GSPartners
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Volume XVIII | No. 41 | November 3, 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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1.08%
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5 Yr Swaps
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1.35%
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12-MAT
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1.75%
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3 Month LIBOR
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0.29%
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10 Yr US Treasury
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2.55%
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10 Yr Swaps
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2.63%
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11th Dist COFI
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0.37%
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6 Month LIBOR
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0.45%
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30 Yr US Treasury
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4.06%
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| | | Transaction Description: | | $17,183,000 Bridge/Construction Loan for Redevelopement of 16 Acre Retail Site in Coastal California City GSP has arranged 75% of cost financing to transform a functionally obsolete 80,000 s.f. 1970's vintage property to a 150,000+ s.f., 100% occupied, multi-building, newly renovated retail center. Sponsor purchased the property in 2007 and has been entitling, leasing and negotiating lease extensions/relocations with existing tenants. The cornerstone of the renovation is a newly executed 138,000 s.f. 20 year term ground lease with Lowes, (S&P rated "A+"). The remaining tenants are a mix of national chain restaurants and local tenants that will be located on outparcels around the anchor. Loan proceeds are being used to pay off existing land loan, renovate existing buildings, demolish old structures, perform offsite improvements to the parcel, and deliver a "clean dry pad" to Lowe's, scheduled to open in late 2011. Lowe's will then build their own building. Note that there is a good sized parcel that should lease up during the renovation that will add another 20,000 s.f. to the rentable space (175,000 s.f. total). Loan allows for partial releases of outparcels as they stabilize and are eligible for permanent financing. |
Challenge: (1) The renovation is basically 2-phased due to existing tenant expirations. Sponsor needed to fund loan this month without having the Phase 2 plans in place. (2) There is an ongoing remediation from a closed gas station site. |
Solution: (1) Lender agreed to accept Phase 2 diligence post closing as they got comfortable with Sponsor expertise, ability to formulate/execute the business plan and their success in obtaining the Phase 1 approvals; (2) Lender was satisfied with tri-party agreements between the gas station parent, Lowe's and sponsor. |
| | Rate: LIBOR + 4.00% with 5.50% floor | | Term: 2 1/2 years with 2 x 1 year extensions | | Amort: Interest Only | | LTC: 73% | | Recourse | | Lender Fee: 1.0% | | Brokers: Steve Bram, David R. Pascale, Jr. |
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| | | Hot Money | Portfolio Lender Funding 3-5 Year Perm Loans, Flexible Prepay Available With CMBS rapidly becoming the 800 pound gorilla in the lending world, funds are innovating structures for borrowers who want flexibility and simpler loan documents. This fund likes multifamily, retail, office, industrial and hotels. Asset quality and location are key (prefers "B" asset and "B" location at minimum). Flexible prepay and some interest only is available (no full term IO however). Loan size: $5,000,000 to $50,000,000; Rates: 6% - 7.5% range; Loan Term: 3-5 years; Amort: 30 years; Max LTV: 75%; Non recourse. | | | Hot Money | Approved Freddie Mac Mezzanine Lender Actively Investing Behind Senior Agency Debt, Lending up to 90% Combined LTV and 1.05 DCR Lender is a national multi-family real estate mezzanine lender. Their fixed rate loans are ideal for new acquisitions or cash-in refinancing. $1 million is the minimum loan amount and the loan term is coterminous with the Freddie Mac loan. Qualifying properties include stabilized, conventional Class A and B multifamily properties in good physical condition with opportunity for improved performance. | | | Hot Money | CMBS Continues to Mature: Robust Secondary Market, New Originators and Low Rates Lead to Opportunity for Borrowers We are seeing increased competition for good transactions among lenders, increased leverage, great rates, here's the latest... Transaction Size: $10,000,000 and up; Rates: 10 year pricing just about 5.00%, 5 years in the mid 4% range; LTV: 75% for core 4 product types (up from 70%); Debt Yield: as low as 9-9.5%; Mezzanine: Available, underwritten down to an 8% debt yield, rates in the 12-14% range, blended cost of capital for high leverage loan is about 7-8%; Lender Fee: par to 0.50%, larger deals are usually 0.25%, Non-recourse | | | 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. Click here to join the George Smith Partners group to get access to current conversations and topics. | | | Speakers Corner | Jonathan Lee will be a guest lecturer discussing Construction Financing at an Advance Real Estate Finance class at UCLA on Monday, November 8. | | | Pascale's Perspective | QE2: The Fed announced specifics of its bond purchase program (Quantitative Easing, Round 2): (1) $600 billion in purchases of securities; (2) $75 billion per month for about 8 months; (3) The Fed will concentrate the purchases in the 2.5 to 10 year bond range, not much in the 30 year range; (4) As much as $250 billion of additional purchases will come from maturing securities the Fed already holds. Immediately the bond market rallied slightly with the notable exception of the 30 year. I believe the Fed is embarking on this path because it is wary of deflation and is signaling the market to expect inflation. Interestingly some economists are opposed to QE precisely because it may cause inflation. For commercial real estate investors, it means rates should remain low for the next 6-8 months......Stay tuned....David R. Pascale, Jr. | | | We Remember George | Five years ago today we lost our beloved Chairman and friend, George A. Smith. George’s keen intelligence, sharp wit and amazing attitude is still a fresh presence here in Suite 2700. Each day a “George story” is told by a partner, associate or a client. George’s example informs so much of what we do at GSP. It is a privilege to carry on George’s spirit and stunning example in the work we do each day. Cheers George. We miss you. Click here to see our tribute issue of FinFacts from 2007, with some classic George stories. |
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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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