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FINfacts™ XXIV – No.89 | October 11, 2017
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| Prime Rate |
 4.25 |
| 1 Month LIBOR |
1.24 |
| 6 Month LIBOR |
1.52 |
| 5 Yr Swap |
 2.02 |
| 10 Yr Swap |
2.29 |
| 5 Yr US Treasury |
1.95 |
| 10 Yr US Treasury |
2.34 |
| 30 Yr US Treasury |
2.88 |
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Rate: LIBOR + 2.75%
Term: Nine months
Guarantee: Recourse
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GSP placed the 49 unit ground-up multifamily development loan for a well-heeled Sponsor in an affluent Los Angeles suburb two years ago. Now nearing completion, market dynamics offer stronger support as a “For Sale” exit as condominiums than the originally anticipated rental housing option. A condo map was in place prior to ground breaking. Working with our construction lender, GSP negotiated release prices and an additional $3,680,000 funding for capital upgrades and a partial return of cash equity to the Sponsor. The construction loan was extended to July of 2018 to allow for additional time for the individual unit sell-out. Recourse is limited to the top 25% of the loan.
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Rate: 4.77%
Term: 10 Years
Amortization: Interest Only for 5 years; 30-year amortization thereafter
LTV: 65%
Prepayment: Yield Maintenance
Origination Fee: Par
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George Smith Partners placed a $5,108,000 permanent loan for a 160-unit class B garden style multifamily building in a tertiary market located in the southwestern United States after arranging the acquisition loan in late 2016. During underwriting, the existing national management company exited the market on 30 days’ notice with a looming loan maturity. GSP worked with the lender to demonstrate that the Sponsor had assembled an experienced team in their newly formed management company which allowed the lender to get comfortable with the Sponsor self-managing the asset without a track record of management in similar assets. Fixed for 10 years at 4.77%, the non-recourse loan is interest only for the first 5 years and 30-year amortization thereafter.
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Rate: Confidential
Term: 12 months plus extensions
Amortization: Interest Only
LTV: 75%
Guarantee: Recourse
Origination Fee: 1.00%
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George Smith Partners secured a $4,550,000 bridge loan to refinance a 2007 constructed, distressed 25,000 square foot shadow anchored shopping center in the Inland Empire. The CMBS note was purchased at a discount during the recession and the note buyer agreed to a discounted payoff with the borrower. The largest tenant vacated prior to loan maturity which added another level of complexity to the transaction. George Smith Partners sourced a Lender experienced with this location, comfortable with Sponsor’s financial strength, track record and guarantee. Our Sponsor was not required to invest additional cash into the transaction. The new loan included an interest reserve as well as funds for leasing commissions, tenant improvements and no prepayment penalty.
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George Smith Partners identified a national capital provider funding fixed or LIBOR-based floating rate loans from $3,000,000 to $75,000,000, starting at 4.5%. This lender will finance Multifamily, Retail, Office, Industrial, Self-Storage, Mobile Home Parks, and Hospitality properties located in primary and secondary markets nationwide. 30 year amortization and terms up to 10 years on a non-recourse basis up to 85% LTV.
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The headline on last Friday’s monthly employment report was the first monthly decline in jobs in 7 years (down 33,000). But the Fed found solace in the wage growth figure (up 2.9%). This metric has been critical in the Fed’s decisions to keep rates low as many FOMC voters consider wage growth a critical part of their mandate. The thinking is wage growth raises living standards and leads to general inflation. The 2.9% increase was surprising and welcome news, but next month’s number will be closely watched as the increase could be hurricane related (exacerbating short term labor shortages). Today’s release of Fed minutes all but confirms a rate increase in December (the futures market shows an 87% probability). The minutes show some members voicing concern that the existing low inflation environment may be “persistent”, with others afraid that inflation could “run away unchecked” if they keep rates too low too long. Meanwhile, the “great unwind” (balance sheet reduction) is beginning this month. Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners
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If you have an inquiry regarding George Smith Partners’ commercial real estate financing, please contact your GSP representative or Todd August, Chief Operating Officer (310) 867-2995 or TAugust@GSPartners.com
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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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