current pay requirement and an accrual to an all-in rate of 12% to 14%. | | | Hot Money | CMBS Continues to Mature: Robust Secondary Market, New Originators and Low Rates Lead to Opportunity for Borrowers We are seeing increased competition for good transactions among lenders, increased leverage, great rates, here's the latest... Transaction Size: $10,000,000 and up; Rates: 10 year pricing just about 5.00%, 5 years in the mid 4% range; LTV: 75% for core 4 product types (up from 70%); Debt Yield: as low as 9-9.5%; Mezzanine: Available, underwritten down to an 8% debt yield, rates in the 12-14% range, blended cost of capital for high leverage loan is about 7-8%; Lender Fee: par to 0.50%, larger deals are usually 0.25%, Non-recourse | | | Hot Money | Life Company Update -- Rates in the Low 4's for 5 year Term Life Companies are still looking for Class A properties in primary and good secondary locations with "limited hair" Underwriting is based on marking rents to "most recent signed lease" and market vacancy. Loan amounts are based on a 10-12% debt yield. More underwriting is being done as lenders are not sure of how to calculate "LTV" in today's moving target cap rate environment. Some are willing to look outside the core product types including mixedc use, mobile home parks, self storage, etc. They are also willing to compete with the agencies on class A apartments. Rates: 5 year term, 4-5%, 10 year term: 4.75-5.50%. Amortization: 25-30 years. | | | 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. | | | Speakers Corner | David Rifkind (moderator) and David Pascale, Jr. (panelist) will be discussing "The New Cycle Begins" at the Crittenden Real Estate Finance Conference on October 26, 2010 in Atlanta. For more information click here. | | | 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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