FINfacts™ XXIV – No. 98 | December 13, 2017

MARKET RATES
Prime Rate 4.25
1 Month LIBOR 1.46
6 Month LIBOR 1.71
5 Yr Swap 2.23
10 Yr Swap 2.41
5 Yr US Treasury 2.17
10 Yr US Treasury 2.40
30 Yr US Treasury 2.77

INTRODUCTION

Congratulations Gilda Rivera, Senior Vice President at George Smith Partners for being recognized for the 2018 Women of Influence Award.  This past year, Ms. Rivera reached $100 million in closed transactions which is the highest number of dollars brought in by a female broker at GSP.  With over 19 years as a commercial real estate lender and broker, this award is well deserved.


RECENT TRANSACTIONS
$10,000,000 Cash-Out Refinance on a Single Tenant Class A Utah Office Building

Rate: 4.4%
Term: 10 year fixed
Amortization: 25 years
LTV: 65%
Prepayment: No prepayment penalty
Guarantee: Recourse

George Smith Partners secured $10,000,000 for the cash-out refinance of a newly constructed Class A single-tenant office building located in Pleasant Grove, Utah. Our Sponsor required a cash-out refinance to pay-off a maturing construction loan for a non-investment grade privately owned tenant. With strong sponsorship and an experienced real estate investor, GSP identified a lender who was is comfortable with 65% loan to value. Fixed for ten years at 4.4%, the loan amortizes for the 25-year term and no prepayment penalty.


$4,000,000 Mixed-Use San Francisco Acquisition

Rate: 5.75% Fixed for Ten Years, 6.0% Fixed Thereafter
Term: 15 years
Amortization: 30 years
LTV: 80%
Guarantee: Recourse
Prepayment Penalty: 4,3,2,1

George Smith Partners successfully arranged the $4,000,000 acquisition debt of a 62-unit affordable SRO (Single Room Occupancy) property with two retail spaces in San Francisco. SRO units lack a full kitchen and has shared bathroom facilities. As a result of the unique use and shared bathroom units, financing this style of multifamily housing is extremely difficult for conventional lenders, even with very strong sponsorship and an incredible San Francisco location. In addition to challenges related to the asset type, this particular property had strict affordable covenants and complications related to the retail element.

GSP identified a community development lender who became comfortable with the asset type, affordable nature of the project and the future value of the property. The 15-year loan represented 80% of the stabilized value of the property and also provided funds for the rehab and renovation of the property. Fixed for 10 years at 5.75% and increasing to a 6.0% for the last 5 years, the recourse loan holds a 4,3,2,1 pre-payment penalty while amortizing over a 30-year schedule.

 


$1,950,000 Refinance for Prime Los Angeles Owner/User Office; 75% LTV

Rate: Fixed at 4.43%
Term: 20 years
Amortization: 20 years
Prepayment Penalty: 5,4,3,2,1
LTV: 75% of value
Guarantee: Recourse

George Smith Partners secured $1,950,000 for the refinance of an office building in the San Fernando Valley. The owners had purchased the property all cash six months prior and were seeking to recapture a portion of their equity. The ownership structure involved 4 businesses, 5 Trusts, and 7 individuals, all of whom had to go through the documentation process. Although the bank required full recourse from all of the Trusts, they were willing to waive repayment guarantees to some of the individuals behind the Trusts. Fixed for 20 years at 4.43%, the recourse loan was sized to 75% of the total capitalization. Amortization commences on a 20-year schedule and has a 5-year stepdown prepayment penalty.

Advisors

Matthew Kirisits
Director

Pascale's Portrait
PASCALE'S PERSPECTIVE
Yellen’s Swan Song – A Highly Telegraphed, Expected and Non-Unanimous Rate Increase

The mid-December rate increase has become a holiday tradition over the past 3 years. Today’s rate hike was no surprise, the “action” was all in the commentary and the two no votes. Yellen’s final press conference as Chair was notable for commentary on the tax cut (it may deplete ammo to fight future recessions), bitcoin (highly speculative), her greatest disappointment (inability to achieve the Fed’s target inflation of 2.0%). The inflation “miss” was highlighted by this morning’s lower than expected CPI report. The lack of wage inflation is especially troubling to the Chair. The rate hike is notable as it shows confidence in the strength of the US Economy. The two “no” votes show some members afraid that rate hikes may damage the recovery and/or that the recovery is weak. The “dot plot” indicating three rate hikes for 2018 (and 2 or 3 more in 2019) is being looked at skeptically by markets, the futures index indicates they expect 2 next year. Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

More Perspectives ›

If you have an inquiry regarding George Smith Partners’ commercial real estate financing, please contact your GSP representative or Todd August, Chief Operating Officer (310) 867-2995 or TAugust@GSPartners.com


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