|
FINfacts™ XXIV – No. 62 | April 5, 2017
|
|
|
| Prime Rate |
 4.00 |
| 1 Month LIBOR |
 0.99 |
| 6 Month LIBOR |
1.42 |
| 5 Yr Swap |
 2.00
|
| 10 Yr Swap |
2.34
|
| 5 Yr US Treasury |
1.89
|
| 10 Yr US Treasury |
2.37
|
| 30 Yr US Treasury |
2.98
|
|
|
|
Rate: LIBOR + 8% (Capped at 9%)
Amortization: Interest Only
LTC: 90% Loan to Cost / 75% Loan to Value
Term: One Year Term With (2) – One Year Options
|
|
Transaction Description:
George Smith Partners secured a $8,200,000 private money bridge loan to enable the renovation and re-tenanting of an un-anchored retail shopping center in Orange County, CA. The loan included over $1,500,000 of cash out to the sponsor at closing as well as $600,000 for future tenant improvements and renovations.
Challenges:
The sponsors requested maximum cash-out proceeds that dissuaded many capital providers. Additionally, several tenants were in the process of significantly upgrading their spaces and had unfinished renovations in place. Finally, the project had unsettled legal issues with one of the major tenants.
Solution:
GSP used its experience and relationships to identify a lender who could understand the greater value of the project and was able to demonstrate both the inherent value of the property due to its extraordinary location as well as the future value of the project as completed. As a result, the lender became comfortable with the loan’s basis per square foot.
|
|
|
|
Rate: LIBOR+5.50%
Amortization: Interest Only
LTV: 65% LTV
Term: 24 months
Lender Fee: 1%
|
|
George Smith Partners secured $7,600,000 non-recourse bridge financing for a 50% occupied class C multifamily property in a secondary market located in the Southwest. Proceeds included $2,127,000 for renovation on dilapidated units and capital expenditures as well as an interest reserve. The sponsor acquired the property with no reliable operating history utilizing a seller carry back note. Many of the tenants were late on their rent at the time of acquisition. The sponsor systematically put in place stricter underwriting for tenant qualification and value engineered a renovation budget. Most lenders were unable to understand the business plan, despite the sub-market being at 94% occupancy and the sponsor’s recent rentals already hitting pro forma with very light unit turn expenses. GSP identified a lender with extensive knowledge of multifamily re-positioning and became comfortable with the pro forma cash flow and stabilized value. In addition, the lender has capacity to offer a fixed rate permanent loan at stabilization to mitigate refinance risk.
|
|
|
|
George Smith Partners is originating non-recourse loans up from $5,000,000 to $40,000,000 for a national specialty bridge lender. Leverage ranges from 75% to 85% LTC plus 100% of good news dollars and interest reserve for deals below break-even debt coverage at close. Interest is not charged on funds until drawn and there is typically no origination fee, but there is an exit fee which demonstrates the lender’s commitment fund as many dollars toward the reposition as possible vs. discounting proceeds with hold backs. Typically terms are three years with (2) one year extensions. Yield Maintenance burns off after 12 months after the loan. Rates start at LIBOR+5.00% and loans can close in as fast as 30 days. With a 16 year track record, our capital provider provides certainty of execution.
|
|
Davies “Perspective” – My Return Home to GSP
As many may or may not know, last week I made the decision to return home to George Smith Partners after a brief stint at another platform. I learned a lot about GSP and myself in the process and what and why I love this profession so deeply. The thrill of helping a real estate entrepreneur succeed in a venture is something that is a passion to my core. As a former developer, I can vision the trials and tribulations it takes to succeed and love nothing more than to be there in capitalizing the ventures on behalf of the entrepreneur.
GSP’s platform allows for our advisors to leverage their creativity and passion in an entrepreneurial setting. I believe the firm is very unique in the following ways:
- Dedicated Team Support– The Principals and senior advisors of our firm each have 3-6 dedicated team members who work specifically on your transaction; effectively as your outsourced CFO. I believe this dedicated staff is critical to providing the level of service of necessary to successfully capitalize a project.
- Entrepreneurial Synergy– The Principals of our firm have a collective 200 + years of arranging and structuring ventures, through good times and bad.
- Firm’s Duration in Capital Markets– Founded in 1992, by George Smith and our three co-founding Principals, the firm has fostered entrepreneurial advisors for over 40 years. That level of market continuity, respect, and depth of experience is unmatched on the West Coast.
- Family Oriented– The individuals who work at this firm truly consider each other as part of a family and everyone has each other’s back to help each other succeed.
- Generational Legacy– The firm is structured to leverage off each previous generation’s knowledge to pass on and assure that as the younger advisors grow, they can count on the more senior members of the firm to assist in anything they need.
I wanted to thank my fellow principals for welcoming me back with open arms and can’t wait for what we can all do together to benefit our clients in the decades to come.
I’m looking forward to continuing to work with my valued clients along with fostering new ones as we grow George Smith Partners in to the next generation.
Sincerely & Happily Home,
Malcolm Davies
|
|
Constellation Place
10250 Constellation Blvd., Ste. 2700
Los Angeles, CA 90067
|
|
|
|
© 1999 - 2024 George Smith Partners, Inc. DRE # 00822654 FINfacts is an ePublication of George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
|
|
|
|
Hi, just a reminder that you're receiving this email because you have expressed an interest in George Smith Partners. Don't forget to add finfacts@gspartners.com to your address book so we'll be sure to land in your inbox!
|
|
