Rate: 5.03% (10 year swap +1.93%)
Term: 10 Years
Amortization: 2 years Interest Only then 30 years amortization after
Loan to Value: 72%
DSCR: 1.40X
Prepayment: Defeasance
Guarantee: Non-Recourse
Lender Fee: Par
Transaction Description:
George Smith Partners successfully arranged $6,500,000 in cash-out permanent refinance secured by a 104,974 SF, multi-tenant Research & Development facility in Bristol, Pennsylvania. The loan proceeds will be used by the Borrower to pay off the existing debt and to buyout a partner.
Challenges:
The Subject Property is fully occupied with short-term leases. The Major Tenant is one of the largest chemical companies in the world, which occupies 72% of the total building space. The Tenant has a lease term of less than three years, and their lease requires only a 6-months notice period. In addition, the Appraiser had a difficult time finding comparables because of the Research and Development special use of the Facility.
Solution:
GSP identified a CMBS lender willing to provide a 10-year loan structured with 15 months of major tenant cash flow sweep prior to lease expiration. GSP provided comparables that the Lender and Appraiser found acceptable. The appraised value was within the range to receive the full loan amount that the Borrower requested. Priced at 10-year SWAP + 1.92% for the 10-year term, the fixed loan sized to 72% of value, 2 years Interest Only, then 30 years amortization.
Related Financings
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Multifamily Townhome Project Refinancing: $157,500,000 Cash-Out Refinance of a 752-Unit Multifamily Property; 10-Years Interest Only at 4.29%
June 20, 2018
Transaction Description:
George Smith Partners arranged the refinance of Colony Townhomes, a 752-unit multifamily property located in Canyon County, California. The refinance proceeds replaced a HUD loan, also previously arranged by GSP, with a remaining term of 23 years and with pre-payment penalties. Sized to 65% of value, the non-recourse, 10-year, interest only loan is fixed at 4.29%.Challenge:
The Sponsor wanted to seize the opportunity to cash out significant appreciated equity, while locking in low interest rates in a rising interest rate environment. The early refinance meant that the Sponsor would have to incur the pre-payment penalty. The recent fluctuations in the 10-year Treasury spurred additional urgency in the transaction.Solution:
The Sponsor’s original HUD loan was priced at 3.75% with over 20 years remaining. Through analysis, GSP determined that the interest rate savings for a new 10-year loan would easily offset the early prepayment costs of the existing loan, as well as provide for the major cash out the Sponsor was hoping to achieve. Once the Sponsor decided to proceed, Rate Lock was accomplished in 14 business days and the loan closed 21 days later.While an early refinance does not make sense in every situation, frequently, the opportunity to liberate trapped equity as well as lock in long term fixed rates ahead of expected further rate increases offsets the prepayment penalty cost incurred by refinancing prior to the open prepayment window.
Rate: 4.29% Fixed
LTV: 65%
Term: 120 months
Amortization: Interest Only
Guarantee: Non-Recourse
Prepayment Penalty: Yield Maintenance- Advisors: Gary M. Tenzer
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$4,300,000 Refinance/Cash-Out of a Southern California 15 Key Motel
January 31, 2018
George Smith Partners successfully arranged $4,300,000 to refinance a 15 key motel on Coronado Island, San Diego. GSP identified a local lender who understood the Sponsor’s entitlement play based on their past success, their proposed development plans post entitlement, and the value of the land, which was exempt from any influence of the California Coastal Commission. Ultimately, the lender sized the loan to 66.8% of “As Is” appraised value. The two-year interest only note is priced at 4.50% above LIBOR and has 2 six-month extension options. Upon successfully obtaining the required entitlements, the Sponsor plans to refinance with a construction loan for a planned 39 key hotel.
Rate: LIBOR + 4.50%
Term: 2 Years + 2 Six Month Extensions
Amortization: Interest Only
LTV: 66.8%
Guarantee: Top 20% Recourse- Advisors: Evan Kinne
