GSPartners
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Volume XXI | No. 18 | May 15, 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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0.83%
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5 Yr Swaps
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0.98%
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12-MAT
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0.17%
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3 Month LIBOR
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0.27%
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10 Yr US Treasury
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1.94%
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10 Yr Swaps
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2.06%
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11th Dist COFI
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0.97%
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6 Month LIBOR
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0.42%
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30 Yr US Treasury
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3.15%
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| | | Transaction Description: | | $38,900,000 Senior Construction Facility George Smith Partners successfully placed the $38,900,000 loan to take out a $6,000,000 bridge lender and provide ground-up construction financing for Phase 1 of a 373 unit, multifamily/marina development on Hayden Island in Portland, Oregon. Proceeds were used to retire the existing bridge loan (Davies – GSP FinFacts 12/12/12) required to satisfy creditors after the project stalled post-ground breaking. The marina is currently stabilized and operating while the loan will provide additional funds to develop 175 units of the two-phase project. The three year loan is sized to 65% of cost and only requires a repayment guarantee of the top 10% of the loan. This transaction represents the second marina GSP has placed in the last 12 months |
Challenge: Over the course of the Project’s lifecycle, the Borrower had encountered several issues, many of which made conventional financing improbable including (1) Seizure of initial construction loan syndication’s agent-bank by the FDIC; (2) Consequent lender-liability issues stemming from syndicate banks’ failure to fund construction loan proceeds (3) Chapter 11 bankruptcy-protection filing. |
Solution: Under time-pressure to repay the $6,000,000 bridge loan, GSP recognized the opportunity to take advantage of the high-yield financing programs in the private-equity markets to fund 100% of future costs-to-complete. Several factors made this approach possible: (1) Horizontal improvements and utilities were already in place; (2) Fully functioning, 95% occupied, 204-slip marina providing ample cash-flow for assistance with debt-service at funding. GSP demonstrated that the Borrower, through the course of the project, had invested approximately $20,000,000 to-date and was credited that amount – thus underwriting to a 65% LTC constraint. |
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| | | Transaction Description: | | $16,000,000 Non-Recourse Cash-Out Refinance of an Un-Stabilized Grocery-Anchored Shopping Center in a Secondary Market GSP successfully placed the $16,000,000 on-book, non-recourse loan for a 152,765 square foot grocery-anchored shopping center. The retail asset is located in Sonoma County, Northern California. The loan was sized to 65% of value, allowing for a return of equity back to the Sponsor. The rate floats during the 7-Year term at LIBOR + 2.50%, currently at 2.70%. There is no prepayment penalty while floating over LIBOR although the Borrower may fix the coupon through a swap at any time during the 7-year term. |
Challenge: The property is currently 81% occupied. The non-credit grocery anchor representing 33% of the center has very strong sales but faces a lease expiration in 2016, during the initial loan term. An additional national anchor tenant representing almost 20% of the net rentable is a recently executed lease with no sales history. |
Solution: GSP targeted non-recourse on-book lenders who valued the Borrower’s track record of successful operating experience, allowing the Borrower to benefit from earn-out proceeds as the property stabilizes. The loan structure has an initial funding of $13,500,000 based on the property’s cash flow today, and incudes up to an additional $1,000,000 for future leasing costs associated with vacant space. A favorable appraisal resulted in up to $1,500,000 of additional funds made available to the Borrower upon meeting cash flow hurdles upon stabilization. Interest is paid only on the funded amounts and not on earn-out dollars until disbursement. |
| | Rate: 30 Day LIBOR+2.50%; Currently 2.70% | | Term: 7 Years | | Amort: Interest Only until stablilzation; 30 years thereafter | | LTV: 65% of Stabilized Value | | Prepayment: None | | Non-recourse | | Lender Fee: 1.0% | | Brokers: Gary E. Mozer, Katie Rodd |
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| | | | Five Year CMBS execution with Reduced Prepayment Wall Street is actively expanding their platform and structures to attract a higher production volume. GSP is receiving qualified terms from one CMBS originator quoting five year fixed rate, amortized over 30 years down to a 9% debt yield for commercial, sub-9% for multifamily. The loan will open to prepayment without penalty for the last two years for a 30 basis-point increase in spread. A three year zero-prepayment can be structured for an additional 60 basis point premium. Five year transactions are currently priced at 3.75% before the pre-payment premium add-on. |
| | | 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 | Managing Director Gary E. Mozer was recently interviewed by GlobeSt.com in preparation of the ReCon Global Retail Real Estate Convention to be held next week in Las Vegas. Mr. Mozer advises as to the availability of capital for the volume of transactions currently available. The article and more information on the ICSC Convention is available here. | | | Congratulations! | Hardy congratulations to former GSP intern/future GSP full-time employee Andrew Hornblower on his progression from student to USC Alumni! We at GSP look forward to working with you on a full-time basis and welcome you to the Real World. Fight On Andrew! | | | Pascale's Persepctive | Treasuries…. Is the economy ready to “ride on its own”? Is Bill Gross right? Treasury yields spiked almost 40 bps from a low of approximately 1.60% in late April up to nearly 2.00% Tuesday….. Why? A highly cited WSJ article the weekend of May 4-5 indicated that the Fed is looking to wind down bond purchases, aka Quantitative Easing. This is actually good news as Fed governors feel the economy is almost ready to thrive without massive central bank intervention….. Then Bill Gross tweeted that the “long bull market in bonds ended on April 29, 2013” (at the 1.60% 10 year yield)…. Bond yields dropped slightly today as the 10 year is at 1.94. ….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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