FINfacts™ XXIV – No. 18 | May 4, 2016

MARKET RATES
Prime Rate 3.50%
1 Month LIBOR 0.44%
6 Month LIBOR 0.90%
5 Yr Swap 1.23%
10 Yr Swap 1.67%
5 Yr US Treasury 1.23%
10 Yr US Treasury 1.78%
30 Yr US Treasury 2.63%

RECENT TRANSACTIONS
$16,350,000 Non-Recourse 85% Loan-to-Cost Bridge Financing with Significant Construction Component

Rate: L + 5.30%; 5.74% at closing
Term: 2 year initial term plus two one-year options
Amortization: Interest only
LTV: 85% as-is, 75% as-stable
Prepayment: 18 month spread maintenance
Guaranty: Non-Recourse
Lender Fee: 1%

Transaction Description: George Smith Partners successfully placed $16,350,000 in non-recourse bridge debt to renovate and expand a 1970’s vintage Orange County community retail center. The 37,000 square feet of existing improvements will be expanded by over a third to 51,000 square feet. Approximately $6,000,000 of loan proceeds will be used to construct retail space for an investment-grade big box tenant that will account for 65% of the property’s stabilized income. An additional $1,000,000 will be funded for existing tenant improvements and common area renovations. The non-recourse loan is structured with a $2,000,000 construction overage reserve in lieu of a completion guaranty; there is no warm-body repayment or completion guarantee. Sized to 85% of as-is value and 75% of as-stable value, credit was given to the new lease with an anticipated 2017 tenant delivery date. A debt service reserve was also funded to cover the shortfall in interest payments until the tenant begins paying rent.

Advisors

Nick Rogers
Vice President

$10,400,000 Texas Multifamily Acquisition to 75% of Purchase

Rate: 4.99%
LTC: 75%
Term: 10 years
Interest Only: 5 Years
Amortization: 30 Years Thereafter

Transaction Description: George Smith Partners placed the $10,400,000 acquisition loan for a 248 unit garden style apartment in Texas to 75% of purchase.  This is our client’s first commercial asset in this region.  Our Sponsor was purchasing this asset in an exchange and therefore required certainty of execution to close on time and as applied for.  Maximum leverage tied with a lengthy interest-only period was needed to achieve the desired business plan.  Despite turmoil in the capital markets, the loan funded at the applied for proceeds, rate, and term.  Fixed for 10 years at 4.99%, the first five years are interest-only prior to rolling into a 30 year amortization schedule.


Single-Tenant Refinance – 65% LTV in a Tertiary Market

Rate: 4.35%
LTV: 65%
Term: 10 Years
Amortization: 25 Years
Recourse
Lender Fee: 0.50%
Prepayment: Open

Transaction Description: George Smith Partners arranged the $1,350,000 refinance of a single tenant Tractor Supply Company in Paris, Tennessee. A ten-year loan term was structured despite only four years remaining on the single tenant lease. Fixed at 4.35% for ten years, the loan amortizes over 25 years and was sized to 65% of current value. There is no prepayment penalty for this recourse loan.

Advisors

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

SPEAKERS CORNER

Bryan Shaffer will be speaking at the IMN 2nd Annual Real Estate Family Office and Private Wealth Management Forum (West), May 5-6, 2016 in Huntington Beach, CA. He is one of the speakers on the Debt/Lending Panel. See more information here.


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HOT MONEY
Small Balance Mezzanine Debt or Preferred Equity

George Smith Partners is placing Mezzanine Debt or Preferred Equity requests for value-add opportunities to as low as $1,000,000 up to 85% of total capitalization. Collateral must cash flow to pay to an 8% current with the balance accruing to a double-digit yield depending on the hold period and transaction type. This balance sheet program can fund quickly to accommodate acquisition escrows.

More Hot Money ›

Pascale's Portrait
PASCALE'S PERSPECTIVE
Treasuries Rally Again on US and International “Headwinds”

Treasury yields dropped on safe haven buying as worldwide stock and debt markets indicate the return of the “risk off” trade after a relatively optimistic April. This week’s news included: (1) Chinese manufacturing index indicating contraction; (2) US GDP for 1Q came in at 0.5%, below expectations; (3) Australia’s central bank unexpectedly lowered their key interest rate to 1.75%, an all time low. The 10 year T is down to 1.77% after hitting 1.93% on April 26 (way back when markets were expecting sustainable growth). The consensus is for the 10 year to trade between 1.50% and 2.00% for a while with only a single rate increase from the Fed for 2016.   Stay Tuned.   David R. Pascale, Jr.

More Perspectives ›

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