Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of David Toti - Citigroup
David Toti - Citigroup
My first question relates to some of your regional concentrations and I was wondering are you seeing any trends in performance relative to stabilization as it could be connected to housing improvement or overall economic stability of the region, or is there still a pretty big disconnect between those two trends.
Karl Haas
On the negative side, there is some correlation. Certainly San Bernardino, LA, Florida, the markets where the housing is and Phoenix and Las Vegas where the housing has been a real problem, we are having, we are seeing a lot of stress in those markets and Boston and the Baltimore, DC area, New York continue to do well.
I’m not sure it’s a turnaround in housing that’s driving it one way or the other though.
David Toti - Citigroup
Can you share the terms on the construction financing, I’m not sure if I missed that.
Kent Christensen
I didn’t give any details about that. What we’re seeing on the construction financing are terms that have floors, they’re LIBOR based but generally have floors. The floors are between 5.75 and 6.5. The terms are anywhere from three to four years, three years with a one year extension.
We’re getting 65% loan to value. And the appraisals are coming in as far as establishing the cap rate, appraisals are coming in and then we’re having to negotiate what each of the individual banks as to what the cap rate might be. But we’re in the high seven’s low eight’s on cap rates, on the negotiation with banks.
There’s obviously no sells to be able to really tie appraisals to, so it’s a negotiation with the bank.
David Toti - Citigroup
And then are there any plans to push rents in the existing customer base, I know you’d sort of held off on that for a bit.
Karl Haas
Actually we have, we’ve continued to increase the existing customers all through the last, through the whole recession. We did have, we still do have some governors where if the existing customers’ rate gets too far out of line, the street rates, that we might not increase those tenants. But overall we continue to increase existing customers and as mentioned in my narrative, that we are seeing actually reduced vacates.
So we haven’t seen a negative reaction to existing customer rate increases.
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