First Quarter Market Update & Fundings
April 20, 2016
SVI LAX, LLC for the Residence Inn LAX, which is the top performing hotel in the
LAX sub-market. The property was originally a 12-story office building which our
borrower did a spectacular job converting to the current use, a 231 room Residence Inn
suites hotel. Our permanent loan funded on 10-months stabilized and includes an
earn-out tied to a performance debt yield.
RESIDENCE INN By Marriott Goleta, CA
I am also pleased to announce the funding of another construction loans for
RD Olson Development for the development of the 118 room Residence Inn
in Goleta, CA in the amount of $30,355,000. The construction financing was
arranged through one of Westcap Corp's key bank relationships.
EL SEGUNDO CREATIVE OFFICE
$30,000,000 permanent loan for this newly renovated, fully leased, 5 story
creative office building in El Segundo, CA. Financing was provided by
Westcap's exclusive correspondent Sun Life of Canada who won the business
with a very competitive interest rate below 4% for this 10 year loan.
RESEARCH POINTE, Irvine Spectrum
$7,500,000 10-year fixed 25-year amortizing at 4.75% on a three tenant
50,000SF office with one tenant in transition and another vacating. PAR,
no hold-backs and no prepayment penalty through one of our regional banks.
MORTGAGE MARKET UPDATE
It has been an outstanding quarter and other than a blip in CMBS, which is
getting back in the swing of things, we are seeing more than enough capital
from our life companies, banks, pension funds and debt funds to keep the ball
rolling. The first quarter saw major fluctuations in Treasury yields and spreads
in the CMBS arena in particular. Movement of both continues to move in
concert with the price of oil, and which has fluctuate from a low of $30.75/brl
to a high of $41.75/brl over the 1st Q and presently stands at $41.08/brl . Over
the same time, we have seen the 10-year Treasury fluctuate from a low of 1.52%
up to 2.30% ago and presently stands at 1.82%. There are whisperings of
China's economy imploding, while Europe central bank is considering negative
interest rates in an attempt to stimulate their sagging economy, and our FED is
now wondering if they raised rates too soon. Our economy is still lagging with
"real unemployment rate (U6)" standing at 9.8% and I continue to believe that
we are going to continue to be stuck in this rut until U6 improves considerably
and a white knight comes along who can rein in government spending. The
following links spell out the situation clearly:
http://portalseven.com/employment/unemployment_rate_u6.jsp
Life Company Rates:
5 Year 10 Year 20 Year
Multifamily 2.87%-3.57% 3.20%-3.90% 3.77%-4.52%
Retail 3.07%-3.77% 3.40%-4.10% 3.97%-4.74%
Office 3.20%-3.82% 3.45%-4.15% 4.02%-4.77%
Industrial 2.97%-3.67% 3.30%-4.00% 3.87%-4.62%
Many have institutes floors with the huge drop in yields seen
recently, and many really are not sure what to quote right now.
Ranges are consistent with LTV's. We are seeing full leverage
life company spreads in the 175-200 range over the 10-year
Treasury equating to rates in the high 3's to low 4's today.
CMBS Spreads: CMBS is up against some real challenges
with the new banking regulations kicking in, which now
require a senior level manager to personally certify the quality
of the loans being made for secularization. In addition, CMBS
lenders are now being required to retain 5% of each loan they
make. The result is higher CMBS spreads, which are currently
running in the range of 310-325 for full leverage over the higher
of Swaps or the Treasury yield, resulting in full leverage CMBS
loans commercial property loans for 10-year terms in the range
of 5.00%+/-. Hospitality is running higher.
WHY WESTCAP?
WESTCAP is a founding member of Q10 Capital, which was
formed in 1988, and is a network of 14 of the largest independent
mortgage banking companies in the country which have arranged
$12.7 billion over the past three years. With a proprietary database
sharing quotes, lender and equity intelligence we are constantly in
a position to insure that we deliver the best sources at any given
time for our clients.
WESTCAP serves as a correspondent to 15 life insurance companies
for, which we service over $1.5 billion, and other sources of capital in
order to meet all of our client's financing needs. Most of these
correspondent relationships date back over 25 years, including
Sun Life of Canada for which we have been the exclusive correspondent
in Southern California for almost 30 years. We are handling assignments
ranging from $1,000,000 to $400,000,000, and represent all sizes of
borrowers including some of the largest developers in Southern California.
Call for rates on all income property types including hospitality,
self-storage, student and senior housing. In addition to our life company
sources, we have a long list of relationships with active CMBS,
construction, bridge and mezz lenders and equity for all product types.
We even have a couple of bank sources which offer no prepayment
penalty and a few who offer non-recourse. With a few exceptions our
permanent lending sources are PAR to us.
Steve Bridges
Executive Vice President
WESTCAP CORP
9960 Irvine Center Drive
Irvine, CA 92618
Office: (949) 387-9061 Cell: (949) 235-1540
sbridges@westcapcorp.com
https://www.linkedin.com/in/SteveBridges2 www.westcapcorp.Q10Capital.com
CA RE Broker: 00465840
