GSPartners
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Volume XX | No. 39 | October 3, 2012
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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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0.22%
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5 Yr US Treasury
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0.60%
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5 Yr Swaps
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0.74%
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12-MAT
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0.16%
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3 Month LIBOR
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0.35%
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10 Yr US Treasury
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1.61%
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10 Yr Swaps
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1.68%
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11th Dist COFI
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1.07%
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6 Month LIBOR
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0.63%
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30 Yr US Treasury
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2.82%
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| | | Transaction Description: | | $12,740,000 Bridge Refinance of an Anchored Retail Center in Reno, Nevada GSP arranged the no-cash-out reposition refinance of a 160,000 square foot retail center anchored by several strong national tenants. |
Challenge: The Reno property was 76% occupied with only a handful of recently executed new leases. |
Solution: GSP called on a close relationship with a strong, middle market Bank and set up a face-to-face meeting very early in the process. GSP positioned the recent lease extensions including those of the anchors as a strong indication of the strength of the center and highlighted the center’s key location within Reno. By demonstrating the Sponsor’s other business lines, the Bank was able to fully underwrite the Sponsor as a whole to obtain comfort with this request as well as establish a strong pipeline for future business. |
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| | | Transaction Description: | | $6,200,000 Permanent Fee Position Loan on Improved Land GSP successfully closed the no-cash-out refinance of an improved parcel leased to Time Warner. The subject property is used as a warehouse and retail location for Time Warner. |
Challenge: While Time Warner is investment grade credit, the lease is executed by a non-credit Time Warner sub-entity, and not guaranteed by the parent corporation. The borrower required a 10-year (or longer) fixed rate term, which is three years beyond the lease expiration date. |
Solution: GSP identified a lender that became comfortable with the desirability of the location and the large investment Time Warner had in the infrastructure. GSP also marketed this as an 18 year self-amortizing loan which provided satisfactory cash flow to the Borrower and heavy amortization to the lender should the tenant chose not to exercise their option at the end of the initial loan term. |
| | Rate: 4.83% | | Term: 18 Years | | Amort: 18 Years | | LTV: 50% | | Prepayment: Yield Maintenance | | Non-recourse | | Lender Fee: Par | | Brokers: Steve Bram, Allison Higgins |
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| | | | Regional California Bank Funding Reposition Bridge GSP identified a regional bank funding broken/fractured condos and the repositioning of other value-added opportunities. This Institutional lender will fund anywhere within California on loan requests from $1,000,000 to $20,000,000. LTV is constrained to 65% of value on multifamily and commercial assets. Rates start between Prime + 1.00%-1.50%; floored at 5.0%. Non-recourse will be considered on requests below 50% LTV and a 1.25 DCR at close. A 5-Year mini-perm may be available upon asset stabilization. |
| | | Hot Money | Institutional 7-Year Fixed Rate Portfolio Lender to 75% LTV w/No Prepayment Penalty GSP is funding 3, 5 and 7 year fixed rate loans on stabilized assets with a California based portfolio lender with no prepayment penalty. This institutional lender will fund in the eight Western States (excluding Nevada & Arizona) from $2,000,000 to $10,000,000 on multifamily and commercial assets to 75% of value. In place cash flow must support a 1.20 dcr for multifamily or 1.25 dcr on commercial assets. Rates will start from 4.25% for five year fixed funds to 4.80% on a seven year term. | | | If you have an inquiry regarding George Smith Partners' commercial real estate financing, please contact your GSP representative or Todd August, Chief Operating Officer, at (310) 867-2995 or TAugust@GSPartners.com. | | | In The News | Senior Vice President Steven Orchard and Managing Director David Rifkind were both quoted in the September edition of Real Estate Forum. Mr. Orchard's comment on the Growth of Medical Office Buildings begins on Page 29. Mr. Rifkind's outlook on the near-term successes of multifamily financing and development starts on Page 79. | | | Pascale's Perspective | LIBOR Reform is Coming The Wheatley Report on “The Future of LIBOR” was released last week. It was commissioned by the Chancellor of the Exchequer of England in the wake of LIBOR fixing scandals which put a spotlight on the methodology and procedures in calculating LIBOR rates. LIBOR is intended to be a benchmark of “interbank” lending, i.e. the rates that banks charge other banks for short term funds. Note that $300 Trillion of financial instruments are tied to LIBOR; the stakes are high for the capital markets. Any transition needs to be orderly and transparent. Highlights of findings and recommendations from the Wheatley report: (1) Market participants are in favor of keeping LIBOR. Replacing LIBOR with a new index could create a legal and regulatory nightmare for existing derivative contract holders; (2) Transparency: The British Bankers Association had been surveying banks and asking “if you did make an interbank loan of 30 or 60 days, what would the rate be today?” This led to “guesstimation” and potential manipulation. The Wheatley report recommends the rates being based on actual interbank deposits, certificates of deposits, commercial paper, etc . Also, 3rd party transactions offered to the surveyed banks will be taken into account; (3) Procedures: New submissions should contain detailed transaction data, record keeping, corroboration. Participant submitters will be trained with new detailed guidelines. Regular periodic external audits will be performed by regulators with results published; (4) Less indices: LIBOR is now calculated in many currencies and several time periods (1,2,3,4,5,7,8, 10 and 12 month LIBOR rates are regularly published) Wheatley recommends less indices: just the common currencies and the most traded periods. Possibly just US Dollars, Euro and British Pound for Overnight, 1 month, 3 month, 6 month for example. What should borrowers expect? Lenders we are talking to mostly agree “the only place to go is up”, meaning that more transparency should increase LIBOR rates. How much? ...stay tuned... David R. Pascale, Jr. |
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©2012 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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