FINfacts™ XXIV – No. 33 | August 17, 2016

MARKET RATES
Prime Rate 3.50
1 Month LIBOR 0.51
6 Month LIBOR 1.20
5 Yr Swap 1.17
10 Yr Swap 1.44
5 Yr US Treasury 1.17
10 Yr US Treasury 1.57
30 Yr US Treasury 2.28

RECENT TRANSACTIONS
$33,000,000 Non-Recourse Acquisition Bridge Financing for an 82% Occupied Multi-Tenant Industrial Business Park

Rate: LIBOR+2.75%
Term: 3 Years plus one 2-Year extension
Amortization: Interest Only for initial 2-Years
LTC: 65%
Prepayment Penalty: None
Release Provisions: Structured release provisions
Recourse: Non-Recourse
Lender Fee: 0.50%

George Smith Partners successfully structured and placed the non-recourse acquisition bridge loan for a 27 building multi-tenant industrial business park, totaling 475,000 square feet with over 231 tenants in the Pacific Northwest. At acquisition the property was 82% occupied with a going in debt yield of approximately 9.5%. $24,530,000 of the on-book financing was funded at closing with $7,220,000 to be future funded for immediate property improvements, future upgrades which includes funding for the Sponsors’ strategic spec-suite program, as well as future leasing costs. Upon achieving a predetermined net operating income, the lender will advance an additional $1,250,000 earn-out. Interest will not be paid on future funding until disbursement. Floating at L+2.75% for a three year term; the first two years are interest only. There is one (1) two-year extension.

Advisors

Nick Rogers
Vice President

Five-Year Fixed Non-Recourse Acquisition at 3.30%

George Smith Partners secured the $2,000,000 non-recourse acquisition loan for a 14-unit value-add multifamily property in Los Angeles. Our Sponsors are highly experienced owners & developers of retail and multifamily properties in Southern California. The subject property is well-maintained although a number of tenants are paying rents 7% to 41% below market. Emphasis was placed on our Sponsor’s considerable experience unlocking the value of multifamily properties through re-leasing and capital improvements. One year of Interest-Only was secured prior to rolling into a 30 year amortization schedule. Fixed at 3.30% for the first five year term, the loan will float at 6 month LIBOR + 2.75% thereafter.


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HOT MONEY
80% LTC “For Sale” Housing from a private REIT

George Smith Partners identified a private REIT funding ground-up senior and mezzanine construction as well has bridge debt from $2,000,000 to $15,000,000 for in-fill residential condo reposition or development. Estate home “fix & flip” product is also available for investors. Geographic targets are western and north-eastern states. Sized to 80% of cost; pricing ranges from 6% to 9% based on leverage.

More Hot Money ›

Pascale's Portrait
PASCALE'S PERSPECTIVE
Fed Minutes Reveal Multiple Viewpoints

Today’s release of July’s Fed Minutes and recent statements by influential Fed officials (Lockhart and Dudley) show some sentiment for a rate hike at the next meeting (September). These officials feel that even though inflation is not at the Fed target of 2%, the economy is nearing “full employment” (which itself is a historic anomaly, chalk it up to the “new normal”). Others want to wait and see more data – perhaps a strong 3rd Quarter GDP which is anticipated. There is also some worry that the unprecedented long period of ultra-low rates is causing excessive risk taking. However, the futures market has low probabilities for any rate increase before December. Stay tuned.

David R. Pascale, Jr.

More Perspectives ›

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