GSPartners
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Volume XXI | No. 8 | February 27, 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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0.20%
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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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0.93%
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12-MAT
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0.18%
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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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1.90%
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10 Yr Swaps
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1.98%
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11th Dist COFI
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1.07%
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6 Month LIBOR
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0.46%
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30 Yr US Treasury
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3.10%
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| | | Transaction Description: | | $4,328,000 Acquisition of 16 Unit Chicago Apartments George Smith Partners successfully placed the debt acquisition of a 16 unit multifamily property in Chicago, Illinois. The assets were developed as two contiguous “For-Sale” condominiums five years ago. The seller purchased the note from the prior construction lender, then foreclosed on the assets. Once on title, the seller repositioned the two buildings, converting them to “For-Rent” properties prior to their sale last week. Historical operating history was very limited although market surveys and an MAI analysis confirmed the supportable demand and Net Cash Flow used for underwriting. GSP reviewed this request as a refinance for the seller prior to asset stabilization, but was introduced to the buyer upon the asset going under contract. GSP’s relationship with the seller assisted in back-filling of this “story deal” and added credibility to satisfying the purchasers’ financing contingency. Terms for the ten-year non-recourse loan are: 75% of purchase, fixed at 4.20% with 30 year amortization. |
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| | | Transaction Description: | | $1,885,000 Non-Recourse Acquisition Loan for 20-Unit Ventura Apartment GSP Successfully arranged the 75% of purchase loan for a 20-unit apartment building in Ventura, California. The $1,885,000 loan is fixed for 7 years at 4.12% prior to rolling to LIBOR+225 for the remaining term. There is no balloon risk as the loan has a 30-year term, and 30 year amortization. |
Challenge: The Borrower requested maximum proceeds but would not personally guarantee the new loan. Ventura County is viewed as a secondary B-market by many capital providers. There were no direct sale comparables in this market segment, creating a challenge to support the purchase price on a per door or capitalization basis. This is the only multifamily asset in the Borrowers’ investment portfolio. Indexes were in flux during the issuance of the term sheet, jeopardizing the purchase if the all-in coupon moved against us during due diligence. |
Solution: GSP utilized its extensive lender relationships to identify a portfolio lender who is active in and familiar with this market and borrower profile. GSP’s market comparable search identified similar assets to support the purchase price. The Lender agreed to a non-recourse, 75% LTC based on the borrowers’ over-all commercial experience and financial capacity. The Lender locked rate at application, removing all interest rate risk and allowing the transaction to be underwritten on a fixed constant. |
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| | | | Multifamily 30 due 12 George Smith Partners is originating multifamily loans fixed for 12 years with 30 year amortization. These non-recourse loans are not constrained by stressed DCR tests or artificial capitalization rates. LTVs to 80% on purchases with up to three years of interest only for quality assets; 75% LTV for cash-out refinances. There is no interest-only option with any return of equity. Transactions are sized from $1,000,000 to $50,000,000 for stabilized assets nationwide. Par pricing tops off at 4.50% fixed for the 12 year term with larger transactions and/or lower leveraged requests funded at a reduced rate. |
| | | Hot Money | Small Loan Platform GSP is actively funding California transactions to $3,000,000 for multitenant retail, office and industrial assets. Loans are sized to 70% of value with rates as low as 4.0% fixed for five years of the ten year term. Amortization can be pushed out to 30 years. Prepayments vary but are typically a step-down as opposed to a yield maintenance calculation. A personal repayment guarantee will be required. | | | 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 | Gary M. Tenzer was recently interviewed by GlobeSt.com on the mounting momentum CMBS originations have taken on over the last six quarters and their expanding appetite for all stabilized product types. Risk spreads have compressed as debt yields dropped. Mr. Tenzer’s comments and production forecasts are available in the article on-line here. | | | Speakers Corner | GSP Co-Founding Partner Gary M. Tenzer will moderate the "Traditional Debt General Session" panel during the ICSC Capital Markets West Conference on Tuesday March 5th. The event will be held at the InterContinental Hotel in Century City. Registration information and panel details; as well as other event topics may be found here. | | | Pascale's Perspective | Treasuries and Equities—Markets have “whipsawed” in the past few days. Just when it seemed like the long bond market rally was “ending” (10 year T was up to 2.06% last week), the “fear factor” returned, volatility spiked and the 10 year yield dropped down to 1.85%....Why? (1) Return of Euro instability on Italian election “uncertainty” as market friendly technocrats were in danger of being replaced by populist anti-austerity factions, (2) Consumer weakness due to expiration of payroll tax holiday, gas price spike, sequestration uncertainty….But then, just like that, fear factor subsides as the new hot fundamental, US housing markets, showed continuing strength and Fed Chairman Bernanke “soothed” markets with his dovish testimony in front of Congress. The Chairman was specifically indicating that the “hawkish” element among Fed governors (ie anti QE3) is a minority and that the program will continue…..equity markets at 5 year high…Treasury sitting at 1.90%. ...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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