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FINfacts™ XXIV – No. 1 | January 6, 2016
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| Prime Rate |
 3.50% |
| 11th Dist COFI |
0.64% |
| 1 Month LIBOR |
0.42% |
| 3 Month LIBOR |
0.62% |
| 6 Month LIBOR |
0.83% |
| 5 Yr Swap |
1.60% |
| 10 Yr Swap |
2.09% |
| 5 Yr US Treasury |
1.64% |
| 10 Yr US Treasury |
2.17% |
| 30 Yr US Treasury |
2.93% |
| 12-Mat |
0.32% |
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Rate: 3.52%
Term: 10 Years
Amort: 15 Years
LTV: 60%
Prepayment: Yield Maintenance
Non-recourse
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Transaction Description: George Smith Partners successfully arranged a $15,700,000 permanent loan for the refinance of a 150 unit multifamily rental property in Anchorage, Alaska. The Subject is an A-quality asset and had solid historical occupancy and strong cash flow. This financing introduced a valued client to a new insurance capital provider. Our Sponsor is a major apartment owner with strong relationships among a variety of institutional lenders including agencies, insurance companies and banks. The full coupon was locked shortly after application at no additional cost or spread premium. There are no reserves or impounds with this execution. Although the property had a significant military concentration it had essentially no impact on the underwriting or closing process. Sized to 60% of value, the non-recourse loan is fixed at 3.52% for 10 years, amortized over 15 years.
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Rate: 5.50%
Term: 15 Years
Amort: 30 Years
DCR: 1.25
Non-recourse
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Transaction Description: George Smith Partners successfully placed the $10,510,000 cash-out refinance of a 194 unit Single Room Occupancy multifamily project in San Francisco. SRO’s are similar to other multifamily projects, except units are more like dorm rooms with shared bathrooms and/or kitchens. As apartment rents have spiked, this is one of the few affordable properties remaining in the San Francisco City Limits. GSP’s experience in this complex asset type enabled us to quickly identify a lender who not only considered the overall project quality, but understood the benefit to maintaining affordable housing in the City. Our relationship with a community focused lender allowed us to arrange a non-recourse loan to return $1,500,000 in cash that was previously invested into the rehabilitation and repositioning of the asset. Our Sponsor purchased this asset just under two years ago for $10,000,000. The non-recourse 15 year loan is fixed at 5.50% with a 30 year amortization schedule. Loan documents allow for future secondary debt as the value increases.
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Rate: 5.0%
Term: 12 Months
Amort: Interest Only
LTC: 70%
Recourse
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Transaction Description: George Smith Partners successfully the construction financing for the development of three residences in Toluca Lake, California. Currently the subject is a vacant single family home that will be raised and the lot sub-divided for the future homeowners. Sized to 70% of total cost, the 12 month institutional loan is priced at 5.0%.
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Transitional transactions from $25,000,000 to $150,000,000 are locally underwritten and funded by a publicly funded REIT. There is no securitization exposure for this balance sheet lender and future fundings are not subject to negative arbitrage. Three year terms are priced on a non-recourse basis from L+350 to 550 based on leverage and product type. Sub 1.0 coverage will be considered although some cash flow must be present at the time of funding.
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The 10-year Treasury yield was 2.12% on January 2, 2015 with predictions of 2.50-3.00% for year end 2015 and the Fed raising rates…. Well, the Fed is raising rates but the long end of the Treasury curve is not following. Today’s 10-year T closed at 2.17%. Why? It’s another reminder that the Fed controls short term rates (except when they meddle in the bond market with unusual buying or selling of Treasuries). The 2 year spiked to over 1.00% last week, the highest in 5 years. Also, the 10-year treasury is reacting to the ‘risk off’ trade (Iran/Saudi tensions, North Korean nuke testing, China currency volatility, etc.) and the lack of inflation. Watch for the long treasuries to be extremely sensitive to inflation news and trends this year…… CMBS: As spreads continued to widen during December (which is usually a ‘thinly traded’ month anyway), originators took pools off the market and will be putting them out later this month. Traders will be back with fresh allocations but bidding into a large supply. The first pools to securitize in 2016 will be watched closely for pricing guidance… stay tuned… David R. Pascale, Jr.
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Constellation Place
10250 Constellation Blvd., Ste. 2700
Los Angeles, CA 90067
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© 1999 - 2024 George Smith Partners, Inc. DRE # 00822654 FINfacts is an ePublication of George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
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