GSPartners
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Volume XVII | No. 36 | November 18, 2009
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KEY RATE INDICES
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Prime Rate
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3.25%
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1 Month LIBOR
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0.24%
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5 Yr US Treasury
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2.18%
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5 Yr Swaps
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2.46%
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12-MAT
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5.44%
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3 Month LIBOR
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0.27%
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10 Yr US Treasury
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3.35%
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10 Yr Swaps
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3.42%
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11th Dist COFI
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1.272%
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6 Month LIBOR
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0.54%
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30 Yr US Treasury
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4.28%
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| | | Transaction Description: | | $2,500,000 Permananent Financing for Two Tenant Restaurant Property George Smith Partners arranged permanent financing for this 7,000 s.f., 70% occupied, newly built restaurant property. The property is well located in an affluent area of Southern California with excellent access off of a major freeway. Two of the three restaurant spaces are leased to well known casual dining concepts. The property contains some unique architectural flourishes indicating “pride of ownership” and is owned by the original developers. Financing was provided by portfolio lender who intends to start a long term relationship with the borrower. Lender provided a 5 year fixed rate loan at 5.45%, giving a rate reduction due to deposits. The loan can reset for another 5 years at a floating rate, thereby protecting borrower from "early balloon risk" The loan was underwritten based upon the in-place income. |
Challenge: Restaurants (particularly casual dining) are not a preferred product type at this point in the cycle. Some lenders will not underwrite restaurant income. |
Solution: GSP found a relationship oriented portfolio lender who was able to get comfortable with the excellent demographics and location and saw this as an opportunity to start a relationship with a strong borrower. |
| | Rate: 5.45% | | Term: 5 years fixed, then 5 years floating | | Amort: 25 years | | LTV: 60% | | DCR: 1.50 | | Prepayment: 1% for years 1-4, then par | | Recourse | | Lender Fee: 1.0% | | Key Players: Steve Bram, David R. Pascale, Jr. |
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| | | | New Private Lending Program for Bridge Loans, Discounted Note Payoffs, etc. George Smith Partners is representing a new nationwide private lending program, which offers financing at up to 75% of value on income producing real estate located in major MSA’s. Unlike most private lenders, this lender offers loans between $5MM to as large as $25MM filling the gap between small private lenders and institutional funds that traditionally need a minimum $25MM loan size. The lender will consider financing any type of commercial income producing property.
The lender is a substantially capitalized real estate investor, highly experienced in real estate development, acquisition and management. The Company’s platform is capable of lending to investors for DPO’s, acquisition of both distressed and performing properties, and re-finances where there still is equity in the transaction. The program provides financing with moderate fees and annual interest rates ranging from 11 - 14% depending on the property’s risk profile.
The Lender will finance near bank quality assets but also will consider assets that are not stabilized and don’t currently meet a 1.0 DSCR. Bridge loans may include an interest reserve to cover debt service until the asset is cash flow positive. Loan terms typically are 1-3 years with extensions allowed on a case-by-case basis.
The lender can move quickly and can close in 2-4 weeks without requiring an appraisal.
While first trust deeds are their preference, they will, consider mezzanine or second mortgage financing as well. Pricing and terms for these loans are on a case-by-case basis.
| | Transaction Size: $5,000,000-$25,000,000 | | Rate: 11-14% | | Loan Term: 1-3 years | | Amort: Interest Only | | Max LTV: 75% | | Max LTC: 75% | | Min DCR: 1.0 (case by case) | | Non-recourse | | Property Types: Office, Retail, Multifamily, Indstrial | | Fees: 1-3% | | Geography: Nationwide |
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| | | Hot Money | Bank funding Apartment Construction Loans. Transactions must "make land sense", meaning that the land cost cannot be at mid-2000's condo land prices. A good benchmark is $20,000 per unit or below. Based upon solid "real world" pro forma income projections, lender will fund up to 75% of cost. Pricing is LIBOR based with a 6.00% floor on the all-in rate; Transaction Size: $3,000,000-$10,000,000 Rate: 6.00% floor; Loan Term: 2-3 years; Recourse; Geography: Southern California and Arizona | | | Hot Money | New Bank Program Funding Nationwide Loans for "Tier 1" Investors This lender will consider Perms and some Construction. This bank has a clean balance sheet, no legacy issues. Focus is on good borrowers in primary and secondary markets. Lender will consider "some" non-recourse, but most loans will be recourse. Lender underwrites to a 10.5% debt yield, which is fairly aggressive in today's environment. Will consider single tenant with long lease term. Transaction Size: Up to $7,000,000; Rate: 6.5%; Loan Term: 3-5 years; Amort: 25 years Max LTV: 60-65% Max LTC: 50% Min DCR: 10.5% debt yield. Property Types: Office, Industrial, some Retail; Fees: 1.0% Geography: Nationwide | | | If you have an inquiry regarding George Smith Partners' commercial real estate financing, asset sales or advisory services please contact your GSP representative or Todd August, Chief Operating Officer, at (310) 867-2995 or taugust@gspartners.com. | | | Welcome Jonathan Grossman; GSP's New Director of Asset Resolution | George Smith Partners has appointed industry executive Jonathan Grossman as Senior Vice President to lead the firm’s Asset Resolution Group.
“As more than $15 billion in securitized loans reach maturity in 2010 and 2011, George Smith Partners is committed to finding financing solutions for borrowers facing CMBS defaults,” explained David Rifkind, Principal and Managing Director of George Smith Partners. “With such a lengthy track record of success and unparalleled experience in the realm of debt restructuring and refinancing, Jonathan Grossman is the ideal candidate to find creative and unique financing solutions on behalf of borrowers caught in the CMBS crisis.”
Reporting directly to George Smith Partners’ principals, Grossman will lead the Asset Resolution Group. The purpose of the Asset Resolution Group is to evaluate borrowers’ debt equity structures. After an extensive evaluation of the borrower’s assets, Grossman and his team will leverage their relationships with lenders in order to create unique financing, allowing borrowers to navigate today’s turbulent economic conditions as smoothly as possible.
“George Smith Partners is one of only a few firms with the resources, knowledge and depth of experience necessary to create solutions for borrowers invested in today’s commercial real estate market,” said Jonathan Grossman, Senior Vice President of George Smith Partners. “I am thrilled to be joining the team and look forward to utilizing the firm’s strong characteristics and growing George Smith Partners’ role as a leader in debt restructuring and refinancing.”
Prior to joining George Smith Partners, Grossman served as Director of Asset Management for Countrywide Commercial Real Estate Finance. While working at Countrywide, Grossman developed the Asset Management and Portfolio Management Group, which provided servicing and asset management for Countrywide’s conduit loans and position/balance sheet loans, as well as private client funds. In his two years at Countrywide, Grossman structured and syndicated in excess of $500 million of floating and fixed rate debt, as well as supervised the credit analysis and underwriting of $1 billion of placed and position debt and preferred equity.
Grossman has also worked for Freemont Realty Partners, GMAC Commercial Mortgage Inc. and Archon Group, a Goldman Sachs subsidiary. Grossman holds a Bachelor of Science in Business Administration from California State University, Northridge. | | | Pascale's Perspective | By David R. Pascale, Jr.
Spotlight on CMBS: The CMBS market has moved from "dead" to "on life support".....The long awaited DDR single borrower, TALF aided, low leverage securitized portfolio of retail properties went to market last week. The pricing was tighter than expected and even oversubscribed. It's not time to bust out the champagne and party like its 2006 quite yet. The 28 property loan was low leverage (approximately 50% LTV), heavily scrutinized and underwrtten by the Fed, and had extensive rating agency review. The all-in interest rate will end up at just under 6%. However, this may attract other borrowers to dip their toe into the pool. The next step will be to see if non-TALF aided transactions can securitize. Some major lenders are planning on "cautiously" restarting their programs in 2010....Stay tuned.... | | | Press Box | GSP Principal Steve Bram published an article entitled “Capital Markets Conundrum-Are there viable solutions to today’s financing puzzle?” in the November-December edition of the Commercial Investment Real Estate Magazine, The Magazine of the CCIM Institute, used with their permission. To read the article, click here. He also did a podcast interview called “Banking Expert Steve Bram Explores the Future of Capital Markets." To listen to the podcast, click here |
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©2009 George Smith Partners, Inc. FINfacts is an ePublication of
George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
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