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FINfacts™ XXIV – No. 21 | May 25, 2016
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| Prime Rate |
 3.50% |
| 1 Month LIBOR |
0.44% |
| 6 Month LIBOR |
 0.96% |
| 5 Yr Swap |
1.36% |
| 10 Yr Swap |
1.72% |
| 5 Yr US Treasury |
1.40% |
| 10 Yr US Treasury |
1.87% |
| 30 Yr US Treasury |
2.66% |
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Rate: 4.92%
Term: 10 Years
Amortization: 2 Years Interest Only; 30 Years Thereafter
LTV: 75%
Prepayment: Defeasance
Non-Recourse
Lender Fee: Par
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Transaction Description: George Smith Partners successfully placed a high leveraged, non-recourse $22,800,000 refinance for a mixed-use 225,000 square foot warehouse building with a significant office component. The Orange County, California property sits on a 12 acre parcel and was constructed in 1966 and subsequently renovated in 1985 and again in 2001. The 2001 renovation was structured to accommodate a government agency whose footprint occupies 60% of the gross improved square footage. Their build-out consists of 31% office (2-story), 19% air conditioned warehouse, and 50% conventional warehouse. Loan proceeds were allocated to cover additional tenant improvements and lease commissions as this agency recently extended for an additional 15 year term. The remaining square footage is leased to an industrial bakery who has occupied the property since 1989. Their lease rolls during this 10 year loan term. GSP sourced a capital provider who underwrote the tight market constraints and agreed to push proceeds below an 8.0% debt yield without layering on mezzanine debt. Fixed at 4.92% for 10 years, the non-recourse loan is interest-only for 2 years before rolling into a 30 year amortization schedule.
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Rate: P+0.5% with a floor of 4.25%
Term: 7 years
Amortization: 25 years
LTC: 70%
Prepayment: None
Recourse
Lender Fee: 0.375%
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Transaction Description: George Smith Partners arranged the $5,145,000 acquisition loan for the purchase of a mixed-use Santa Clarita CRE asset made up of eight retail units and 20 office suites; sized to 70% of purchase. At the time of close, the retail was 100% leased and occupied with only one office vacancy. Purchased for $7,350,000, our Sponsor sought maximum loan proceeds but required a release for a pad restaurant on its own APN, with the goal of selling that collateral and reducing their basis in the property. GSP secured a floating-rate loan with the requested release, priced at Prime + 0.5%, with a 4.25% floor. There is no prepayment penalty.
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Investment Banks seeking CMBS feeders continue to offer their balance sheets for short-term bridge transactions on larger executions. GSP is working with one I-Bank funding down to $10,000,000 on-book for three year terms on a non-recourse basis. Sized down to a 4.0% going-in debt-yield, an interest reserve may be funded at close. Sub-3.0% coupons are underwritten for Class A assets in gateway cities. The one-point exit fee will be waive upon rolling into a CMBS perm.
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The two-year treasury yield hit its highest level since March 15th as the Fed continues to telegraph a rate hike in coming months. Meanwhile, the 10-year yield remains relatively low at 1.84% as foreign buyers are fleeing ultra low 10-year yields in Europe and Asia. Oil prices continue to stabilize, hitting a 7 month high near $50 per barrel. This is welcome news for the economy as home and car loan defaults are spiking in oil dependent regions such as Houston. Recent economic reports (new home sales, home starts, etc.) are exceeding expectations. Markets will watch upcoming data closely leading up to the Fed’s next meeting in June. Futures indicate a probability of a rate hike by September. The June meeting is set for 10 days before the British vote to stay or leave the European union. Regardless of the data, the Fed may choose to wait. 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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