Rate: LIBOR + 4.0%
Term: Three Years + One Year Option
LTC: 60%
Loan Fee: One Point
Non-Recourse

George Smith Partners placed the ground-up construction loan for the development of 90 “For Sale” housing units over ground-floor retail in the heart of the San Francisco Financial District, walking distance from several major tech employers. The retail is designed for restaurant use and can be sold to a single user or easily sub-divided and sold to two separate owner/operators. No public parking will be available although several residents may purchase a subterranean space in addition to their unit acquisition. Sized to 60% of actual costs, the non-recourse loan only carries a completion and carve-out signature; there is no repayment guarantee. Priced at LIBOR (floored at 0.5%) plus 400, the three year loan carries a one-year option to extend.

Interest Rate: 4.00%
Term: 15 Years
Interest Only: 2 Years
Amortization: 30 Years
LTV: 55%
Prepayment Penalty: Yield Maintenance
Non-Recourse
Lender Fee: Par

George Smith Partners arranged $5,242,500 in non-recourse debt to refinance a 315-unit apartment complex in a tertiary market. The Sponsor requested maximum cash-out proceeds that dissuaded many capital providers from considering the request given the B quality of the asset and the soft market. A comparative market study supported the underwriting and maximum loan proceeds. Priced at 4.0%, the fixed term is for 15 years and provided for 2 years of Interest Only prior to rolling into a 30 year amortization schedule.

Advisors

Steve Bram Managing Director & Principal / GSP Co-Founder

Allison Higgins Senior Vice President

People love to compare Real Estate cycles with baseball, and it looks like the multifamily market is entering the 6th or 7th inning, with a good chance of extra innings. Developers are becoming increasingly concerned with rising labor costs, expensive land, and slowing rent growth. While rents have continued to grow, the pace at which they are increasing appears to be leveling off. National rent growth of 3.5% in June was the lowest since the 3.4% of April 2014, and marked a 37-basis-point decrease from the 3.8% recorded in May. This was the eighth month, of the previous nine, in which the rate decreased. Before you get too alarmed please remember rent growth of 3.5% is still above the long-term average. With national vacancy rates less than 5%, multifamily is still the preferred asset type for lenders. According to the WSJ, the U.S homeownership rate fell to the lowest level in 50 years in the second quarter of 2016. In the same time period, renter-occupied housing units increased by 967,000. With millennials increasingly pushing back the age of home ownership, their demand for apartments should keep the multifamily market hot for the foreseeable future. So it’s time to call on the bullpen, but keep your closers seated, as it looks like this game still has a few innings left.  Jason Gaffner