MARKET RATE WATCH

10 year treasury 4-16-08: 3.67%; 6 months ago, 4.57%; 1 year ago 4.69%

5 year treasury 4-16-08: 2.80%; 6 months ago, 4.23%; 1 year ago 4.60%

Wall Street Conduits are essentially out of business except for Well Fargo. While many conduits are trying to keep their loan production staff busy, Wells Fargo decided earlier this year to use their balance sheet for non-recourse permanent loans with 10, 5, and 3 year terms. They are limited to 75% loan to value. Their best rates today are about 6.70% for 10 years; 6% for 5 years; and about 5.5% for 3 year deals. They are not interested in hotels and their minimum deal size is $3MM.

Life Companies rates are ranging in the mid 5% range for shorter term loans to low 6% range for 10 year deals. Everything depends on the quality of the deal, and how conservative the underwriting is. There are a few life companies that are out of the market or have effectively put themselves out of the market by charging interest rates in the mid 7% range. Deal size is also a limitation. Many Life Companies want deals over $3MM and others higher than that. We do have lenders that will go as low as $1MM.

Credit Tenant Lease Transactions have stabilized somewhat in the past 30 days. A Walgreen’s deal today is in the lower 6% range (a spread of 250 over the interpolated 16 year rate) for a 25 year fully amortizing deal. Non-investment grade tenant deals can be done with Life Companies for lower leverage transactions. 75% to 85% loans are achievable with non-investment grade tenants but the rate will be in the mid to upper 7% range today. We have access to current tenant credit listings. Please feel free to contact us for this information.

Multi-Family - The agencies are the best choice for multi-family permanent loans. I recently quoted a 10 year deal where the fixed rate was just under 6% (a 250 bp spread). 80% loan to value is still available and 1.20 times debt coverage ratio. 5 year deals are also available at a coupon rate in the 5.5% range. Fannie Mae is scrutinizing cap rates that appraisers use and will likely not consider anything lower than 6.5% in today’s market. Don’t forget that they offer supplemental fundings which eliminates the prepayment risk. For deals under $3MM, the 3 MAX program offers fixed closing costs ($7,500) and limited documentation.