GSPartners
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Volume XX | No. 41 | October 17, 2012
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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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0.22%
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5 Yr US Treasury
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0.78%
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5 Yr Swaps
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0.89%
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12-MAT
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0.16%
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3 Month LIBOR
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0.33%
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10 Yr US Treasury
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1.82%
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10 Yr Swaps
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1.85%
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11th Dist COFI
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1.07%
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6 Month LIBOR
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0.59%
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30 Yr US Treasury
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3.00%
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| | | Transaction Description: | | $3,965,000 Colorado Springs Acquisition GSP arranged the financing for a 117 unit stabilized apartment building in Colorado Springs, Colorado. The Los Angeles based Borrowers required acquisition funds for a recently stabilized apartment building that emerged from receivership in 2010. The Borrowers had a strong multifamily track record in the Los Angeles market, but had not owned rental assets outside of the state prior to this purchase. |
Challenge: The Borrowers required that equity investors were excluded from signing as Key Principles in the new loan. Their out-of-state ownership coupled with the lack of signatures from primary investors provided an underwriting challenge. |
Solution: GSP proposed a 65% LTV loan to allow passive investors from signing as Key Principals. GSP also demonstrated to the lender that the on-site management company was a leader in the local market and would overcome any challenges for the out-of-state Borrowers. |
| | Rate: 3.86% | | Term: 10 Years | | Amort: 30 Years | | LTC: 65% | | Prepayment: Yield Maintenance | | Non-recourse | | Lender Fee: Par | | Brokers: Jonathan Lee, Shine Cheng |
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| | | Transaction Description: | | Multifamily Cash-Out Refinance w/Minimal Operating History Shahin Yazdi placed the cash-out refinance of two multifamily properties in Los Angeles for the same borrower. Both loans are fixed at 4.65% for 10 years. At the end of the fixed term, rates will adjust semi-annually to 6-month LIBOR plus 235 for the remaining 5 years of the term. |
Challenge: Historical operating history was extremely limited. One asset was purchased within the last 6 months and had no historical Profit & Loss Statements prior to the acquisition. The 2nd property was purchased last year and it too had minimal historical data. The Borrower requested we underwrite the current repositioned value of the property rather than the cost basis for these loans as his cost basis is significantly lower than the current property value. |
Solution: Using extensive market research, Mr. Yazdi was able to compensate for the lack of historical data. Actual cash flow history although limited, was used to determine reasonable estimates of operations. Market data also facilitated in confirming our underwritten cash flow. The Borrower’s financial strength supported a 65% LTV request regardless of the recent capitalization. |
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| | | | Insane LifeCo Pricing George Smith Partners is working with a Life Insurance Company looking to augment their portfolio with low-leveraged, high quality real estate loans and cut rates this week for transactions to 55% LTV. Loans from $5,000,000 to $100,000,000 offering an 11%+ debt yield will be priced from 2.50% fixed for five-years or 3.25% for a 10-year term. The 10-year opens with five-years of interest only before rolling into a 25 or 30 year amortization schedule. This pricing is reserved for core institutional assets nationwide. |
| | | Hot Money | Small Loan CMBS Product is Back! GSP is working with a West Coast capital provider actively funding non-recourse fixed rate CMBS loans down to $2,000,000 with no spread add-on. Until recently, Wall Street was rejecting all loan requests less than $5,000,000. Extensive closing and legal fees made CMBS execution less than palatable for Borrowers. This Wall Street underwriter will cap all lender related closing costs including lender legal fees at $20,000. This nation-wide lender will fund in MSAs as small as 50,000 to a 9%-10% debt yield and 70% LTV. Products include core asset types + student housing and mobile home parks. Hospitality and single-tenant requests are not being considered at this time. | | | If you have an inquiry regarding George Smith Partners' commercial real estate financing, please contact your GSP representative or Todd August, Chief Operating Officer, at (310) 867-2995 or TAugust@GSPartners.com. | | | Speakers Corner | Founding Partner Steve Bram will be participating in a "Next Generation" workshop panel sponsored by the ICSC on Thursday November 8th. Panel discussions will involve the acquisition of a retail asset from the views & aspects of a principal, debt and institutional equity provider. For more information or sign-up for the Beverly Hills event, please visit the ICSC site here. | | | Pascale’s Perspective | Treasury Yields Rise: Treasury yields rise on economic data; the 10 year is at 1.82%. Two key components of any recovery cycle are consumer spending and housing. Both were reported this week: (1) Deleveraging: Household debt has fallen to its lowest level since 2007. Now the question is “Will households spend again?” Consumers have dry powder, but confidence has been shaken by the recent recession and they are squeezed by rising gas and food prices. (Which are not included in CPI reporting and therefore don’t enter in to Fed policy on rates); (2) Housing starts rose to highest levels in 4 years. Housing is key because home buying spurs several job markets: construction, financial services, hardware, etc. Also, European “fear factor” is low this week as Greece comes to terms on its next injection of bailout funds. Treasury yields broke through a key technical level, some chart gurus say that 1.88-1.90% yields are imminent. …stay tuned…… David R. Pascale, Jr. |
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©2012 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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