GSP Insights

  • Expand

    National Full Capitalization Hotel Financing

    Hot Money

    October 24, 2018

    George Smith Partners identified a national “Full Structured” hotel financier funding permanent hotel bridge, mezzanine loans and preferred equity investments secured by hotel assets for acquisitions, recapitalizations, cash-out re-financings, and renovations. Permanent financing up to $50 million; fixed for 20-30 years at 4.5%-6.5% with terms up to 10 years and leverage up to 80% of cost. Bridge debt to $50 million; fixed or floating at 6.0%-9.0% with terms to 5 years and 85% of stabilized value. Mezzanine tranches to $10 million; rates from 12%, Interest only or matched to senior loan. Leverage is limited to 85% of value. Preferred Equity to $10 million; rates between 13% to 20% to 95% of cost. There is no participation for the Pref Equity once their returns are realized.

  • Expand

    Gary M. Tenzer on the Trial Technology & Litigation Support Podcast

    Podcast

    October 23, 2018

    Gary M. Tenzer, Co-Founding Principal of GSP was a guest on the Trial Technology & Litigation Support Podcast.  Gary handles the litigation support practice for GSP; he has extensive experience as an expert witness having been retained in over 300 matters and testifying in over 100 cases nationwide.

    Click here to listen to the podcast.

    Clickhere to read the transcript from the podcast.

  • Expand

    Rising Rates Affect on Consumers, Fed Minutes Indicate Resolve

    Pascale’s Perspective

    October 17, 2018

    Increasing rates are supposedly the solution for an overheating economy. Rising rates are affecting the housing markets (negatively) and apartment metrics (positively in a contrarian way). Higher rates are slowing down the home refinance market to a crawl and also putting pressure on buyers and sellers. (higher rates = less loan proceeds of course). Today a Freddie Mac study indicated higher mortgage rates are turning some would be buyers into renters (at least until prices go down), thereby increasing occupancy and rents for apartment owners. Of course many apartment owners are bemoaning the increase in fixed and floating rates for their acquisitions and perms. Today’s Fed minutes indicate the committee is united (last month’s increase was unanimous) and convinced more hikes are in order. This is a significant message to markets that the Fed is not bowing to pressure from the executive branch. The 10 year T hit 3.20% again today after a week of huge market volatility. In other contrarian news, the Sears bankruptcy will be good news for many retail owners as many of the affected Sears (or Kmart) locations involve rock bottom below market rent for good infill retail locations. Savvy and well capitalized operators can repurpose the space. Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

  • Expand

    Co-GP Equity Provider

    Hot Money

    October 17, 2018

    George Smith Partners identified a Co-GP equity provider for multifamily, student housing, senior Independent-living, hospitality, industrial, office (including medical and other uses on a selective basis), self-storage and mixed-use sectors. Looking for value-add and opportunistic opportunities (mostly 90/10 or 95/5 deals) in primary and secondary markets nationwide. Target equity investments between $1-10M per deal with an investment period of 2 to 10 years.

  • Expand

    Wall Street Correction, Is This Part of “Normalization”?

    Pascale’s Perspective

    October 10, 2018

    Last week’s comments from Fed Chair Powell have resonated with the markets. He said that we are a “long way” from neutral on interest rates and that the “really extremely accommodative low interest rates are not appropriate anymore”. This is a vote of confidence in the strength of the US economy, so it’s good news, right? Also, note that the Fed has indicated that they may increase rates above the neutral rate if necessary in order to restrain inflation. It seems that there is some technical support for 10 year rates above 3.00% (the yield did not “snap back”, it is staying high partly due to continued record supply). Many accused the Fed of inflating asset bubbles with years of low rate and accommodative policy. Well then, now those assets may be “marked to market” and we may be seeing the “real” values of stocks and other financials. Note that during much of today’s plunge in stocks, both stocks and bonds were selling off (which is unusual). However, there was some “flight to quality” bond buying at the end of the day, the 10 year yield dropped to 3.16% as traders noted that tomorrow’s Dow futures indicate a triple digit drop. Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

  • Expand

    National Portfolio Permanent Lender With Zero Prepayment

    Hot Money

    October 10, 2018

    George Smith Partners is working with a national portfolio lender that is structured with no pre-payment penalty and loan origination fees of 0.50% for transactions up to $50,000,000. Rate is set at acceptance of LOI and most loans close within 60 days of pre-screen. Partial or non-recourse deals on strong credits that reflect a low LTV and higher than normal debt coverage for properties located in sub-market areas with communities of 100,000+ population.

  • Expand

    Antonio Hachem in Multihousing Pro

    In the Press

    October 9, 2018

    “Based on the market’s stable long-term growth fundamentals, we were able to identify a lender with a strong appetite for multifamily, and successfully secured a better solution for the Sponsor’s current financing needs, says Hachem. “As lender interest in this product type increases, borrowers are presented with a unique opportunity to redeploy capital. We continue to identify many opportunities for borrowers to realize substantial cash-out proceeds while still locking in a very attractive fixed rate.”

    Click here to read the full article from Multihousing Pro, “George Smith Partners secures $17 million in non-recourse financing for 120-unit multifamily community in Sacramento”.

  • Expand

    Gary M. Tenzer Participates in Commercial Real Estate Symposium Panel

    Event Recap

    October 5, 2018

    The Real Property Law Section held their annual Commercial Real Estate Symposium on Thursday, October 4, 2018. Gary M. Tenzer, Principal/Co-Founder of George Smith Partners, participated in a panel that discussed the trends and developments of real estate financing in 2018. The panelists included Caroline Dreyfus of Cox, Castle & Nicholson, Mitchell Regenstreif of DLA Piper, and David Hitchcock of Buchalter.

    Gary described current trends in commercial lending, in which he covered rising interest rates, pull-back in construction financing, and how non-recourse loans are much more common now than a year ago. In addition, he dove into the lending activity of the agencies and life insurance companies. The panel concluded with a discussion of specific financing topics and loan provisions such as non-recourse carve-outs, permitted transfers, preferred equity rights, and financial covenants.

  • Expand

    Shahin Yazdi Explains How Bridge Loans Are An Attractive Strategy for Value-Add Investments

    In the Press

    October 5, 2018

    Shahin Yazdi, Principal/Managing Director of George Smith Partners, explains how Bridge loans may be the right financing strategy for value-add investors with a clear plan to increase property income.

    “Value-add product is becoming harder and harder for investors to find in the current market. Our nation’s continued economic health has driven fundamentals forward, while high investment transaction volume, an influx of hungry capital and a healthy dose of foreign investment have driven up property prices in major metros throughout the United States. While the overall result is net positive for the nation, the challenge for commercial real estate professionals is that projects are becoming increasingly difficult to pencil”…

    Click here to read the full article.

  • Expand

    Formula For A New 7 Year High for the 10 year T

    Pascale’s Perspective

    October 3, 2018

    Interest rates are front and center today as the 10 year yield broke through a critical key technical level and is now up to 3.20%. The yield has risen 40 basis points in the last 45 days. The rate has not been above 3.12% since 2011. A perfect storm of factors is fanning the flames: (1) The new NAFTA agreement removes a major uncertainty for US growth, and markets seem to have accepted continued rocky US-China trade relations (for now); (2) The mid September expiration of a special tax benefit for pension funds purchasing Treasuries has had an effect on demand, buying from these major purchasers has slowed, and it seems like this anomaly held rates down in August and September as they loaded up before the deadline; (3) Continued good news on the US economic front, today it was the ISM non-manufacturing index hitting 61 vs a 58 estimate, a post recession high. We may be entering a “new” reality, or is it the return of the “old” normal of pre-recession metrics with treasury yields in the 4-5% range. Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

  • Expand

    Alternative Financing Cheaper than Traditional Mezzanine Debt and Preferred Equity

    Hot Money

    October 3, 2018

    George Smith Partners is working with a private source of CPACE (Commercial Property Assessed Clean Energy) capital to finance ground-up development in California, Colorado, Utah, Texas, and 18 other states. CPACE is a form of long-term, non-recourse mezzanine financing for construction projects. At rates of 6% to 7%, it can fill 10-20% of the capital stack for a 20 to 25 year term. The financing is repaid through a special property assessment and amortizes like debt. CPACE can be used for any asset class, on projects of any size, in the 22 states where PACE has been approved. PACE can be used alongside other forms of financing such as New Market Tax Credits, LIHTC, TIF, EB-5, and traditional senior financing, among others. The main benefit to sponsors is reduced cost of capital – PACE replaces more expensive mezzanine debt or preferred equity in the capital stack.

  • Expand

    Davies Team Participates in the 2nd Annual Drive for a Cause

    Philanthropy

    October 2, 2018

    Malcolm Davies and his team participated in the 2nd Annual Drive for a Cause supporting the Parkinson’s Wellness Fund at the BMW performance center in Thermal, California.  The action filled day allowed the Davies team to get behind the wheel of a BMW and go up to 125 mph.  It was a great experience for everyone and helping to raise money for a great cause was meaningful.