FINFacts October 26, 2011

Volume XIX  |  No. 41  |  October 26, 2011

Letter to the Editor

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KEY RATE INDICES Prime Rate  3.25% 1 Month LIBOR  0.25% 5 Yr US Treasury  1.06% 5 Yr Swaps  1.42% 12-MAT  0.22% 3 Month LIBOR  0.42% 10 Yr US Treasury  2.20% 10 Yr Swaps  2.40% 11th Dist COFI  1.32% 6 Month LIBOR  0.61% 30 Yr US Treasury  3.22%

Transaction of the Week Transaction Description: $2,825,000 Los Angeles Multifamily Portfolio Cash-Out Refinance. George Smith Partners successfully placed the refinance of a stabilized multifamily portfolio in West Los Angeles, California. The Borrower received 5 years of interest only at 4.35% with a 10 year term. The loan will float over 30-day LIBOR, amortized over 30 years during the 2nd five year period of the term. Challenge: The Sponsor engaged George Smith Partners to obtain a higher leveraged alternative to the Borrower's primary banking relationship. Many lenders have constrained their interest-only loans by underwriting with hyper-amortization after the IO period or limiting the loan to value. Cash-out transactions typically do not qualify for any interest only amortization. The Borrower required the lowest rate for a fully-leveraged, interest-only program. The Sponsor also required that only one member who carries a minority interest personally guarantee the loan. Solution: GSP was successful in leveraging the strength of the Borrower's recourse to obtain the exact terms requested. The Lender was able to approve the loan on the strength of the minority managing member. The loan was locked at application, and the lender honored all of the terms that had been negotiated. Rate: 4.35% Fixed for 5 Years Term: 10 Years Amort: 30 Years after IO LTV: 75% w/Cash-Out Prepayment: Step-Down Recourse Lender Fee: Par Brokers: Marc Schillinger, Andrew Hornblower Hot Money Non-Recourse Hospitality Reposition Debt to 80% of Cost. George Smith Partners is working with a new fund seeking to finance reposition loans for office and hospitality assets from $5,000,000 to $20,000,000. The 1st trust deed will advance up to 80% of total cost. The lender can build in an interest reserve for a pay & accrue structure on assets that are below break-even coverage. Reposition construction will be considered although no ground-up financing is available at this time. Terms of four to seven years will be priced from 8.5%. Loan fees will vary depending upon asset quality. Hot Money National Portfolio Provider Funding Skilled Nursing and Assisted Living Facilities up to 70% LTV. George Smith Partners identified a national capital provider financing mini-perm and permanent debt for stabilized health care properties. This portfolio lender is funding skilled nursing, assisted living, and dialysis centers nationwide. Operating entities for owner/user as well as leased assets to investors will be underwritten to a 1.35 DCR on a 25 year amortization schedule, and 70% LTV. A three year operating history and a personal repayment guarantee are required for funding. Pricing starts at 5.50% for a five year fixed rate loan with flexible prepayments. Structures include three, five and seven year terms. 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. 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.

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©2011 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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