FINFacts August 10, 2011

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Volume XIX  |  No. 30  |  August 10, 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  0.91% 5 Yr Swaps  1.22% 12-MAT  0.24% 3 Month LIBOR  0.28% 10 Yr US Treasury  2.10% 10 Yr Swaps  2.36% 11th Dist COFI  1.34% 6 Month LIBOR  0.44% 30 Yr US Treasury  3.50%

Pascale's Perspective: Market Update World Markets: The S&P downgrade of US debt to AA+ put markets in "uncharted territory"......Fannie and Freddie were downgraded early Monday morning to AA+......Investors are still considering US Treasuries a safe haven due to a variety of factors: (1) S&P's credibility was diminished in the subprime crisis; (2) The US can print money to pay its bills (unlike the Euro); (3) China must continue buying Treasuries to keep the US buying Chinese exports and support the Yuan......10 year T dropped to 2.08% before a mild rebound.....Worldwide equity markets are plummeting on concerns about the Euro (possible Spain/Italy defaults, downgrade of France), possible US double dip, uncertainty over the US downgrade, an unusually downbeat Fed statement, and worries that governments are "out of bullets" to aid the economy. Lending: Lots of volatility.....Fannie and Freddie spreads widen, but with ultra low Treasury yields, 10-year Fannie and Freddie all-in rates are as low as 4.85% and 4.65% respectively.....Life Companies and CMBS are instituting floors. CMBS new originations start at 6%, Life Company rates anywhere from the mid 4% to mid 5% range depending on leverage......Pricing is very fluid for all lenders, many of whom are not comfortable pushing leverage on new quotes, while some remain on the sidelines until markets settle…stay tuned…David R. Pascale, Jr. Transaction of the Week Transaction Description: Non-Contingent Multifamily Purchase Finance in West Los Angeles Marc Schillinger successfully financed the acquisition of a stabilized multifamily property in Los Angeles. The Borrower entered contract without a financing contingency and only 35 days to close. The Sponsor also requested competitive pricing on a 7-year fixed-rate loan with a flexible prepayment schedule. GSP identified a lender that was able to deliver within the Sponsor's strict timeline, while offering a competitive rate and terms that exceeded borrower expectations. Rate: 4.75% Fixed Term: 7 Years Fixed Due in 10 Amort: 30 Years LTV: 73% Prepayment: 1-1-1-1 Recourse Broker: Marc Schillinger Hot Money National Bank Funding Condo Inventory Loans from $20,000,000 A national investment bank is actively funding condo inventory loans from $20,000,000 to $100,000,000. The financings carry a 9% rate up to 65% loan to sell out and will be held on-book. This capital provider will also consider other portfolio bridge loans in the 6% range. Hot Money Regional Bank Funding Bridge & Construction $5,000,000 to $100,000,000 A western regional bank is funding construction and bridge projects up to 85% of cost in 19 Western states including Missouri, Wisconsin, and Hawaii. The LIBOR based financings carry a minimum 50% recourse, no floor, and are available to professional real estate borrowers. This capital provider will consider most property types with at least 10% cash-in on a spec basis with no preleasing required. Fixed coupons may be provided with a SWAP or cap/collar at L+250-300. 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.

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