For Real Estate Professionals Seeking a Market Edge
Credit-Rating Conflicts Addressed by Senate Bill
Following the confirmation that rating agencies Standard & Poor's and Moody's Investors Service inflated their assessments of mortgage bonds in exchange for payment by Wall Street firms selling the debt, the U.S. Senate recently approved a proposal to allow regulators to determine who will rate asset-backed securities
In a 64-35 vote, the Senate backed an amendment to the newly adopted financial overhaul legislation to create a ratings board overseen by the Securities and Exchange Commission. The board will assign a credit-rating company to evaluate an offering, and will conduct an annual assessment of each rating company to scrutinize [the company's] accuracy in grading debt compared with competitors; according to the amendment. While credit-rating companies will still determine their fees, the SEC would have authority to ensure payments are “reasonable” so as to discourage collusion between the bond issuer and rating agency.
We will keep you posted…
$15,000,000 PreSale of Single-Tenant Office Building
Penstar recently obtained a letter of intent from an investment group to pre-purchase a single-tenant to-be-built office building from an area developer. Upon completion, the 100,000 square foot property, located in the Midwest and under an 11-month plan for construction, will be leased under a 15-year term to a subsidiary of a strong European company under a bond net lease.
The developer will utilize the purchaser's lease to ensure that all required items from the committed tenant will be stipulated; including the requirement that no rent abatement would be granted in the event that the property is condemned by natural causes or by acts of God or man. The going in return will be set at 8.9% with annual escalations of 2.25%. Additionally, the buyer is willing to provide the developer a 100% of cost construction loan at 5.5% if the construction loan is guaranteed.
The buyer is seeking to acquire $200 million of to-be-built or sale leaseback transactions for nationwide office, industrial, retail, and special use properties from $4 million to $30 million. The key to structuring a transaction of this type is getting the buyer involved early and utilizing their tenant's lease to facilitate the financing. To learn more, please contact Steven Hamermesh at (818) 883-9609 or Hamer@PenstarAdvisors.com.
Helpful Humor
The best antidote for those challenging transactions is to take a moment to have a hearty laugh. Helpful humor is our way of infusing laughter into your work-week
“Weight Loss Tip”
While visiting a girlfriend, a woman opened the refrigerator and was puzzled to find a snapshot of an attractive, slender, scantily-clad young woman.
|
30
Day Libor |
10-Year
Treasury |
Prime |
0.34% |
3.24% |
3.25% |
Penstar Realty Advisors can be reached at (818) 883-9609.