FINfacts™ XXIV – No. 151 | January 23, 2019

MARKET RATES
Prime Rate 5.50
1 Month LIBOR 2.52
6 Month LIBOR 2.85
5 Yr Swap 2.67
10 Yr Swap 2.78
5 Yr US Treasury 2.58
10 Yr US Treasury 2.75
30 Yr US Treasury 3.06

RECENT TRANSACTIONS
$34,000,000 Dallas Multifamily Acquisition Fixed at 5.15% w/Full Term Interest Only

Rate: 5.15% fixed
Term: 10 years
Amortization: 10 years Interest Only
Prepayment Penalty: Defeasance
LTV: 65%
DCR: 1.4x
Debt Yield: 7.75%

Transaction Description:

George Smith Partners secured a $34,000,000 permanent loan for the acquisition of a 273 unit Class A multifamily property in Dallas, TX. The 10 year loan is priced at 5.15% and fixed for ten years, with full term interest only. The Borrower executed their purchase and sale agreement in October 2018 as part of a 1031 exchange. While in due diligence the cash flow declined due largely to new construction coming on-line. In addition property taxes were re-assessed at a higher rate. GSP worked with the lender as well as the rating agencies to demonstrate the historical occupancy (95%+) and mitigate the loss in net cash flow from the rise in operating costs. The borrower was able to rate lock at an all-in rate less than applied for, with full proceeds, during the last week of 2018. The transaction closed once business commenced in full in 2019.

Advisors

Jonathan Lee
Principal/Managing Director
Shahin Yazdi
Principal/Managing Director
David Stepanchak
Senior Vice President
Matthew Kirisits
Vice President
Olga Alworth
Senior Vice President
Samuel Sarshar
Assistant Vice President

$13,600,000 for the Acquisition and Reposition of 199-Units in Mesa, Arizona

Rate: 30-Day LIBOR + 3.45%
Term: 36 Months plus Two 12-Month Extensions
Amortization: 36 Months Interest Only
Loan to Cost: 75%
Prepayment: 24-month spread maintenance; open thereafter
Guarantee: Non-Recourse
Lender Fee: 1.00%

Transaction Description:

George Smith Partners arranged $13,600,000 of bridge acquisition financing for a 199-unit apartment complex located in Mesa, Arizona. The Property, which was built in 1970, features a pool, bbq area, and playground. The units range from studios to 3-bedrooms and are currently 97% occupied. The Sponsor plans to renovate the exterior area to improve the overall appeal of the Property and address some deferred maintenance . The 3-year loan is sized to 75% LTC and has an interest rate that floats at 3.45% above 1-Month LIBOR. The non-recourse financing has 24 months of yield maintenance and has a 1.0% origination and 0.5% exit fee.

Advisors

Steve Bram
Principal/Co-Founder
David R. Pascale, Jr.
Senior Vice President
Patrick O’Donnell
Vice President

Acquisition Financing for NNN Jack in the Box, Texas

Rate: 5.375%
Term: 5 Years Fixed, 12 Year Term
Amortization: 30 Years
Guarantee: Recourse
Prepayment Penalty: 5,4,3,2,1
Lender Fees: None

Transaction Description:

George Smith Partners placed acquisition perm financing for the purchase of a single tenant, NNN-lease Jack in the Box in Texas. The Sponsor is a single asset entity, whose goal is to self-manage the NNN retail property. This Property was identified in a 1031 exchange. Jack in the Box has 12 years remaining on the lease, therefore George Smith Partners worked with the Lender on structuring a 12-year coterminous term. Due to the low leverage and other mitigating factors, GSP was successful in acquiring a 30-year amortization for the Sponsor along with a stepdown prepayment penalty. GSP also negotiated with the Lender to waive all fees.

Advisors

Reuven Risch
Vice President

SPEAKERS CORNER

Please join Evan Kinne, Senior Vice President at GSP, and other industry experts for the Opportunity Zone Expo on Friday, January 25th from 10:00 am to 4:00 pm at the JW Marriott L.A. Live. Evan Kinne will be a panelist for the 2:00 pm discussion, “Building Blocks for Success: Best Practices for Structuring Funds”. Click here for more information.


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HOT MONEY
Co-GP Equity Provider Offering Financing for JV’s During Predevelopment

George Smith Partners is working with a Co-GP equity provider for multifamily, condominium, office, hospitality, mixed-use, retail, student housing and industrial sectors. The capital provider will enter into joint ventures during pre-development periods and will take entitlement risk. They can be used to provide equity for ground-up development, build-to-core, asset repositioning, distressed construction projects and non-performing construction loans. Looking for value-add and opportunistic ground-up opportunities in top 25 markets nationwide. Target equity investments between $15-$50+ million for total capitalizations north of $100 million ranging from 50% – 90% of the required GP equity. A construction completion guarantee will be provided where their GC is project managing.

More Hot Money ›

Pascale's Portrait
PASCALE'S PERSPECTIVE
Government Uncertainty May Roil Markets

The longest Government shutdown in history is by definition “uncharted territory” and may push markets. Potential effects that may begin to “pile up”: no economic reports for markets to interpret, federal agency causing slowdowns in economic activity (TSA, USDA inspectors, etc), consumer/business confidence erosion, potential global investor impatience and avoidance of US dollars/treasuries (ugh! – especially if the shutdown begins to affect the upcoming debt ceiling debate). With no end in sight, the only “ray of light” from Washington has been a potential trade deal with China (who seems to need to make a deal). The 10 year T seems to have settled in a range of 2.70-2.80 lately, today at 2.75%. CMBS: With no pool having been securitized since before Christmas, originators are slightly “flying blind” looking for a level to price off of. Whisper talk on upcoming pools indicates some narrowing may be in the cards (AAAs at Swap + 95 as opposed to over 100 in December). All-in rates for full leverage loans is right about 5.00% (again). 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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