GSPartners
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Volume XXI | No. 10 | March 13, 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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0.88%
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5 Yr Swaps
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1.02%
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12-MAT
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0.18%
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3 Month LIBOR
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0.28%
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10 Yr US Treasury
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2.02%
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10 Yr Swaps
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2.10%
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11th Dist COFI
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0.96%
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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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3.22%
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| | | Transaction Description: | | $22,000,000 CMBS Cash Out Refinance of Grocery-Anchored Shopping Center GSP successfully placed the cash-out refinance of a 110,000 square foot grocery-anchored retail center in northern Orange County. This loan represented a significant return of equity to the Borrower on a non-recourse basis. The 10 year term is fixed at 4.27%, amortized over 30 years. |
Challenge: The anchor tenant representing 43% of the gross income and 40% of the net rentable square footage has yet to take occupancy, with “doors open” 45 days past our funding date. The tenant’s corporate outlook is negative. |
Solution: GSP structured a holdback whereby funds at closing were sufficient to pay off the existing loan and offer a small return of equity. The remaining proceeds were held and will be released when the anchor issues a clean estoppel and begins paying rent. Market data on demand generators, qualitative analysis on the tenant’s commitment to the space, and information on potential replacement tenants supported the certainty of the future income stream. |
| | Rate: 4.27% | | Term: 10 Years | | Amort: 30 Years | | LTV: 60% | | Prepayment: Defeasance | | Non-recourse | | Lender Fee: Par | | Brokers: Gary E. Mozer, Katie Rodd |
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| | | Transaction Description: | | $6,000,000 Permanent Take-Out of a Hotel to “For Rent” Housing GSP successfully placed the $6,000,000 refinance of a 243-unit, 11-story apartment building in Reno, Nevada. The property was purchased by the Borrower as a limited service hotel and subsequently converted to “For Rent” apartments. The refinance proceeds were used to pay off the existing capital stack including a bridge 1st Trust Deed and a private mezzanine loan. The non-recourse loan is fixed for 10 years at 4.80%, amortized over 30 years. |
Challenge: The Sponsor extensively renovated the property to convert it from a hotel to apartments. The asset came on-line as rental apartments during the recession. While it leased-up quickly, the income has been volatile over the last few years due to the weak Reno market. Although the income had stabilized over the last 6 months, lenders were hesitant to lend on year-over-year declining income. |
Solution: GSP identified a lender that was comfortable with the volatile income given the increasing occupancy over the last 6 months as well as the relatively low leverage loan request. The property had historically maintained cash flow well above the lenders minimum dcr constraint. |
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| | | | Hospitality – All stages of the Capital Stack Hotel capital is making a renewed resurgence. As capital continues to chase core assets down to tight yields, GSP is working with a debt fund willing to accept more risk in exchange for a wider return. As a portfolio owner of hospitality, their focus is exclusively hotels, but in every segment of the capital stack; senior/mini-perm notes to 75% w/sub-10% debt yield, mezzanine/pref equity, Joint Venture Equity. DPOs and bridge/reposition requests are considered below break-even coverage. Transactions must size for a minimum of $15,000,000 and assets must be in a Top 50 MSA market. Debt pricing starts at 6.75% so not competitive with the CMBS market on rate but will fund further up the capital stack and accept more risk than most Wall Street underwriters. |
| | | Hot Money | Opportunistic JV Equity: Value-Add, Ground-Up George Smith Partners is actively placing Joint Venture Equity requests with an opportunity fund for larger construction or reposition transactions. IRR requirements will vary although asset liquidation will be required upon stabilization in order to achieve the desired thresholds. Projects requiring a minimum of a $10,000,000 JV equity component in gateway cities will be considered for all core asset classes plus hotels, “For Rent” and “For Sale” housing. Entitled and un-entitled land will also be considered with the proper structure. This JV partner will fund option payments during the re-entitlement phase to avoid taking title of the dirt prior to construction. Sponsors must have a balance sheet and a positive reputation. | | | 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 | GSP Senior Vice President Malcolm Davies recently penned an article for CCIM Institute Magazine on secondary and tertiary market opportunities. Mr. Davies offers detailed descriptions of market components and yield expectations. The entire article is available on-line here. | | | Speakers Corner | Senior Vice President Marc Schillinger will be moderating the finance panel at this year’s Healthcare Real Estate West Conference to be held Wednesday March 20th. The downtown Los Angeles event will be hosted by The Sheraton Hotel. More conference information and registration is available on-line. |
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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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