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FINfacts™ XXIV – No. 42 | October 19, 2016
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| Prime Rate |
 3.50 |
| 1 Month LIBOR |
.53 |
| 6 Month LIBOR |
1.26 |
| 5 Yr Swap |
 1.23
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| 10 Yr Swap |
1.57
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| 5 Yr US Treasury |
1.23
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| 10 Yr US Treasury |
1.74
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| 30 Yr US Treasury |
 2.51 |
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Rate: 4.54%
Term: 10 Years
Amortization: 5 Years Interest Only; 30 Years Thereafter
LTV: 68%
Guaranty: Non-Recourse
Lender Fee: None
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Transaction Description: George Smith Partners successfully placed $8,100,000 in ten year fixed rate first mortgage financing on three big-box retail spaces occupied by national retailers in a secondary California Walmart shadow-anchored retail center. Constructed in 2015, all three tenants executed ten year lease terms, creating rollover event risk during the new loan term. George Smith Partners identified a national institutional lender able to provide a ten-year loan term despite not having historical sales. To mitigate the tenant rollover concentration at loan maturity, the transaction is structured with a cash flow sweep 12 months prior to two of the three tenants’ lease maturities. Sized to 68% of appraised value, the transaction includes five years of Interest Only payments prior to converting to a 30-year amortization schedule. This non-recourse loan carries a 4.54% fixed coupon.
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Speaker's Corner |
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Managing Director Gary M. Tenzer, was interviewed by Globest.com on the opportunities found in agency lending. Mr. Tenzer expounded on his expertise in multifamily lending and described agencies like Fannie and Freddie as “gangbusters” a reflection of current market conditions and trends. Mr. Tenzer served as moderator on the Agencies of Change panel on the first day of the 2016 RealShare Apartments conference where the discussion ranged from green financing programs with the agencies to pre-stabilization programs, new products and changing bank regulations. Register for the Thursday conference meetings here.
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New Market Tax Credits: Investors Await Announcement for $7 Billion Round |
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By year-end, The Community Development Financial Institutions Fund is expected to announce a combined round of New Market Tax Credits (NMTC) with $7 billion to award. The NMTC program started in 2000, aimed at bringing capital to distressed and low-income communities. These credits may be considered a boost or gap financing that is not repaid. The benefit from the improvements must be maintained for 7 years or face recapture of the tax credits. Eligibility is mainly determined by location and community impact. If approved and allocated, these credits generally account for 20-25% of the capital stack. Additional specifics on New Markets Tax Credit Program is available on-line. Huber Bongolan, Jr.
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In The Press |
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George Smith Partners Principal Jonathan Lee was featured on Globest.com on the successful arrangement of $34 million in non-recourse ground-up construction financing for a San Francisco’s Mid-Market condominium. The article explores the attractiveness of walkability in the city and the importance of development along transit-oriented corridors to meet current market demands. Jonathan Lee described, “The flexibility of this proposed project, coupled with its irreplaceable location in the urban core of San Francisco, made it an attractive project for lenders.” Additional details on this transaction are available as initially published in the August 10th issue of FinFacts.
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The 10 year Treasury sits at 1.74% after hitting a 4 month high of 1.84% on Monday. Fed members Yellen and Fischer both gave interesting statements in recent days: Yellen mused about the effect (or lack thereof) of macro monetary policy on segments of the workforce. She suggested that the Great Recession may have eroded the skills of much of the nation’s workforce and consequently their spending habits. This is a deeper more granular level of analysis than the Fed usually engages in, as it generally focuses on national inflation and unemployment statistics. Fischer made the case for raising rates, sounding the alarm on the “dangers” of low rates threatening financial stability. Markets still expect a rate increase in December. Overall, the Fed has lowered their growth expectations and eventual “normalized” short term rate, from about 4% to 3% (today its 0.50% and expected to normalize in 2018/2019). Speaking of inflation, yesterday’s core CPI number of 0.1% for September was below the expected 0.2%. This caused some buying of Treasuries. However, oil prices hit their highest level since July 2015 today. If oil prices firm up and start rising, it could be a factor in an uptick in inflation. Treasuries then sold off due to hedging of the massive Saudi Arabia bond sale ($17.5 billion, interestingly priced at 1.65% over the 10 year Treasury). stay tuned David R. Pascale, Jr.
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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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