Long Term Interest Rates Outlook

On a steady climb throughout the last quarter, Monday saw the 10-Year Treasury break the 3% barrier. The short-term Federal Funds Rate, presently at 0% to .25%, has done very little to keep long term rates from rising. Those individuals speculating that long term rates will fall are pointing to both the stimulus bill and TARP funds to provide liquidity and competition into the credit markets, which will in turn drive rates down. With respect to TARP funds, the opposite has occurred as banks use the capital to bolster their balance sheets, while offering a very selective lending approach.

While the stimulus bill is expected to add liquidity, Will it be enough to get lenders to make loans? As we have previously stated, the United States government is buying Treasuries at a premium in order to keep interest rates artificially low. The Chinese and Japanese, historically the largest buyers of U.S. Treasuries over the past 10 years, have not been as active in the acquisition of Treasuries. At the earliest sign of recovery, the government will most likely discontinue buying Treasuries. If this occurs, rates may spike dramatically. We will keep you posted…

$15.2 Million Loan Quote for Northern California Medical Office Building

Penstar obtained a $15.2 million loan quote for a fully occupied medical office building in Northern California. The 3-year mini-perm loan will be used to replace construction debt upon Certificate of Occupancy and lease-up. The loan is priced on a non-recourse basis, 600 over Libor, with a floor of 6.5%, and on an interest-only basis. To discuss, please contact Steven Hamermesh at (818) 883-9609 or Hamer@PenstarAdvisors.com.

National Investment Fund Seeks Sale Leaseback Opportunities: Penstar is working with the Chairman of an investment fund who has allocated $300 million to acquire corporate properties from tenants through a sale-leaseback. The fund is seeking transactions nationwide ranging from $3 million to $100 million. Ideal tenants will be strong private or public companies with retail, office, industrial, and special use properties. Properties will be acquired on an all-cash basis and the investment group pays 100% of appraised value for the assets. Minimum lease terms are 15 years. To discuss, please contact Steven Hamermesh at (818) 883-9609 or Hamer@PenstarAdvisors.com.

30 Day Libor	10-Year Treasury	Prime
0.46%	2.80%	3.25%

Penstar Realty Advisors can be reached at (818) 883-8600 or at our offices located at:
21700 Oxnard Street, Suite 1870, Woodland Hills, CA 91367