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FINfacts™ XXIV – No. 16 | April 20, 2016
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| Prime Rate |
 3.50% |
| 1 Month LIBOR |
0.44% |
| 6 Month LIBOR |
0.90% |
| 5 Yr Swap |
1.21% |
| 10 Yr Swap |
1.63% |
| 5 Yr US Treasury |
1.31% |
| 10 Yr US Treasury |
1.85% |
| 30 Yr US Treasury |
2.65% |
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Rate: Prime+ 0.25%
Term: Two Years + One Year Option
LTC: 42%
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Transaction Description: George Smith Partners secured $30,000,000 for the recapitalization of a vacant 68k square foot office building and pre-development site entitled for future multifamily development. The two-year loan term allows for staged funding to cover tenant improvements, capex, and construction of a new parking garage. A release for the multifamily parcel was structured to allow for future construction debt. Priced at Prime plus 25 basis points, there is no interest rate floor.
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Rate: LIBOR+9.50%
Term: 12 months, plus (2) Six-Month Exts
Amortization: Interest only
Loan to Cost: 65%
Prepayment: Six-month spread maintenance
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Transaction Description: George Smith Partners arranged the high dollar per square foot ($907/SF) non-recourse acquisition of a vacant 9,370 square foot retail building situated on an oversized 29,555 square foot parcel (6.4:1,000 parking) located along a major thoroughfare in Santa Monica, California. An interest reserve to carry the loan through the initial 12-month term was funded as the single-tenant improvement is currently vacant. GSP sourced a capital provider comfortable with the high loan per square foot and short closing timeframe due to the project’s strong market fundamentals. Sized to 65% of purchase price, the eight-day quick close acquisition loan priced at 9.50% over one-month LIBOR.
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Rate: 3.25%
Term: 30 Months
Interest Only: 6 Months
LTC: 70%
Prepayment: None
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Transaction Description: Shahin Yazdi successfully sourced the acquisition and rehabilitation bridge debt for an 8-unit multifamily property in Glendale, California. Sized to 70% of total capitalization and fixed at 3.25% for 30 months, the first 6 months are interest only. There is no prepayment penalty. Although sub-1.0 coverage at close, an interest reserve was not funded; the Sponsor will feed the monthly debt-service short out-of-pocket.
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CMBS volatility has Sponsors searching for national permanent capital providers with the ability to close as applied for at higher leverage points than traditional life insurance companies. GSP is working with several small balance lenders who pool then securitize but hold their own B Piece and advance to 75% of current value for stabilized assets. The lack of a B-Piece buyer omits the need for a material adverse change (MAC Clause) statement in the loan application. Priced in the high 4% range for 10 year fixed terms, amortization is typically 30 years for core assets. Lender legal is typically in-house to minimize closing costs.
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The 10 year Treasury spiked to 1.85% today as traders sold off during the Fed’s “blackout” period in advance of next week’s meeting, and continued firming up of oil prices. The futures markets show a 1% chance of a rate rise this month, a 16% chance in June, and Sept-Dec at about “even money” for a single rise. CMBS: After the rally that saw the 10 year AAA bonds tighten from T+165 to T+129, last week saw a slight widening up to about T+133. B-piece buyers and rating agencies continue to by hyper-vigilant with originators subject to “haircuts” and “kickouts” for loans with perceived credit issues. “Inside the fairway” and low leverage loans are being priced aggressively with all-in rates under 5.00%. 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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