GSPartners
|
|
|
|
Volume XXI | No. 24 | June 26, 2013
|
|
|
|
|
|
|
|
|
|
KEY RATE INDICES
|
|
Prime Rate
|
3.25%
|
1 Month LIBOR
|
0.20%
|
5 Yr US Treasury
|
1.42%
|
5 Yr Swaps
|
1.61%
|
|
12-MAT
|
0.16%
|
3 Month LIBOR
|
0.28%
|
10 Yr US Treasury
|
2.52%
|
10 Yr Swaps
|
2.75%
|
|
11th Dist COFI
|
0.97%
|
6 Month LIBOR
|
0.41%
|
30 Yr US Treasury
|
3.57%
|
|
|
|
| | Pascale's Perspective | “The Fed Giveth and the Fed Taketh Away” …..a quote from Gerge Smith circa a 1998 edition of FINfacts…. As of June 2013: a week since the Fed meeting and Chairman’s press conference has been volatile across all fixed income markets, especially Treasuries….The 10 year T was at approx. 2.17% before the meeting, it hit a high of 2.67% this week, and now seems to be “settling in” at about 2.50%. Thursday, Friday and Monday were extremely volatile as the “rubber band snapped” ie much of the selling was due to some old Wall Street bogeys: betting, betting wrong, and betting using borrowed money, it looks like: (1) Several large holders had bought bonds using leverage and had to cover positions by selling and (2) The day before and morning of the Fed announcement, there was a flurry of trades going “long”, traders were betting that the Fed would not engage in any “taper talk”, they were counting on “QE4, which means QE forever” Those traders realized they had bet wrong even before the press conference started. The rapid selling over the last week basically “cleared the books” and markets have calmed, for now. Is a 2.50% the “equilibrium” for the Treasury? What about spreads? CMBS and MBS Agency (Fannie and Freddie) all have seen some widening, with traders remarking “its trying to catch a falling knife” when trying to price new business. Some stability has returned in the past day or two, but it’s too early to see if this firms up, or maybe the market was oversold and we could even see some narrowing across Treasuries and spreads. Bottom line for borrowers in process that are watching coupons rise, they are trying to figure out if today’s higher rate is the “next stair on the way up” or a short or long term peak. New 10 year fixed rate coupons are pricing much closer to 5.00% than 4.00% or even in the low 5’s. ...Stay Tuned... David R. Pascale, Jr. | | | | Transaction Description: | | $5,500,000 Cash-Out Refinance of a West Los Angeles Boutique Hotel GSPs Ameet Chagan placed the $5,500,000 non-recourse cash-out refinance of a 47 unit limited service boutique hotel in West Los Angeles. The asset, constructed in 1985, was free & clear at the time of funding representing a 100% return of equity to the Borrower. Sized at $117,000 per key, the 10-Year term is fixed for 7 Years before floating at 2.75% over Prime. The step-down prepayment is 5%, 4%, 3%, 2%, 1%, open. |
Challenge: Cash out requests on non-flagged hospitality are the exception and far from the norm. Non-recourse financing on hotels garners further scrutiny and the loan per key request is relatively high for a limited service hotel. The Sponsor required a long term fixed rate with a flexible prepay option and reporting structure which ruled institutional lenders out. This asset was difficult to comp out as most boutique hotels have a food and beverage component. Franchised limited service hotels trade at a substantially higher capitalization rate. |
Solution: GSP identified an experienced hospitality lender with a healthy balance sheet that understood the superior operating history and location of the high quality asset. The lender became comfortable with the significant return of equity and the property performed exceptionally during the market downturn. The lender became comfortable by extending a non-recourse loan as the Sponsor owned this asset for almost 30 years and proved his “hands-on” approach to management and pride of ownership. This location has exceptionally high barriers to entry. The appraisal relied upon the strong historical operating history in their confirmation of value for this unique asset. |
| | Rate: 6.0% Fixed for 7 Years | | Term: 10 Years | | Amort: 25 Years | | Prepayment: 5,4,3,2,1, open | | Non-recourse | | Advisor: Ameet Chagan |
|
|
| | | | Ground-Up Construction Healthcare Mezz-Debt George Smith Partners identified an International Mezzanine Debt fund currently funding mezzanine debt for the construction of several skilled nursing facilities and an acute care property in the US. Other healthcare related uses considered include Assisted Living, Memory Care and Hospitals. Transactions will size from $5,000,000 to $50,000,000 per project with single-digit pricing to 90% of cost. A tri-party agreement with the senior lender will be required for this non-recourse mezz-debt. Commitments are obtained as fast as 45 days and funding 30 days thereafter. |
| | | Hot Money | 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. | | | 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 | Principals Malcolm Davies and Gary E. Mozer were recently featured in The Real Estate Forum on-line magazine. Mr. Mozer's view on foreign investors seeking a safer haven in Southern California real estate may be found on page 22. Mr. Davies' nomination as a SoCal Leader is found on page 26. | | | Congratulations SVP Bryan Shaffer | GSP congratulates Bryan Shaffer for his recent advancement to Senior Vice President. Mr. Shaffer joined GSP two years ago and in that short term has placed a variety of complex DPOs and bridge/reposition transactions; 10 thus far in 2013 with 11 more slated for funding in the next 30 days. Product types have varied but all were complex and utilized Mr. Shaffer's prior development and institutional asset manage experience. |
|
|
|
|
©2013 George Smith Partners, Inc. DRE # 00822654 FINfacts is an ePublication of
George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
|
|
|
|
|
|
|
|
