FINFacts April 27, 2011

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Volume XIX  |  No. 16  |  April 27, 2011

Letter to the Editor

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KEY RATE INDICES Prime Rate  3.25% 1 Month LIBOR  0.21% 5 Yr US Treasury  2.06% 5 Yr Swaps  2.25% 12-MAT  0.30% 3 Month LIBOR  0.27% 10 Yr US Treasury  3.36% 10 Yr Swaps  3.42% 11th Dist COFI  1.47% 6 Month LIBOR  0.43% 30 Yr US Treasury  4.45%

Transactions of the Week Transaction Description: Joint Venture Equity for Partially-Entitled land GSP arranged a $19,000,000 Joint Venture equity investment for the acquisition of a partially-entitled land assemblage. The Los Angeles (Hollywood) California site will be developed with 200 multifamily units and ground floor retail. Challenge: The client required a JV equity partner who was comfortable closing not only with development risk, but also a planned re-entitlement from its current office and hotel use. The JV equity partner had to be willing to close without debt and wait through the re-entitlement process. As the sponsor does not intend to break-ground for 12 to 15 months, costs are uncertain and the investor is exposed to both capital market and lease-up risk. Solution: GSP capitalized on its strong equity relationships to secure an institutional investor that understands the client's business plan; i.e. infill apartment construction in Los Angeles. The investor we selected has similar goals to those of our client; to invest on a programmatic basis, and willing to hold long-term. GSP worked with the client and investor to mitigate and explain the entitlement process, and to substantiate the high pro-forma returns that justify such risks. The purchase closed on terms as negotiated without debt. Proceeds:  $19,000,000 initial funding Co-invest:  95%/5% pari passu promote w/waterfall profit distribution Brokers:  Gary E. Mozer, Steven Orchard, Josh Roseman, Michelle Lee   Hot Money HIGHLIGHTS Multifamily Non-Recourse Bridge to Perm Debt A national capital provider has launched a non-recourse turn-around bridge program for multifamily assets including manufactured and student housing. Quick close refinance or purchase DPOs are also considered. Unlike traditional Agency Gateway bridge product, this program will fund major capital improvements for an eventual Fannie or Freddie take-out. Cash flow must be in place at funding although an interest reserve may be included to 75% of total capitalization. The two year LIBOR based floater has no prepayment penalty and the lender will waive agency origination fees if rolled into their perm upon asset stabilization. Transaction Size: $5,000,000 to $75,000,000 Rate: 5.0% - 7.0% Loan Term: 2 years Amort: Interest Only Max LTC: 75% Non-recourse Property Types: Multifamily Fees: 1 point Geography: Nationwide Hot Money National HOA Capital Improvement Loan Program A nationwide lender is offering non-recourse property improvement debt to cash flowing Home Owners Associations for capital upgrades up to $5,000,000. Projects may range from re-sealing the exterior of buildings to the instillation of a new swimming pool. Collateral is the assignment of HOA dues - there are no individual liens and thus no need for partial releases. Loans self-amortize over 10 years upon construction completion. There is no prepayment penalty. Five and 10 year fixed rates are available starting at 6% fixed for five years.  This nationwide program does not have a prepayment penalty. 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. Stars to Watch GSP Senior Vice President Steven Orchard is featured in Commercial Property Executive's April edition as one of 10 Stars to Watch.  CPE selected 10 rising stars under 40 from various commercial real estate industry aspects: investment, development, finance, services and research.  We at George Smith Partners congratulate Steven on being recognized as an industry leader.  The complete article may be found on line at:  http://www.cpexecutive.com/business-management/executiveprofiles/cpe%E2%80%99s-stars-to-watch-rising-leaders-in-commercial-real-estate/ Speakers Corner Founding Principal and Senior Director Steve Bram will participate in a panel discussion at the Crittenden Conference in Las Vegas on May 3rd and 4th.  Registration and more information on the conference may be found at:   http://www.crittendennational.com/national-conference-schedule.html 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.  We invite you to consider a career with George Smith Partners.  Please direct confidential inquiries to Todd August, Chief Operating Officer, at (310) 897-2995

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