GSPartners
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Volume XXI | No. 3 | January 23, 2013
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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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0.21%
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5 Yr US Treasury
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0.75%
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5 Yr Swaps
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0.90%
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12-MAT
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0.18%
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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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1.82%
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10 Yr Swaps
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1.90%
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11th Dist COFI
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1.00%
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6 Month LIBOR
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0.48%
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30 Yr US Treasury
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3.02%
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| | | Transaction Description: | | $12,247,000 Cash-Out Refinance for Colorado Apartment Community GSP arranged a significant return on capital for a four-parcel, 289 unit apartment complex in Wheat Ridge, Colorado. The Borrower requested maximum proceeds for reinvestment into new acquisitions. The non-recourse loan is fixed for 10 years at 3.96%. |
Challenge: The Borrower’s existing lender relationships were unwilling to provide a cash-out refinance due to the subjects’ tertiary location. The property operates as 308 units, collecting at 96% of Gross Potential. GSP discovered that 7% of the units were non-conforming during our due diligence period. Standard protocol requires lenders not count income for non-conforming units although expenses associated with those units are still underwritten. This substantially lowered NOI and loan proceeds. At 40 years old, the asset required increased maintenance reserves and a potentially costly list of immediate repairs. |
Solution: GSP secured a lender that did not artificially constrain loan-to-value due to the property's tertiary location. The lender provided maximum proceeds at 75% LTV. The GSP team oversaw all of the physical and valuation inspections, working on-site with the appraiser and underwriter in supporting the valuation and cash flow to minimize the negative impact of the non-conforming units. The GSP team also worked with the Borrower to optimize its capital repairs budgets to further improve NOI and preserve the original loan request. |
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| | | Transaction Description: | | $3,250,000 30 Due 30 Fixed-Rate w/Recorded 2nd Trust Deed GSP Successfully placed the $3,250,000, refinance for a 68-unit affordable housing community. The property is age and income restricted. All units are one bedroom, one bath. The loan is fixed for 30 years at 5.0%, has a 30-year term, and amortizes over 30 years. |
Challenge: The affordability component is supported by a recorded 2nd trust deed that is almost three times the senior loan. Although the 2nd lien holder agreed to re-subordinate to new debt, this recordation prohibited most underwriters from reviewing the file. The Borrower is interest rate risk adverse and refused to accept any rate reset or balloon exposure. |
Solution: GSP identified a DUS underwriter who agreed to obtain the required waivers for the recorded 2nd trust deed given the affordability component and the below market rents. The Borrower experience in this market and segment further solidified the credit file. |
| | Rate: 5.0% | | Term: 30 Years | | Amort: 30 Years | | Prepayment: Yield Maintenance | | Lender Fee: Par | | Broker: David Stepanchak |
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| | | | National Debt Fund Recapitalized A national bridge debt provider has recently recapitalized and is aggressively funding reposition transactions with a mandate to put $400,000,000 out into the market over the next 12 months. Senior notes will range from $10,000,000 to $25,000,000 for 2 to 5 year terms. Pricing is not programmatic and will vary widely depending on risk and leverage. Transactions to 85% of cost will be considered. All product types including land and condo inventory will be underwritten. Ground-up construction requests will also be considered. Recourse is deal specific although completion guarantees will be required for construction transactions. |
| | | Hot Money | Ten-Year Fixed Regional Bank Portfolio Lender w/Step-Down Prepay George Smith Partners is working with a Regional Bank actively ramping up their commercial real estate portfolio as economic metrics continue to stabilize. Applications fully executed with deposits posted by March 31st will qualify to receive a 3.25% start rate for two year before adjusting up to 4.50% for the remaining 8 years of the fixed term. Transactions of up to $10,000,000 will be sized to 75% for multifamily, 70% for most commercial assets and 65% for unanchored retail. All California major metropolitan markets will be considered. The recourse loan will carry a 5-5-4-3-2 prepayment penalty. | | | 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 | | | In The Press | Founding Partner Gary M. Tenzer was recently interviewed by Multi-Housing News for their January publication. Mr. Tenzer's thoughts on the Apartment Investment Forecast may be found on page 20 and is available on-line here. | | | Pascale's Perspective | Markets rally on debt ceiling “kick the can” Today’s actions in Washington have assured markets there will be no US sovereign default, at least until summertime (hopefully it will not be a replay of 2011’s summer drama). Equity markets are rallying, volatility indices and spreads are tightening, that’s good. But international investors, rating agencies, etc still do not have that elusive “certainty” that will only come from a long term plan to lower deficits. Will the long awaited “grand bargain” emerge from the upcoming budget negotiations? ...Stay Tuned... David R. Pascale, Jr. |
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©2013 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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