GSPartners
|
|
|
|
Volume XIX | No. 9 | March 9, 2011
|
|
|
|
|
|
|
|
|
|
KEY RATE INDICES
|
|
Prime Rate
|
3.25%
|
1 Month LIBOR
|
0.26%
|
5 Yr US Treasury
|
2.16%
|
5 Yr Swaps
|
2.38%
|
|
12-MAT
|
0.31%
|
3 Month LIBOR
|
0.31%
|
10 Yr US Treasury
|
3.47%
|
10 Yr Swaps
|
3.60%
|
|
11th Dist COFI
|
1.48%
|
6 Month LIBOR
|
0.46%
|
30 Yr US Treasury
|
4.60%
|
|
|
|
| | | | | | Transaction Description: | | Transaction Description: $9,725,000 of Preferred Equity for two Multi-Family Properties in Los Angeles. GSP successfully placed tranches of preferred equity on two separate stabilized multifamily complexes for one client. GSP identified the preferred equity provider offering the best pricing and a maturity co-terminus with the new senior debt. |
Challenge: GSP was tasked with finding a preferred equity provider who was comfortable investing behind one of the agencies, which has not traditionally allowed subordinate financing. Additionally, senior lender approval issues arose prior to funding the senior debt that complicated the closing of the preferred equity. |
Solution: GSP worked exhaustively to identify the lender with the lowest cost of funds who could provide preferred equity co-terminus with the senior debt and acceptable to the agency lender. GSP made certain that the senior lender and client were comfortable with the equity provider, overseeing communication between all parties involved. GSP intensively managed the entire process and documentation leading up to the funding of the senior tranche. After closing the senior debt, GSP kept the senior lender involved in the preferred equity discussions to facilitate the preferred equity closing process. The current pay-rate of 8.0% is collected through year 5. The total blended coupon is below 6.0% for each property at an 82% loan-to-value. |
| | Rate: 9.0% years 1-5, 10.0% years 6-10. | | Term: 10 years | | Amort: Interest Only | | LTV: 82% | | DCR: 1.10 | | Prepayment: Stepdown | | Non-recourse | | Lender Fee: 0.50% | | Brokers: Gary M. Tenzer, Nick Silbergeld |
|
|
| | | Transaction Description: | | GSP arranged a 30-year self-amortized, 5-year fixed rate cash-out refinance for a Southern California Apartment Building. Our client acquired a distressed apartment building late 2010 in an all-cash purchase. They engaged GSP to recoup a significant portion of their equity after only three months of ownership. They required a portfolio lender that would allow flexible prepayment on a fixed rate loan with no balloon risk. |
Challenge: Portfolio lenders maintain strict guidelines on cash-out. Although stabilized, the asset had less than 1 year of cash-flow history. The Managing Member was willing to personally guarantee but only owned 7.5% of the borrower. Additionally, one limited partner owned in excess of 50% and would not guarantee. Lenders typically require all members with 20% or more ownership personally guarantee as well. |
Solution: GSP demonstrated that the borrower had fully stabilized the asset in a strong rental market. The lender also recognized and gave credit for all of the capital upgrades added since acquisition allowing the cash-out to be a factor of total capitalization rather than just the purchase price. Finally, GSP convinced the lender to underwrite the additional limited member but not to require a personal guarantee given the financial strength and experience of the Managing Member. |
| | Rate: 5.84% fixed for 5 years | | Term: 30 years | | Amort: 30 years | | LTV: 65% | | Prepayment: 5-4-3-2-1 | | Recourse | | Broker: Shahin Yazdi |
|
|
| | | | California Regional Portfolio Lender Funding Mini-Perm Debt. This lender is seeking quality commercial and multifamily assets in California but will consider properties nationwide with a California sponsor. Three to five year floating rate terms are available with no pre-payment penalty. They will fund up to $15,000,000 but has a sweet spot for transactions between $7,000,000 and $10,000,000. Asset types include office, industrial, retail, multifamily, hotels, healthcare, mobile home parks and condo inventory. They will not consider land or construction loans at this time. | | Transaction Size: $2,000,000 to $15,000,000 | | Rate: Prime plus 1.0% | | Loan Term: 3 to 5 years | | Amort: 25 to 30 years | | Max LTV: 65% or 70% for multifamily | | Recourse |
|
| | | Hot Money | Owner/User Financing up to $15,000,000 for Purchase or Refinance A capital provider is originating larger predominantly owner occupied (more than 50% by square footage) industrial, office or retail properties on a nationwide level. Acquisition financing from $8,000,000 to $15,000,000 is available to 90% of cost. Refinance debt is also available at lower LTVs. This lender also has the capacity to offer a forward rate lock of up to 12 months. No banking relationship is required | | | Hot Money | Nationwide Portfolio Lender Funding Aggressively Priced, Non Recourse Bridge Loans This lender is looking for higher quality assets, "big" sponsors and will price accordingly. They are targeting $2 billion of "on book" bridge loans for 2011. For qualifying transactions, this is a fantastic program. For those that don't qualify, there are plenty of higher priced bridge lenders we are accessing. Loan Size: $10,000,000 to $75,000,000; LTV: Non-Recourse up to 65%, will go higher with recourse; Exit Debt Yield: 9.5%; Pricing: LIBOR + 2.50 - 3.50% with NO floor; Amort: Interest Only. | | | 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 | | | Pascale's Perspective | "Inflation Hawkes" at the European Central Bank and Banki of England? Will it impact the United States? Europe's recovery is probably more fragile than the US recovery, so investors are surprised at ECB President Jean Trichet’s recent statement indicating a rate hike next month is “likely”. Multiple factors are at work: (1) Inflation is a threat as oil, food and other key commodity prices are spiking and (2) the ECB is demonstrating that it will not keep rates low just to pander to the financially troubled nations of Spain, Portugal, Greece, Ireland, etc. On the heels of this announcement, Nouriel Roubini aka “Dr. Doom” predicts 3 successive rate hikes by the ECB. The Bank of England may follow suit and this could affect LIBOR rates even if the US Federal Reserve stands pat……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.
|
|
|
|
|
|
|
|
