GSPartners
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Volume XXI | No. 30 | August 7, 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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1.37%
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5 Yr Swaps
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1.54%
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12-MAT
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0.15%
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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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2.60%
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10 Yr Swaps
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2.78%
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11th Dist COFI
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0.95%
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6 Month LIBOR
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0.40%
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30 Yr US Treasury
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3.69%
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| | | Transaction Description: | | $5,800,000 Cash-Out Refinance & Acquisition Loan for a Vacant Building GSP successfully arranged the cash out refinance of a 7,300 square foot conventional office building and the simultaneous acquisition loan for a 6,400 square foot adjacent vacant creative office/retail building. No new cash equity was required for either transaction. The cash out loan was limited to 60% of value and is fixed for 3 years at 4.75%, amortized over 25 years. The acquisition loan is fixed for 1 year at 5.25% and is interest only without prepayment penalty. The acquisition loan also included TI and LC’s for the vacant office/retail building. The two loans were funded concurrently and are not cross-collateralized. |
Challenge: The Client requested 100% of capitalization for the purchase of a vacant retail building including all financing and improvement costs. |
Solution: GSP arranged for the 50% of total cost on the vacant retail asset inclusive of all reserves and financing fees. All of the cash equity required for the purchase was supplied by the adjacent office building that contains the client’s corporate offices. These two separate loans provided sufficient cash for the purchase of the new building and carry of the existing performing asset. |
| | Rate: 4.75% & 5.25% | | Term: 3 Years & 1 Year | | Amort: 25 Years & IO | | LTV: 60% | | LTC: 50% including all TI reserves | | DCR: 1.29 & N/A | | Prepayment: 3,2,1 & none | | Recourse | | Lender Fee: 0.875% | | Advisors: Steve Bram, Jonathan Lee, Shine Cheng |
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| | | Transaction Description: | | Bridge Loan For Mixed-Use Hotel Property GSP successfully placed the bridge loan for the acquisition of a hotel, RV park, car wash, restaurant and vacant former casino commercial building located near Death Valley. The restaurant features slot machines and video gambling. The Sponsor purchased the mixed use property from the original developer who owned the asset for multiple decades. The subject is the best performing hotel property in this tertiary market, which serves as a gateway for campers traveling to Death Valley. |
Challenge: The tertiary market, an unincorporated town with a population of just over 35,000, proved to be a challenge for most prospective lenders. The large vacancy created by the former casino was a drag on overall occupancy, while driving down property value on a capitalized basis. Due to the multiple uses and lack of directly comparable properties, both Lender and Sponsorship had difficulty deriving an actual cap rate and value for the asset. |
Solution: GSP was able to source a West Coast Lender with the real estate knowledge to understand the strengths of the asset, regardless of the tertiary location. GSP and its Sponsor articulated the strengths of the asset with the large vacancy in place, and the potential upside presented by the space. GSP consulted multiple local appraisers to arrive at a capitalization rate which kept leverage (from a value perspective) at a satisfactory level for the Lender. |
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| | | | Nationwide Non-Recourse Mini-Perm Lender GSP is originating mini-perm transactions nationally for stabilized assets on a non-recourse basis. Story deals are welcome subject to going-in debt yields north of 8.7%. Credit issues are reviewed and approved prior to application. The five-year term is fixed in the high 4%/low 5% range for core assets up to $10,000,000. LTVs top out at 75% for commercial and 80% for multifamily. No TI/LC reserves are taken at close of escrow. Prepayment may be in the form of yield maintenance or a step-down. |
| | | Hot Money | “Keep it Simple” JV Equity George Smith Partners is originating Joint Venture equity relationships with a West Coast discretionary fund looking to “keep it simple” in order to execute additional transactions by year-end. Rehab/reposition transactions are preferred although non-multifamily ground-up will be underwritten as well. Retail is high on the “needs” list. Equity is structured with a 90/10 co-invest for up to a five year hold period as they desire a multiple over an IRR. Equity slugs will be from $10,000,000 up. | | | 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 | | | Speakers Corner | Founding Partner, Steve Bram will be teaching several extension classes at UCLA and an MBA class at USC. Mr. Bram will be joined by Mark Ruff, Joe Covert and Michael Keston for several of the classes. |
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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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