GSPartners
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Volume XXI | No. 23 | June 19, 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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0.19%
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5 Yr US Treasury
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1.27%
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5 Yr Swaps
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1.49%
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12-MAT
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0.16%
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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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2.35%
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10 Yr Swaps
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2.58%
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11th Dist COFI
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0.97%
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6 Month LIBOR
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0.41%
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30 Yr US Treasury
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3.41%
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| | | Transaction Description: | | $28,450,000 in Acquisition Financing for Three Limited Service Hotels to 77% of Purchase GSP successfully placed $28,450,000 of acquisition financing on three limited service hotels. The assets were funded by two separate lenders and none were cross-collateralized. Two assets are in Arizona and one is in Florida. The non-recourse fixed rate financing represents 75% of the aggregate acquisition price and 68% of total costs including future Property Improvement Plan (PIP) dollars. All three loans are fixed for five years at 4.55%, amortized over 25 years. |
Challenge: There was significant volatility in credit spreads during the time period between signed loan applications and loan closings for these CMBS transactions. Interest rate fluctuations impacted loan proceeds as these transactions were structured with tight underwriting parameters. The Borrower requested an alternative to defeasance as his prepayment option. |
Solution: GSP’s daily interaction with numerous CMBS capital sources allows us to monitor spread movement across various lending platforms and proactively address potential re-pricing issues. Due to a combination of our meaningful ongoing relationships with the lenders and an aggressive posture to lock the all-in coupon, all three transactions were closed at the initial spreads quoted with no negative impact to proceeds. GSP was able to secure a yield maintenance prepayment option as opposed to the more standard defeasance requested by Wall Street capital providers. |
| | Rate: 4.55% | | Term: 5 Years | | Amort: 25 Years | | LTC: 70% - 75% - 77% | | Prepayment: Yield Maintenance | | Non-recourse | | Lender Fee: Par | | Brokers: Gary E. Mozer, Katie H. Rodd |
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| | | | JV Equity and more for California Multifamily GSP is working with a high-net worth organization with a full back-office seeking to fund Joint Venture Equity for ground-up multi-family construction for a five to ten year hold cycle. They will contribute capital for unentitled sites, sign for the construction loan and GC the project, or most combinations there-of including allowing the qualified developer to GC. This program is not “cookie-cutter” with structure and splits varying widely. California “B” quality in-fill locations should have projects sized from $25,000,000 to $100,000,000. |
| | | Hot Money | Nationwide Ground-Up Construction. GSP identified a national institutional funder providing ground-up construction of core property types to 75% of cost. Transactions will range from $5,000,000 to $45,000,000 for up to a five year term. Mini-perm options are typically available upon stabilization. Rates vary based on risk but are floored at 4.0%. Non-recourse with a completion guarantee is available on a limited basis based on product type, location and borrower strength. | | | 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 | | | Pascale's Perspective | The end of the “Bernanke put” is upon us....”Today the committee made no changes to the Purchase Program” remarked the Chairman today in reference to the Fed’s continuing $85 billion of monthly bond purchases known as QE3. So no big deal? Not so fast.... Fixed income markets including treasuries sold off big, the 10 year T went from 2.18% to 2.35% in 4 hours. Why? Because the Chairman indicated the program may wind down beginning in early 2014 and end in mid 2014. This shows how much asset inflation based on “endless” QE3 was priced in to fixed income assets. He noted that this is not “applying the brakes” but more like “easing off the accelerator”. Today demonstrated that the Fed does not have control of the unwinding of their unprecedented “ultra accommodative” policies..... Note that after indicating that the Fed would spend $500 billion - $1 trillion in future bond purchases, that those assets (bonds) were then massively sold off; and this selloff of assets (stocks sold off also) is all due to the Fed’s prediction of an improving economy...... It seems that the only thing the Fed could have said today to forestall a massive asset selloff was that bond buying would continue “forever”. The transition from the “new normal” to the “old normal” (whatever that is/was/will be) may be messy. ...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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