FINFacts May 25, 2011

Volume XIX  |  No. 20  |  May 25, 2011

Letter to the Editor

Forward to a Friend

KEY RATE INDICES Prime Rate  3.25% 1 Month LIBOR  0.19% 5 Yr US Treasury  1.81% 5 Yr Swaps  2.03% 12-MAT  0.28% 3 Month LIBOR  0.25% 10 Yr US Treasury  3.13% 10 Yr Swaps  3.23% 11th Dist COFI  1.45% 6 Month LIBOR  0.40% 30 Yr US Treasury  4.28%

Transactions of the Week Transaction Description: $2,600,000 Fixed-Rate Acquisition of a 31 Unit San Fernando Valley Apartment Building. Shahin Yazdi arranged the $2,600,000 self-liquidating acquisition loan for a 31-unit, stabilized multi-family property. The loan provides for a 10 year fixed term at 6.02% before rolling into a floating rate loan for the remaining life of the loan. The floating term is priced at 6 month LIBOR plus 2.75% after the 10 year fixed rate period. The borrower locked rate at application to secure loan proceeds in the event of a rate spike. Just prior to close, interest rates fell significantly. GSP worked with the lender to allow the borrower to re-lock at the then lower market rate in exchange for a small portion of the borrower's rate lock deposit. Rate: 6.02% Term: 30 Years Amort: 30 Years LTV: 75% DCR: 1.25 Broker: Shahin Yazdi Hot Money Mezzanine and Equity Funds A national fund is providing short and long term [one to 10 years] mezzanine debt to 90% of total capitalization down to a 1.05 dcr. The mezz may be paid current or accrued depending on the business plan. Transactions will range from $4,000,000 to $40,000,000 and carry a 9% to 12% coupon. All product types including hospitality and student housing will be considered. The same capital provider is also offering Joint Venture funds for "value-add" turn-around assets for a three to five year hold. Multifamily is preferred although office and retail projects will be underwritten as well. Investor DPOs are also funded with as little as 5% new cash equity. Hot Money Life Company Bridge & Perm Debt A national Life Insurance lender will fund transition properties down to a 1.10 dcr on an interest only basis. The three year non-recourse loan will advance to 75% of current value, fixed from 5.25%. Longer permanent term loans are also available with 5, 7 and 10 year call dates. Transactions will range from $20,000,000 to $50,000,000 and may include special purpose products including hospitality, high-end health clubs and self-storage in addition to the four major uses. 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 Europe and more:  The "fear factor" is back as troubling news items from Europe spook the markets: huge controversy on how to handle Greece (restructure is favored by Germany, opposed by ECB), and downgrades to formerly "safe" countries such as Belgium and Italy.  US economic reports continue to reflect a slowing economy or the "new normal" or a "double dip".  Some economists point to the weather as a reason for weaker than expected manufacturing reports.  Only time will tell.  All this has led to a flight to quality, pushing Treasury yields to approach their lowest levels of 2011.  CMBS and other credit spreads are "softening" and/or widening slightly as the flight to quality always indicates less appetite for risk... of course all-in loan rates are still very attractive.  Stay Tuned.... David R. 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.  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.

Forward to a Friend

©2011 George Smith Partners, Inc. DRE # 00822654 FINfacts is an ePublication of George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.

Unsubscribe

FINFacts May 18, 2011

Volume XIX  |  No. 19  |  May 18, 2011

Letter to the Editor

Forward to a Friend

KEY RATE INDICES Prime Rate  3.25% 1 Month LIBOR  0.20% 5 Yr US Treasury  1.85% 5 Yr Swaps  1.99% 12-MAT  0.28% 3 Month LIBOR  0.26% 10 Yr US Treasury  3.18% 10 Yr Swaps  3.19% 11th Dist COFI  1.45% 6 Month LIBOR  0.42% 30 Yr US Treasury  4.26%

Transactions of the Week Transaction Description: $2,500,000 Acquisition/Bridge Financing for 90,000 sf Vacant Industrial Property This 4 building property is well located adjacent to the Alameda Corridor in South Los Angeles. Our borrower owns other properties in the market and has demonstrated the ability to operate and lease warehouses. His business plan is to renovate this older property, divide into market appropriate tenant spaces and stabilize. The $2,500,000 purchase price required an additional $1,500,000 of renovation costs. Borrowing entity includes a foreign national equity partner. GSP arranged 62.5% of total project cost financing with a local lender who is comfortable with the borrower expertise and entity structure. This loan also provides for a mini-perm option upon stabilization. Rate: Prime + 2.0% Term: 18 months Amort: Interest Only LTC: 62.5% Recourse Lender Fee: 1.0% Brokers:  Steve Bram, David R. Pascale, Jr. Transaction Description: $1,600,000 Interest Only, Non-Recourse Refinance Marc Schillinger successfully placed the rate & term refinance of a 14 unit apartment building in Santa Barbara, California. As the borrower's current debt was facing a balloon date, the borrower required a non-recourse, interest only loan to pay off his current mortgage. Sensitive to interest rate fluctuations, the borrower also required an early rate lock. The loan was rate-locked for 90 days at application and is interest only for five years before rolling into a 30 year amortization schedule. Rate: 5.30% Term: 5 years Amort: Interest Only LTV: 63% Non-recourse Lender Fee: Par Broker:  Marc Schillinger Hot Money HIGHLIGHTS Life Company Bridge & Perm Debt A national Life Insurance lender will fund transition properties down to a 1.10 dcr on an interest only basis. The three year non-recourse loan will advance to 75% of current value, fixed from 5.25%. Longer permanent term loans are also available with 5, 7 and 10 year call dates. Transactions will range from $20,000,000 to $50,000,000 and may include special purpose products including hospitality, high-end health clubs and self-storage in addition to the four major uses. Transaction Size: $20,000,000 - $50,000,000 Rate: Floored at 5.25% Loan Term: 3, 5, 7, & 10 years Amort: Interest Only or 30 years Max LTV: 75% Non-recourse Geography: Nationwide Hot Money Small Mezzanine and Preferred Equity to 90% of Cost Most Mezz Funds target minimum investments of $5,000,000 for assets requiring total capitalizations of $20,000,000 and more. A Southern California based Mezzanine lender is filling the need for Mezz and Pref Equity allocations from $2,000,000 to $5,000,000 for acquisitions as small as $10,000,000. This capital provider will advance to 90% of purchase price. Only stabilized assets will qualify for the three year term loan. A current pay of 8% to 10% is required for an all-in 15% to 17% yield. Secondary markets will be considered for strong borrowers. 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. GSP in Print GSP Vice President Nick Silbergeld was recently published in the May/June issue of Commercial Investment Real Estate Magazine.  As an experienced industry pro of Agency financing, Nick's review of the Treasury Department's White Paper on Fannie, Freddie and FHA provides an alternative solution for reforming the mortgage markets.  An on-line copy of Mr. Silbergeld's article may be found here. Pascale's Perspective Treasury yields remain low as inflation threats are rapidly diminishing with the sharp drop in commodity prices.  Some nervousness about Europe and the impending end of the Treasury purchases (QE2) are adding to the perception that the recovery is "muted" and less strong than anticipated a few months ago.  It all dovetails together as a weaker economy leads to less commodity demand and less inflation.  This all gives investors more reason to buy Treasury Bonds.  Debt Ceiling:  Lots of posturing but no deal yet, as the August 2nd deadline looms.  As of now, there is no panic selling or crisis as the market seems to be confident some kind of deal will be struck.  CMBS Loan Rates:  Spreads have narrowed slightly and stabilized with much less volatility than recent months.  The low treasury yields and tight spreads with multiple originators competing make this an ideal time to lock in fixed rate Life Company or CMBS rates.   Stay Tuned...  David R. Pascale, Jr. Join Us On LinkedIn George Smith Partners is now on LinkedIn.  Click here to join the George Smith Partners Group and gain access to current commercial real estate topics and conversation.

Forward to a Friend

©2011 George Smith Partners, Inc. DRE # 00822654 FINfacts is an ePublication of George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.

Unsubscribe

FINFacts May 11, 2011

Dear FINfacts reader, We hope you enjoy this week's edition of FINfacts which you will find below.  We would also like to take a moment and encourage you to join over 2900 other commercial real estate professionals who have joined the George Smith Partners/FINfacts Linked In Group. In this group you will gain access to some of the brightest minds in commercial real estate and some of the most current information regarding commercial real estate financing.  To join please click on the link below and enter your email address and Linked in password. George Smith Partners/FINfacts Linked In Group

Volume XIX  |  No. 18  |  May 11, 2011

Letter to the Editor

Forward to a Friend

KEY RATE INDICES Prime Rate  3.25% 1 Month LIBOR  0.20% 5 Yr US Treasury  1.87% 5 Yr Swaps  2.06% 12-MAT  0.28% 3 Month LIBOR  0.26% 10 Yr US Treasury  3.16% 10 Yr Swaps  3.25% 11th Dist COFI  1.48% 6 Month LIBOR  0.42% 30 Yr US Treasury  4.31%

Transactions of the Week Transaction Description: $19,250,000 Cash-Out Refinance of a 150,000 sf Anchored Retail Center. GSP successfully arranged the $19,250,000 cash-out refinance of an existing bridge loan, secured by a stabilized 150,000 sf market/drug center in North Los Angeles County. The borrower required a non-recourse financing structure that provided a return of equity while releasing an adjacent parcel Free & Clear from the current lender. Challenge: Despite the return of the Capital Markets, non-recourse cash-out retail financing is still not widely embraced. A number of leases are month-to-month that further complicated the underwriting. Multiple issues also arose during the due diligence period that included tenants in transition, legacy environmental issues (several), and parking & zoning ambiguities with the City. Solution: GSP surveyed the permanent debt market including Life Insurance Companies, Banks and Wall Street Conduits to identify a lender willing to understand the unique characteristics of this asset. GSP worked with all parties to support the investment thesis: Fortress neighborhood retail with barriers to entry and significantly under-market rents. This loan offers a fully funded lease up and rehab reserve, which supports the borrowers' investment objective. As the adjoining parcel does not contribute to the net cash flow, the new lender released it from their collateral. Rate: 5.39% Term: 10 years Amort: 30 years LTV: 71% Non-recourse Brokers:  David Rifkind, Eric Hamermesh, Loren Bedolla Transaction Description: $3,200,000 Cash-Out Refinance in 35 Days. GSP arranged the $3,200,000 non-recourse refinance of a stabilized multi-family property in just 35 days from being introduced to the transaction. The asset was previously Free & Clear so this represented a 100% return of equity on the Southern California apartment building. Timing was critical to meet the borrowers' investment objectives for an unrelated project. GSP worked with the borrower, lender and 3rd party vendors to present an expedited but fully under-writable package to loan committee. Rate: 5.30% Term: 10 years Amort: 30 years LTV: 55% DCR: 1.45 Non-recourse Broker: Shahin Yazdi Hot Money Small Mezzanine and Preferred Equity to 90% of Cost Most Mezz Funds target minimum investments of $5,000,000 for assets requiring total capitalizations of $20,000,000 and more. A Southern California based Mezzanine lender is filling the need for Mezz and Pref Equity allocations from $2,000,000 to $5,000,000 for acquisitions as small as $10,000,000. This capital provider will advance to 90% of purchase price. Only stabilized assets will qualify for the three year term loan. A current pay of 8% to 10% is required for an all-in 15% to 17% yield. Secondary markets will be considered for strong borrowers. Hot Money Southern California Portfolio Lender Funds @ sub-5% Fixed A Southern California relationship lender is seeking to expand their commercial loan portfolio to high net worth borrowers at very competitive rates. They are willing to advance to 70% of value on core assets with rates as low as 4.75% fixed for five years on transactions to $10,000,000. The shorter term fixed rates are not swapped, allowing for a declining pre-payment penalty. Assets must be stabilized and the borrower must be Southern California based. 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. Speakers Corner Founding Partner Gary E. Mozer will be moderating a panel discussion on structured debt financing for middle and institutional market borrowers at the Commercial & Retail Development Council on Thursday May 18th.  The Council meeting will be held at the Phoenix Convention Center May 18th and 19th. Pascale's Perspective Europe matters.... Here's why  News from Europe moves the markets and sometimes raises the "fear factor".  Recent events: Greece sovereign debt was downgraded again.... Finland elects leaders that ran on an "anti-bailout" platform... Portugal's new bailout is approved.... Last year saw riots in Greece and now ongoing protests in Portugal and Ireland as people in these countries feel that austerity measures are unwarranted punishments being doled out by "bond vigilantes".  Markets shudder on seemingly minor news items that hit the global new cycle in an instant.  Example:  August 2010 a tax court in Spain ruled that certain sales tax revenues were invalid.  This sent various bond yields and credit spreads up within hours as investors worried that one of Europe's largest economies was taking a hit and their sovereign debt was at risk.  Markets calmed the next day when the ruling turned out only to delay certain tax collections.  Is "restructure" a bad word? We may find out sooner rather than later.  Many politicians, bankers, etc feel that the debt load on these countries combined with the high yields the market demands is untenable.  There is not enough total output/GDP for these countries to dig out.  Recent positive private equity investments in Spanish and Italian banks have given rise to the hope that those countries are in recovery and will not need bailouts.  Therefore the problems may be limited to Greece, Portugal and Ireland.  If those countries are allowed to restructure their debt, then they should return to normalcy.  The potential problem is that "restructure" means "debt forgiveness" or "controlled default".  When debt defaults occur anywhere (globally), the potential for a 2008 style panic looms as credit markets everywhere grind to a halt and investors hoard cash.  A European banking crisis may occur as investors and depositors may not be able to identify what banks are holding bonds from the defaulting countries and cause a run on banks.  If the current system is unsustainable, then the question is when to start the restructure?  Some European leaders say that 2013 is the right time due to some rule changes, while some are pushing for this year.  Advocates of restructure hope that a cooperative agreement complete with IMF participation and international consensus will not rattle markets, avoiding a 2008 Lehman style panic.  Stay Tuned...   David R. Pasacale, 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.  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.

Forward to a Friend

©2011 George Smith Partners, Inc. DRE # 00822654 FINfacts is an ePublication of George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.

Unsubscribe

FINFacts May 4, 2011

Volume XIX  |  No. 17  |  May 4, 2011

Letter to the Editor

Forward to a Friend

KEY RATE INDICES Prime Rate  3.25% 1 Month LIBOR  0.21% 5 Yr US Treasury  1.93% 5 Yr Swaps  2.11% 12-MAT  0.28% 3 Month LIBOR  0.27% 10 Yr US Treasury  3.22% 10 Yr Swaps  3.30% 11th Dist COFI  1.45% 6 Month LIBOR  0.43% 30 Yr US Treasury  4.30%

Transactions of the Week Transaction Description: $10,200,000 Permanent Financing on a 92-Unit Multifamily Los Angeles Property GSP successfully obtained a $10,200,000 cash-out agency loan within 45 days of closing the original bridge loan. The debt was secured by a stable infill 92-unit multifamily property in Los Angeles. GSP and the sponsor worked closely with the lender to resolve hurdles related to an estate lien, several un-permitted units, and the reconciliation of historical operating statements. Challenge: The borrower required a cash-out bridge refinance in order to procure proceeds for the acquisition of an unrelated asset with a pending close date. GSP then worked with the sponsor to resolve underwriting issues and pushed the closing of the agency perm loan to minimize interest paid on the bridge loan. Solution: GSP capitalized on its' strong network of lender relationships to secure an agency loan that maximized proceeds and waived the exit fee on the bridge loan. GSP worked with the lender to leverage the existing third party reports to ensure a timely closing with minimal costs. Rate: 5.63% Term: 10 Years Amort: 30 Years LTV: 69% Prepayment: Yield Maintenance Non-recourse Brokers:  Gary E. Mozer, Steve Orchard, Josh Roseman, Scott Swisher Transaction Description: $7,200,000 Permanent Acquistion Financing for a Multifamily Complex in a Secondary Market. GSP successfully arranged a 10 year, fixed rate loan to acquire a 192-unit apartment complex outside of Greenville, SC. While the property was stabilized at close of escrow, an increase in the rental supply over the last three years caused a significant drop in occupancy, forcing the property into foreclosure. The lack of stabilized historical operating data made it challenging for lenders to underwrite the cash flow. GSP indentified a lender that was not only comfortable with the secondary location of the asset, but was also able to underwrite the trailing three months of actual collections in order to maximize the loan amount. Rate: 5.87% Term: 10 Years Amort: 30 Years LTV: 65% Prepayment: Yield Maintenance Non-recourse Brokers:  Steve Bram, Allison Higgins Hot Money HIGHLIGHTS Southern California Portfolio Lender Funds @ sub-5% Fixed A Southern California relationship lender is seeking to expand their commercial loan portfolio to high net worth borrowers at very competitive rates. They are willing to advance to 70% of value on core assets with rates as low as 4.75% fixed for five years. The shorter term fixed rates are not swapped, allowing for a declining pre-payment penalty. Assets must be stabilized and the borrower must be Southern California based. Transaction Size: $1,000,000 - $10,000,000 Rate: 4.75% fixed for 5 years Loan Term: 5, 7 or 10 Years Max LTV: 70% Min DCR: 1.20 Recourse Property Types: Core Properties Prepayment: Declining Fees: 0.5% - 1.0% Geography: National for SoCal borrowers Hot Money 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.  Transactions from $5,000,000 to $75,000,000 will be underwritten to 75% of total cost at 5% - 7%, on an interest only basis. 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 Bernanke Press Conference Aftermath...  Treasuries Rally.....  Debt Ceiling Deal?  The Fed Chief's extraordinary press conference last week did not roil markets as Bernanke did not say anything unexpected, which is what markets always prefer.  It seems that the $600 billion of Treasury & MBS purchases known as QE2 will be completed and the maturing securities will be "rolled over" so the end is not too sudden.  Treasuries rallied on this week's lower than expected job numbers which indicate the fragility of the recovery.  Dollar rally?  A rally may be forthcoming in the US dollar and dollar denominated instruments as (1) Fed starts to contract its balance sheet and (2) the perception that the US "turned the tide" in the war on terror over the weekend may enhance the dollar's standing as a reserve currency.  Investor's continue to purchase Treasuries even as the US approaches the debt ceiling.  Maybe investors have faith that after all the political blustering on both sides, a deal may be in the works involving spending caps, etc.  Stay tuned.... David R. Pascale, Jr. Join Us On LinkedIn George Smith Partners is now on LinkedIn.  Click here to join the George Smith Partners Group and gain access to current commercial real estate topics and conversation

Forward to a Friend

©2011 George Smith Partners, Inc. DRE # 00822654 FINfacts is an ePublication of George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.

Unsubscribe