FINfacts™ XXIV – No. 61 | March 29, 2017

MARKET RATES
Prime Rate 4.00
1 Month LIBOR 0.98
6 Month LIBOR 1.40
5 Yr Swap 1.94
10 Yr Swap 2.39
5 Yr US Treasury 2.04
10 Yr US Treasury 2.37
30 Yr US Treasury 2.99

RECENT TRANSACTIONS
$19,500,000 Acquisition and Reposition Financing with Low 5.00% Going-In Debt Yield on a Multifamily Property in Seattle, Washington

Rate: 30-Day LIBOR + 4.50%
Term: 36 months plus two 12-month extensions
Amortization: 36 months interest only; 30-year amortization thereafter
Loan to Cost: 70%
Prepayment: 18-month lockout; open thereafter subject to 0.50% exit fee
Guaranty: Non-recourse
Lender Fee: 1.00%

George Smith Partners arranged a $19,500,000 first mortgage on the acquisition of a value-add multifamily asset located within one of Seattle’s trendiest neighborhoods.  The national balance sheet lender provided a non-recourse loan to 70% of total project cost including 100% of future capital expenditure funds to refresh the property’s exterior, interiors including living and common area spaces, and convert 13 furnished extended stay style “executive suites” to market-rate apartments.  Interest expense is not incurred on future funding until drawn.  Cash flow is maximized as the loan is interest only during the initial three-year term and priced at 4.50% over 30-Day LIBOR.  Due to low going-in cash flow, the lender structured an interest reserve to cover debt service during the reposition period.

Advisors

Nick Rogers
Vice President

$7,350,000 Non-Recourse Pre-Development Financing on a Predominantly Vacant West LA Office & Retail Building

Rate: 9.50% fixed
Term: 18-months plus two six-month extension options
Amortization: Interest only
Loan to Value: 75%
Prepayment: 12-month yield maintenance
Lender Fee: 1%

George Smith Partners arranged a $7,350,000 non-recourse loan to 75% of appraised value from a national debt fund to finance the pre-development period of an existing 12,500 square foot, West Los Angeles office and retail building.  Despite having very low occupancy, the lender was able to advance $588 per square foot after GSP demonstrated the superior location of the asset and experience of the Sponsor in development.  The lender structured a 12-month interest and carry reserve as the Sponsor vacates the remaining in-place tenants in order to implement its business plan of eventually razing the existing improvements and building a new, high-end, multi-tenant retail building. Loan proceeds were priced at 9.50% fixed for the 18-month loan duration, and interest expense is not incurred on the interest and carry reserve until drawn.

 

Advisors

Nick Rogers
Vice President

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HOT MONEY
Multifaceted Finance Company with $7 Billion Allocation

GSP identified a non-recourse capital provider funding loans from $30,000,000 to upwards of $500,000,000 with a strong appetite for light bridge deals with some in place cash flow.  Sized to as low as a 4% debt yield on in place cash flow, this lender will fund on an interest only basis to a 1.0 debt coverage ratio.  Loans will generally be 3 years with 2 one year extensions, but can be as long as 7 years. Pricing starts at LIBOR plus 3.25%.  Permanent Debt will be sized to 70% LTV and priced competitively. Only high quality assets in primary markets will be considered.  Mezzanine financing starts at $50,000,000 and up to 70% LTV and will price aggressively for best in class assets.

More Hot Money ›

Pascale's Portrait
PASCALE'S PERSPECTIVE
Fixed Rates “Watching and Waiting” for Washington’s Next Move

Treasury yields hit a 3 week low on Monday as the 10 year yield dropped to 2.36% on Monday (interestingly, that is exactly 1% higher than its all time low of 1.36% in the wake of the Brexit vote last July). The twin forces at work are (1) Higher yields due to continuing strong economic reports (Consumer Confidence, Pending Home Sales both outperformed expectations) combined with potential inflation (Oil is again above $50 per barrel) or (2) Lower yields due to lower expectations for tax reform and infrastructure fiscal policy in the wake of last week’s failure to pass health care reform and lingering Euro worries (Brexit fallout, Greece is “fixed” again, but Italy is in trouble). stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners.

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More Perspectives ›

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