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FINfacts™ XXIV – No. 29 | July 20, 2016
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| Prime Rate |
 3.50 |
| 1 Month LIBOR |
 0.49 |
| 6 Month LIBOR |
1.01 |
| 5 Yr Swap |
1.13 |
| 10 Yr Swap |
1.45 |
| 5 Yr US Treasury |
1.14 |
| 10 Yr US Treasury |
1.58 |
| 30 Yr US Treasury |
2.30 |
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Rate: 5 Year Swap + 225
Term: Five Years
Amortization: 30 years
Non-Recourse
Prepayment: Swap Breakage Only
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George Smith Partners placed the cash-out refinance on a grocery & drug anchored retail center that was recently acquired in an all-cash execution. This non-stabilized California asset closed without the benefit of leverage and our Sponsor sought to recapitalize the majority of their equity investment on a non-recourse basis. Fixed for five years at SWAPs+225, the non-recourse loan was sized to 65% of current appraised value from a California Portfolio capital provider.
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Rate: 4.25%, Fixed
Term: 10 years
Amortization: 4 Years Interest Only; 30 Year Amortization thereafter
LTV: 70%
Prepayment: Defeasance
Guaranty: Non-Recourse
Lender Fee: None
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George Smith Partners successfully placed $9,300,000 of non-recourse, first mortgage debt to refinance a 70,000 square foot Bay Area multi-tenant retail property anchored by an independent grocer whose lease is backed by a large wholesale grocery cooperative. The property has a stable occupancy rate below 90% due to approximately 4,600 square feet of static vacancy. In order to maintain leverage despite the reduced income resulting from the static vacancy, George Smith Partners sourced a lender comfortable with a debt yield hurdle below 8% and a 1.20x debt service coverage threshold. The 70% leverage, non-recourse loan has a 4.25% fixed coupon and the 10-year term is interest only for the first four years with a 30-year amortization schedule thereafter.
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Rate: 4.27%
Term: Five Years
Amortization: One Year Interest Only, 30 Years Thereafter
LTC: 80%
Prepayment: 3,2,1,1,1%
Non-Recourse
Lender Fee: Par
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George Smith Partners arranged $5,000,000 in non-recourse acquisition financing for the purchase of a 140-unit apartment building in Jacksonville, Florida. The five year loan floats at 4.27% for 12 months of interest only payment and was sized to 80% of purchase. The loan is also complemented by borrower-friendly prepayment options. George Smith Partners was able to structure the loan to accommodate the TIC (Tenants-in-Common) ownership structure that was preferred by our Sponsor to take advantage of a 1031 exchange option.
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George Smith Partners is now accepting applications for our full-time Fall 2016 Rotational Analyst Program. Entry-level analysts will rotate through various teams and be exposed to all facets of commercial real estate investment banking. This competitive rotational program lasts 15 weeks where analysts will be evaluated for the possibility of a permanent position at the firm. Please submit your resume and cover letter to careers@gspartners.com by August 5th, 2016. Additional information can be found here.
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The latest Dodd/Frank facet makes application Christmas Eve and is anticipated that the complicated risk retention will add to the cost of a CMBS execution. Several originators are testing retention structures prior to the mandate to confirm sizing and pool pricing. Others continue to press for recordations by September 30th to take advantage of the current compressed rates and securitize prior to the unknown impact of the regulations. A handful of CMBS originators have contacted George Smith Partners with “Blue Light Specials” with razor thin spreads for stabilized transactions that will fund and record by the end of September.
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It seems that here in the US, Brexit is a distant memory. Treasury yields are rising, the Dow and S&P are hitting record highs, and the Fed is now confident they can raise rates (one time?) in 2016. Futures market shows a 24% chance by September and a near 50% by year end – much higher than last month. There is a “perfect storm” of news, as positive US economic reports and better than expected corporate earnings boost the Treasury yield, but not “too much” as negative yields around the world attract foreign buyers to our Treasuries (a major spike in Japanese buyers for example). Credit spreads are narrowing, CMBS is benefitting from relative scarcity (issuance is down about 40% compared to last year). We are seeing new loans price from 4.10% to 4.25% (lower for solid assets). 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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