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FINfacts™ XXIV – No. 3 | January 20, 2016
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| Prime Rate |
 3.50% |
| 11th Dist COFI |
0.64% |
| 1 Month LIBOR |
0.43% |
| 3 Month LIBOR |
0.62% |
| 6 Month LIBOR |
0.85% |
| 5 Yr Swap |
1.33% |
| 10 Yr Swap |
1.82% |
| 5 Yr US Treasury |
1.42% |
| 10 Yr US Treasury |
1.98% |
| 30 Yr US Treasury |
2.75% |
| 12-Mat |
0.32% |
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Rate: 3 Mo. LIBOR + 4.00%
Term: 40 Months w/ 2 One-Year Extensions
Amortization: Interest Only
LTC: 60%
Non-Recourse
Lender Fee: 1.0%
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Transaction Description: George Smith Partners successfully placed the $22,000,000 senior construction loan for a 121 unit apartment building in the Westlake neighborhood of Downtown Los Angeles, California. The project will offer unobstructed views of the Los Angeles skyline. There will be 107 market rate apartments and 14 affordable housing units. Sized to 60% of project cost, the non-recourse loan is priced at LIBOR+ 4.0% for the 40 month term.
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Rate: 4.80%, Fixed
LTV: 65%
Term: 10 Years
Amort: Interest Only
Prepayment: Defeasance
Guaranty: Non-Recourse
Lender Fee: Par
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Transaction Description: George Smith Partners successfully placed a $4,600,000 non-recourse permanent loan on a single-tenant NNN CVS property located in San Antonio, Texas. The property was built in 2012 and has 22 years remaining on the lease. GSP sourced the full-term interest only loan from a lender comfortable with the low acquisition cap rate. The loan is fixed for ten years at 4.80% and is interest only during the entire loan term. The third party and lender legal costs were capped at $25,000.
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Rate: 7.9%
Term: 12 Months
Extension: One – 12 month Option
Amort: Interest Only
CLTV: 65%
Prepayment: None
Non-Recourse
Lender Fee: 1%
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Transaction Description: George Smith Partners placed a 65% loan-to-value non-recourse refinance for a two-tenant, 7,200 square foot retail asset in Hollywood (Los Angles) California. The loan was made to facilitate a partner buyout and fund further investments for the remaining Sponsor. Approximately 70% of the net-rentable is owner occupied. Our Sponsor’s low FICO score (high 400s) prevented prior attempts despite the strong retail location and moderate loan sizing. GSP identified a lender who accepted the Borrowers’ credit history and focused on the assets’ value, location and sales history. Fixed at 7.9% for 12 months, the non-recourse loan is interest only and allows for an extension option.
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George Smith Partners is placing private money debt to 65% loan-to-cost for core asset classes and land with entitlement risk. Transactions sized from $2,000,000 to $15,000,000 on quick-close are priced floating over Prime, floored at 10%. Traditionally a non-recourse lender on all asset classes including land, standard warm-body carve out signatures are required.
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Uncertainty is the rule of the day: Disappointing earnings (IBM, etc), Chinese market and currency fluctuations, oil and other commodity prices plummeting on low global demand (feeding concerns about slowing growth). The mood is ‘risk off’ in the markets, the 10 year Treasury yield hit a low today of 1.98% on the ‘safe haven’ trade. Silver linings: Maybe oil is bottoming? China has trillions in reserves to prop up its currency and markets for a long time. Fed watch: The volatility and deflationary aspects of the oil plunge probably indicate that the Fed’s announced ‘4 raises in 2016’ guidance will most likely be 1 or 2 raises, with the next one now expected in September 2016. A March raise seems to be an unlikely possibility. CMBS: Fixed income bonds across the board are being hit with price cuts and spread widening. Unrated junk bonds and European corporates are being hit hard. The very first CMBS pools of 2016 are in the market and the price talk for the AAA tranche is in the T + 140-150 range (compared to T + 120s in October/November). Originators are having a tough time with few data points and new 2016 regulatory challenges from Dodd Frank legislation. Today, a typical full leverage 10 year loan is pricing in the 4.90% to 5.00% range… stay tuned… David R. Pacale, 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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