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FINfacts™ XXIV – No. 67 | May 10, 2017
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| Prime Rate |
 4.00 |
| 1 Month LIBOR |
0.99 |
| 6 Month LIBOR |
 1.43 |
| 5 Yr Swap |
1.99 |
| 10 Yr Swap |
2.32 |
| 5 Yr US Treasury |
1.93 |
| 10 Yr US Treasury |
2.40 |
| 30 Yr US Treasury |
3.04 |
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Rate: 4.52%, Fixed
Term: 10 years
Amortization: 5 Years Interest Only; 30 Year Amortization thereafter
Prepayment: Defeasance
Lender Fee: Par
Guaranty: Non-Recourse
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GSP successfully placed $11,700,000 of non-recourse, ten-year fixed rate first mortgage debt for the acquisition of a 75,000 square foot Southern California multi-tenant retail property anchored by a regional Hispanic grocer and national discount retailer. The 1970’s vintage property is 100% occupied and the two 25,000 square foot anchor tenants who comprise 67% of total collateral square footage. The national discount retailer pays below market rent and its lease expires in 2018 with no renewal options, providing significant potential upside for equity and cash flow risk for debt. GSP highlighted strong anchor sales and an experienced sponsor with extensive retail tenant relationships in order to get the lender comfortable sizing to a 7.7% debt yield. The non-recourse loan has a 4.52% fixed coupon and the 10-year term is interest only for the first five years, with a 30-year amortization schedule thereafter.
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Rate: 10 YR Treasury + 214 (locked at Loan Application at a 4.49% coupon)
Term: 25 years (10+10+5 years)
Amortization: 25 years
Prepayment: Yield Maintenance
Loan to Value: 33%
Lender Fee: 0.50%
Guaranty: Recourse
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George Smith Partners secured $5,100,000 in proceeds for the refinance of a 66 key all-suite Best Western in Southern California. The loan was priced over the 10 year treasury. The rate was locked at application to eliminate interest rate risk. GSP was able to identify a balance sheet lender who would be able to fund prior to the client’s original loan maturity date, provide straight forward loan documents with no legal fees, and provide an efficient due diligence process. The lender was flexible with regard to ownership structure and future partnership buy-out provisions. The loan was approved in a timely manner and closed 45 days after signed application.
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Rate: 4.5% Fixed
Term: 5 Years
Amortization: 30 Year Amortization
Prepayment Penalty: 3, 2, 1
LTC/LTV: 75%
Origination Fee: Par
Guaranty: Recourse
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George Smith Partners secured a $2,170,000 permanent loan for the acquisition of a vintage multi-family property in Hancock Park, comprised of 100% studio units. In order to meet the seller’s timing requirements, GSP secured a loan from a regional bank. By leveraging their deep relationship with the bank, GSP was able to have the lender provide 75% leverage and close with 30 days.
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George Smith Partners’ national correspondent lender is actively providing non-recourse and limited recourse financing for loans $2,000,000 to $30,000,000 on stabilized multifamily, industrial, office, and retail with low rollover risk. Floating rate loans can be priced starting LIBOR plus 1.95%. Fixed rate loans start at 3.50%. The lender fee is Par to GSP clients. Sized to 70% LTV, these loans do not require reserves other than impounds for taxes and insurance and have flexible prepayment options. Forward commitments are offered up to 12 months at a nominal fee of 3-5 basis points per month after 60 days free rate lock at application.
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The 10 year T yield spiked up to 2.41% today, the highest level since March. Factors include: (1) Recent Fed speeches indicate that they are “on track” for an increase in June and another increase before year end. Also, there are more indications of shrinking the Fed balance sheet this year, increasing the supply of bonds in the private marketplace; (2) Supply/Demand dynamics – the Treasury is auctioning about $190 billion in treasuries and bidding was weaker than in recent auctions; (3) Inflation-Fed officials and others are dismissing recent weak inflation reports as seasonal in anticipation of inflation (finally) returning above 2.0%. Also oil prices increased with their largest one day gain since December; (4) Washington – investors seem to be unconcerned with unpredictability stemming from the firing of FBI Director Comey yesterday. The eruption of inter-party hostility after the dismissal can be interpreted as increasing the difficulty of passing major legislation (taxes, infrastructure, etc). So far, that risk doesn’t seem to be priced in. Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners.
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Constellation Place
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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