GSPartners
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Volume XVIII | No. 15 | April 15, 2010
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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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0.26%
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5 Yr US Treasury
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2.53%
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5 Yr Swaps
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2.63%
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12-MAT
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0.42%
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3 Month LIBOR
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0.30%
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10 Yr US Treasury
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3.82%
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10 Yr Swaps
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3.75%
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11th Dist COFI
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1.61%
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6 Month LIBOR
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0.46%
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30 Yr US Treasury
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5.70%
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| | George Smith Partners Welcomes Raffi Sarkissian |
George Smith Partners has hired former Bank of America executive Raffi Sarkissian as a Senior Vice President for George Smith Partners.
“As market activity continues to increase and transaction volume steadily rises, George Smith Partners is expanding our team of professionals in order to meet the needs of our clients,” said GSP's David Rifkind, “Our firm is proactively hiring seasoned industry leaders to provide clients with unparalleled financial consultation in a rapidly changing and opportunistic marketplace.”
“Raffi Sarkissian is an industry veteran with nearly 20 years of proven success in the single tenant and owner-user financing market,” added Rifkind. “He is very customer oriented and highly regarded for delivering top class service to his clientele. Given the broad platform at George Smith Partners, Raffi will be able to offer a greater mix of products to serve his extensive list of owner-user clients. Additionally, his expertise will allow our firm to cater to a segment of the market that we have not traditionally served.”
Sarkissian previously served more than 15 years with Bank of America as a Senior Vice President, originating commercial real estate loans including Small Business Association (SBA) and conventional loans.
During his tenure with Bank of America, Sarkissian established himself as one of the top producers in the country, securing status as the number one lender nationwide for eight consecutive years.
He also received The Annual Award of Excellence for 12 consecutive years. In his new role as Senior Vice President of George Smith Partners, Sarkissian will serve to place debt with lenders for commercial real estate property owners, structuring both conventional and SBA loans.
Sarkissian notes, “Over the years I have developed an in-depth knowledge and understanding of the underwriting process for owner-user commercial real estate transactions as well as underwriting for the businesses that plan to occupy the properties. I look forward to being an active part of George Smith Partners’ continued growth and see this move as a tremendous opportunity to provide my clients with optimal structuring, rate and term options.”
Mr. Sarkissian can be reached by email at rsarkissian@gspartners.com
| | | | Transaction Description: | | GSP Arranges Aggressive Small Multifamily Bridge Loan on 18 Units in Korea Town $1,100,000 loan was secured in order to lower the carry cost of the debt during a massive rehabilitation and re-leasing of the property. The new loan paid off the existing hard money loan that was used to quickly acquire the property at a below market price.
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Challenge: The property was in very poor shape and needed substantial rehab work in order to obtain new rents. A majority of the tenants had not paid rent for several years and were in the eviction process. Also, the seller vacated all 5 units that they occupied prior to the sale to our client. This made it very challenging to underwrite and substantiate assumptions to the lender.
Since most banks require stabilized income and occupancy thresholds, the borrower believed that he had to wait until full lease up and completion before he qualified for attractive debt. |
Solution: GSP took on the challenge to make the market on this type of transaction request. While the income of the property was extremely low, and substantial rehab was scheduled to be completed before new tenants could be in place, GSP identified a lender that could save the borrower over 6.00% in interest annually. Much work was done to substantiate the stabilized cash flows and final exit underwriting so that the lender would be comfortable participating in the transition of the asset. |
| | Rate: 5.00% (Prime + Zero, 5% floor) | | Term: 1 year, renewable annually | | Amort: Interest Only | | LTC: 70% | | Prepayment: No penalty | | Recourse | | Broker: Marc Schillinger |
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| | | Hot Money | Institutional Lender Getting Aggressive on Bridge Loans. This lender has a huge allocation to put out and will go out of the box and do complex structuring. Example: Empty building, condo tower converting to rental apartments. Borrower could not use agency debt. Asset was high quality, so projecting highest rents. Starting rate at 9% which slides down as building leases up. Rate goes to LIBOR+2.50% when loan is at a 9% debt yield. Projected schedule has blended rate at about 7% over 5 years. 70% LTV. Some interest accrues, some funded from reserve, and some paid out of operating cashflow. Lender can also provide partial releases to facilitate condo sell-out. Lender also can fund combination of fixed and floating rate pieces and other innovative structures. | | | Hot Money | Bridge Lending Continued--There is a plethora of money for nearly every level of leverage, loan size and risk profile, much of it non-recourse. Another group of high level veteran bridge lenders have formed a new fund Pricing is very attractive at LIBOR + 3.50% with a 4.00% floor on LIBOR.....basically the loan is "fixed" at 7.50% interest only for a good period of time. Leverage is 75-80% of the capital stack. No construction, lender is funding repositions of existing properties. Lender can fund draws with no neg arb. This is an "on book" lender who services their own loans, ie a real estate executive will be "home" during the term of the loan as opportunities or issues arise. Loan terms are 3-5 years, plenty of time to execute your business plan without incurring heavy interest costs. Transaction Size: $10,000,000-$30,000,000; Rate: LIBOR + 3.50% (4.00% LIBOR floor); Loan Term: 3-5 years; Amort: Interest Only; Max LTC: 75-80%; Non-recourse; Prepayment: Prepayable after some lockout, deal specific; Fees: 0.5%-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. | | | Join Us on LinkedIn | George Smith Partners is now on LinkedIn. This week our membership surged to over 1,000 members. Click here to join the George Smith Partners group to get access to current conversations and topics. | | | Pascale's Perspective | The markets are being pushed and pulled by divergent news. Positive: The US economic recovery is gaining steam as the major money center banks report very strong earnings, strong retail/restaurant/auto sales, the first dip in subprime foreclosures in years, minimal inflation, etc. Negative: Employment numbers (further evidence of the "jobless recovery"), continued concerns about Greece's sovereign debt as an emergency IMF rescue plan is taking shape. Treasuries are benefitting from the flight to quality and the 10 year T is down to 3.82% after hitting 4.00% last week.....Stay tuned....David R. Pascale, Jr. | | | Speakers Corner | Gary E. Mozer will be speaking at Deloitte's Real Estate CFO Roundtable on April 27, 2010. The event is invitation only. |
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©2010 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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