FINfacts™ XXIV – No. 126 | July 11, 2018

MARKET RATES
Prime Rate 5.00
1 Month LIBOR 2.07
6 Month LIBOR 2.51
5 Yr Swap 2.89
10 Yr Swap 2.92
5 Yr US Treasury 2.75
10 Yr US Treasury 2.85
30 Yr US Treasury 2.97

RECENT TRANSACTIONS
$13,369,000 Acquisition and Expansion Loan: 82-Site RV Park

Rate: Prime + 1%
Term: 5 Years
Amortization: Interest Only for 24 Months
Loan to Cost: 65%
Guarantee: Partial Recourse with Burn-Off

George Smith Partners successfully closed an acquisition and expansion loan for an 82-site RV park on the Central California Coast. There are few RV parks west of Highway 1 on the Pacific Coast, and fewer yet that include expansion space. The Sponsor plans to add 24 sites in the coming months to the 100% transient property. The loan included proceeds for the Sponsor to place bungalow-type model home units on several sites. This allows travelers without RV’s to “glamp” at the beautiful and well-located park.

GSP’s mandate was to source a lender who not only had the ability to execute in a timely fashion, but one who recognized the value in the excellent location and rare nature of the park. Furthermore, the Sponsor required a lender who understood their vision for creating a one-of-a-kind and of-the-moment guest experience.

The selected lender was able to recognize the unique value proposition of the property and the strong sponsorship involved in the project.

Advisors

Evan Kinne
Managing Director, GSP; CEO, AXCS Capital

$3,650,000 Cash-Out Refinance of an Auto Service Center

Rate: 4.65% years 1 – 5; then 280 over the 5 Year CMT
Term: 10 years
Amortization: 25 year
LTV: 60% (Closed at 58%)
DCR: 1.35
Prepayment: 3,2,1,1,0, 3,2,1,1,0
Guarantee: Recourse

Transaction Description:
George Smith Partners placed the cash-out refinance of a carwash anchored auto service center in a secondary Los Angeles market. A portion of the loan proceeds for the return on equity will be targeted for future car wash acquisitions. Over half of the Subject’s gross income is generated by a car wash lease from a related party of the Borrower. Although the Operator and Borrower are related, this was not structured as an owner-user execution. Other significant tenants include an auto parts retailer, an insurance broker and a tire retailer/installer. No Phase II investigation was required. Fixed for 5 years at 4.65%, the 10-year term will readjust to the 5-year CMT plus 280 basis points, amortized over 25 years. Sized to 60% of as-is value, proceeds were limited to a 1.35 DCR. Prepayment penalty steps down from 3% and is open years 5 and 10.

Problems:
The MAI appraisal came in above projections. Upward movement on the five-year CMT hampered loan proceeds due to the DCR constraint.

Solutions:
Due to the favorable appraisal we requested additional loan proceeds and the Bank offered $150,000 more than was applied for. When those proceeds were threatened by the run-up in the CMT, the Bank agreed to reduce their rate by 20 basis points. The Sponsor received more loan dollars at a lower rate than applied for in a rising rate environment.

Advisors

Matthew Kirisits
Director

$2,849,250 Permanent Loan for Acquisition of Single-Tenant Building in Tertiary Market

Rate: 4.375% Fixed for 7 Years
Term: 10 Years
Amortization: 25 Years
LTV: 75%
Guarantee: Recourse

George Smith Partners secured $2,849,250 in acquisition financing for a single-tenant Tractor Supply Company in Las Vegas, New Mexico. The Sponsor purchased the 19,000 square foot building for $3,800,000 at a very attractive cap rate for the product type. The tenant has 10 years remaining on their original lease with 10% rental increases every 5 years. GSP was able to mitigate the risk that the market presented by highlighting the Sponsor’s track record with similar assets. Sized to 75% of purchase price, the permanent loan is fixed for 7 years then floats for the last 3 years of the 10-year term.

Advisors

Steve Bram
Managing Director & Principal / GSP Co-Founder
Allison Higgins
Senior Vice President

Picture
HOT MONEY
Small Balance Construction Financing Prime + 1% to 70% of Cost

George Smith Partners is working with a California portfolio lender, focused in urban markets funding construction transactions from $1,000,000 to $7,500,000 on a recourse basis. Rates start at Prime + 1% for terms from 1 year to 30 months. Leverage for Speculative Homes, Condominiums, Apartments, and Small Lot Subdivisions go up to 70% of total development cost.

More Hot Money ›

Pascale's Portrait
PASCALE'S PERSPECTIVE
Evidence of Inflation Piles Up, But Treasuries Remain Sub 3.00%

More and more data indicate an economy at full employment with price increases at all levels of the economy. Producer prices saw their biggest annual increase in over 6 years today as prices climbed 0.3% last month with a 3.4% annual increase. And the NY Fed’s recently “UIG” index (Underlying Inflation Gauge which takes into account non-price data) is at 3.27%. But the 10 year Treasury yield remains stuck at sub 3.00% as markets are fearful of the consequences of tariffs and potential trade wars (less investment by companies and a slowing economy). But what if the economy actually shrugs off the tariffs and they just become another ingredient for inflation? That result may unleash pent up yield spiking. 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


WWW.GSPARTNERS.COM

Constellation Place
10250 Constellation Blvd., Ste. 2700
Los Angeles, CA 90067
Office 310.557.8336
Fax 310.557.1276
Email finfacts@finfacts.net
© 1999 - 2024 George Smith Partners, Inc. DRE # 00822654 FINfacts is an ePublication of George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
Hi, just a reminder that you're receiving this email because you have expressed an interest in George Smith Partners. Don't forget to add finfacts@gspartners.com to your address book so we'll be sure to land in your inbox!