FINfacts™ XXIV – No. 31 | August 3, 2016

MARKET RATES
Prime Rate 3.50
1 Month LIBOR 0.49
6 Month LIBOR 1.07
5 Yr Swap 1.11
10 Yr Swap 1.44
5 Yr US Treasury 1.07
10 Yr US Treasury 1.54
30 Yr US Treasury 2.30

RECENT TRANSACTIONS
$25,200,000 in Acquisition Bridge Financing for a 144 Unit Dallas Multifamily Property

Rate: LIBOR + 3.75%
Term: Two Years initial term with (3) One-Year Exts. There are no performance tests to exercise options.
LTC: 70%
Lender Fee: 1.00%
Exit Fee: None
Non-Recourse
Amortization: Interest Only

George Smith Partners successfully structured the 70% loan-to-cost non-recourse acquisition bridge financing on a significantly under-managed 2000 vintage mid-rise multifamily property in Dallas, Texas. The under-managed property was trailing market rents by 20% at acquisition resulting in a debt yield below 6% on in-place income. The Sponsor’s business plan is to recapture the loss to lease, implement a capital improvement plan including washer/dryer installation to enhance unit interiors, and upgrade the lobby, common areas, amenities and exterior to meet the market’s discerning taste. Floating at 375 over LIBOR, this non-recourse loan is Interest-Only for five years (including options) and was sized to 70% of total cost. A portion of the loan proceeds will be used to finance the interior and exterior upgrades, with interest not paid until funds are drawn.

Advisors

Nick Rogers
Vice President

$6,260,000 Ground-Up Retail Construction & Reposition to 95% of Total Cost

Rate: 9%
Term: 12 months
Amortization: Interest Only
LTC: 95%
Prepayment: None

George Smith Partners arranged the 95% of total cost, ground-up construction loan to redevelop an existing multi-tenant retail center in Sacramento. This financing will be used to demolish and redevelop the majority of the existing center with two new national restaurants in addition to the one that is already in place. New leases were fully executed at close and the existing tenant will continue to operate during the reposition phase. Prior to loan funding, this parcel was sub-divided into three lots allowing for flexible exit strategies. Sized to 95% of total costs including land, soft and hard costs, the loan has pre-negotiated release prices and allows for extension options if needed.

Advisors

Scott Meredith
Managing Director & Principal

In the Press

George Smith Partners’ very own David R. Pascale Jr. is featured in Reuters this week regarding current CMBS trends and pending Dodd Frank Regulation enactment. The article highlights CMBS performance prior to new risk retention rules taking effect Q4 2016. The entire Reuters article is available on-line.


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HOT MONEY
High Leveraged Non-Recourse Bridge

George Smith Partners identified a whole loan provider for reposition transactions to 80% of total capitalization for one-stop capital. This capital provider will also “top off the tank” and participate in a mezzanine or pref-equity position behind other senior lenders from $10,000,000. Larger transactions are priced more competitively based on size. Whole loans from $30,000,000 are priced from LIBOR + 400 on the combined blended coupon – pricing is future Debt Yield based. Secondary markets and zero cash flowing assets are accepted for value-add executions for up to a five year term.

More Hot Money ›

Pascale's Portrait
PASCALE'S PERSPECTIVE
Parsing the Data

Last week’s disappointing US GDP report indicating 1.2% annual growth rate is giving more credence to the “secular stagnation” theory of post crisis economic growth. It definitely seems to have pushed a Fed rate hike past the election, although this Friday’s jobs report will be closely watched. The Fed’s favorite inflation gauge, PCE (Personal Consumption Expenditures) remained at 1.6%, well below the 2.0% Fed target. Recent statements by Fed officials indicate a “one and done” rate hike for 2016, December being the most likely and politically expedient date. CMBS spreads continue to rally as the latest new issue featured AAA bonds at Swap + 108 (compared to Swap + 175 during the volatility early in the year), the “perfect storm” of low treasuries and tight spreads continues. Stay tuned

David R. Pascale, Jr.

More Perspectives ›

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