FINfacts™ XXIV – No. 113 | April 4, 2018
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Prime Rate |
4.75 |
1 Month LIBOR |
1.88
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6 Month LIBOR |
2.45 |
5 Yr Swap |
2.76 |
10 Yr Swap |
2.83 |
5 Yr US Treasury |
2.62 |
10 Yr US Treasury |
2.80 |
30 Yr US Treasury |
3.04 |
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Rate: 8.25% Fixed
Term: 60 Months
Amortization: I/O
LTC: 85%
Guarantee: Non-Recourse
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George Smith Partners has arranged $25,200,000 (85% of project costs) of non-recourse acquisition and redevelopment financing for an un-flagged, family run, 120-Key select-service hotel in Davis, California. To date, the Property has not undergone any significant renovations since opening in the 1980’s. Despite the properties’ dated appearance, the hotels close proximity (less than half a mile) to the UC Davis campus has provided it with ample foot traffic resulting in attractive operating metrics. Over the last three years, the property has consistently produced significant positive Operating Income solidifying the Sponsor’s business plan and confirming that extensive property wide renovations would lead to significant value creation. In addition to completely renovating the Property, the Sponsor plans to re-flag the property with a high quality, nationally recognized brand.
GSP identified a capital provider who was comfortable providing fixed-rate leverage, providing a needed level of security to the client against an increasing rate environment. This structure was a crucial factor in the decision making process for the Sponsor, as the high proceeds level at 85% loan to cost made the project even more sensitive to changes in index rates.
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Rate: Libor + 505
Term: 36 months
Amortization: IO
Loan-to-Cost: 69% LTC
Guarantee: Non-Recourse
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George Smith Partners secured $16,900,000 in bridge financing to acquire and renovate a 7-story office building (first floor retail) in the Jewelry District and historic core of Downtown Los Angeles. The property was originally built in 1913 with open floor plates and is perfectly designed for a conversion to creative office. Even though the project is well-located in the path of DTLA development, some challenges included a lack of both Sponsor experience and credit tenant preleasing. Moreover, being a purchase transaction added additional pressure to close without delays. GSP sourced a Capital Provider to get comfortable with the Sponsor’s team, business plan execution ability, and guarantor of the main leaseholder. While the original financing request estimated a 35% prelease, the Sponsor was able to obtain 60% preleasing by loan funding.
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Rate: 7.90%
Term: 12 Months
Prepayment: Open
Guarantee: Non-Recourse
Extension: 12 Month for 1% at 8.3%
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George Smith Partners arranged pre-development financing for a parcel of land strategically located one block from Hollywood Boulevard, in Hollywood, California. The land is fully entitled for the ground-up development of 28 multifamily units, with the potential for a density bonus as the parcel is located within a Transit Oriented Development district. The pre-development loan allowed the Sponsor to “cash out” appreciated equity to pursue other development projects and to use excess loan proceeds to finance the costs of density bonus application. The lender was able to get comfortable with the re-capitalization of the land with limited cash flow, due to the strong location, market fundamentals and experienced sponsorship.
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Please join Bryan Shaffer, Principal/Managing Director at George Smith Partners, and other top level industry leaders on Thursday, April 12, 2018 for RENTV’s Downtown Los Angeles State of the Market Conference at the L.A. Grand Hotel Downtown. Mr. Shaffer will participate on the Multifamily panel at 11:25 am. Hope you can make it! For 20% off the ticket price, use the promo code “RENTVGSP”. Register Here
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George Smith Partners is placing acquisition debt with a leading middle market investment platform that uses technology to efficiently source and underwrite real estate transactions. Non-Recourse bridge loans from $1,000,000 to $20,000,000, LIBOR + 450-800 bps, terms up to 3 years and up to 80% of total capitalization. The Lender provides a bifurcated loan structure which offers a lower cost of blended capital, and a strong commitment to close. In addition to common equity and senior debt, they offer subordinated financing to increase leverage.
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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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Constellation Place 10250 Constellation Blvd., Ste. 2700 Los Angeles, CA 90067
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