FINfacts Newsletter XIX-5

Volume XIX  |  No. 5  |  February 2, 2011   Letter to the Editor KEY RATE INDICES Prime Rate  3.25% 1 Month LIBOR  0.26% 5 Yr US Treasury  2.10% 5 Yr Swaps  2.29% 12-MAT  0.31% 3 Month LIBOR  0.31% 10 Yr US Treasury  3.49% 10 Yr Swaps  3.55% 11th Dist COFI  1.51% 6 Month LIBOR  0.46% 30 Yr US Treasury  4.64%     Transactions of the Week Transaction Description: 10 Year Fixed Rate Loan on Single Tenant, Leasehold Property.  GSP arranged a 10 Year, fully amortizing loan for a 1,000 Sq ft property that our client owned the leasehold. Most lenders don’t like leasehold properties due to the weakness of the collateral. By focusing on the strength of the Tenant, GSP was able to obtain a loan for our client that amortized over the term of the Lease. Rate: 6.375% Term: 10 years Amort: 10 years LTV: 50% Prepayment: Yield Maintenance Broker: Shahin Yazdi Transaction Description: GSP arranged a 7 Year loan on a 16 unit Apartment Building in Southern California in less than 30 days.  Our client was the highest bidder at a Trustee Sale so he only had 30 days to close the transaction. GSP worked with the client and the lender to establish to a specific timeline. We ensured that all the diligence and 3rd Party Reports were collected in a timely fashion so the borrower was able to close on time. Rate: 5.17% Term: 7 years Amort: 30 years LTV: 80% Prepayment: Yield Maintenance Non-recourse Lender Fee: Par Broker: Shahin Yazdi Hot Money JV Equity for Ground up Construction of SFR.  Private fund looking for solid in-fill locations for SFR development. This program is ideal for experienced Sponsor’s with entitled land at a reset value (vintage land deals are typically hard to pencil). Deal must have entitlements and drawings working toward approvals. Will do 75/25 co-invest with Sponsor’s who are capable of signing alone on debt. Will structure a waterfall after a 12% pref with pari passu payout. Southern California only, but focused primarily on Los Angeles, Orange County and San Diego. Equity investment: $2,000,000 - $10,000,000 Sweet spot is $2,000,000-$6,000,000. Hot Money Western States Portfolio Lender Offering Several Unique Structures At present, this well capitalized lender is currently lending in Oregon, Washington, Idaho, New Mexico, Texas and Arizona. They may be lending in California soon. What sets them apart is a multitude of loan coupon structures. Most loans are 10 years with 25 or 30 year amortization. Structures include 10 year fixed with stepped down prepay; or 5 years fixed at a lower rate and the second 5 years at a pre-determined rate. The 5+5 structure allows borrower to prepay at par in year 6 or continue at a rate option determined at the original closing date (very unique). Lender also offers "3+7" with the option in year 4. Rates range from 4.12% for 3 years fixed to 6.50% for 10 years fixed. Rates are also determined by product type (apartments are best), leverage, etc. Terms: Loan Size: $1,000,000 to $8,000,000; Property Types: Apartments, Industrial, Office, Retail; Max LTV: 70-80%; Min DCR: 1.20 for purchase or 1.25-1.30 for cash out refi; Recourse: Yes; Lender Fee: 0.5% - 1.0%. Hot Money Life Company with Large 2011 Allocation for Loans Pricing Aggressively With attention focussed on the return of CMBS, portfolio lenders are reminding us that they never left and are "back" as big as ever. GSP recently met with a major life company looking for institutional quality transactions $5,000,000 to $50,000,000. Rates for 10 year, fixed rate as low as Swaps + 1.40% (4.86% today). Rates for 5 or 7 years are Swaps + 1.50% - 1.75% (3.70% for 5 years lowest spread) Amort: 30 years, Max LTV: about 60%. Lender services their own loans, so future changes in structure can be accomodated. Forward rate locks available up to 12 months, typical spread premium is 3-5 bps per month. 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 Central Bank Raising Rates? Yes, in China   This week's announcement that China's central bank is raising interest rates puts the spotlight on different agendas around the globe.    While the US Fed is committed to low rates through 2012, China needs to put the brakes on exploding real estate developments spurred on by low rates.   Other countries such as Australia have raised rates over the past year.    Different countries are recovering from the recession quicker or had less "wreckage" to recover from.    With major economic indicators showing some life, the US may be returning to growth/recovery mode.   Usually , that means the Fed should raise rates above zero.    But this is not a typical recovery, it's "the new normal" and there is no road map.....Stay tuned....David 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. ©2011 George Smith Partners, Inc. DRE # 00822654 FINfacts is an ePublication of George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.