GSPartners
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Volume XXI | No. 32 | August 21, 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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0.18%
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5 Yr US Treasury
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1.63%
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5 Yr Swaps
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1.80%
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12-MAT
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0.15%
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3 Month LIBOR
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0.26%
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10 Yr US Treasury
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2.89%
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10 Yr Swaps
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3.05%
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11th Dist COFI
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0.95%
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6 Month LIBOR
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0.39%
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30 Yr US Treasury
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3.89%
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| | | Transaction Description: | | $9,431,000 Ground-Up Flex-Office & Industrial in a Tertiary Market George Smith Partners successfully placed the 72% of cost construction debt for a single tenant ground-up development in a mid-western tertiary market. The flex-office & industrial building is 100% pre-leased to the subsidiary of an international corporation. The capital markets were less than enthused with the 57,000 MSA population and single tenant occupancy. The easily divisible project design and strong tenant viability mitigated market concerns. The construction loan includes an optional five-year mini-perm upon rent commencement at 2.75% over the 5 year LIBOR. The 15 month construction loan was sized to 75% of cost and priced at LIBOR + 2.90%, sub-3.20% today. There is no prepayment penalty or exit fee for the construction debt. |
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| | | Transaction Description: | | $5,600,000 Bridge Loan for a 45% Occupied Two-Story Food Court George Smith Partners successfully placed the $5,600,000 bridge loan for a two-story retail building that is essentially a Koreatown food court. The committed loan represented 84% of the “As Is” value. Capital has been allocated for the renovation of a ground floor restaurant and refurbishment of the outdated second floor food court that is currently vacant. With a three year term, the interest only bridge loan is priced at 4.50%. |
Challenge: The Borrower needed to maximize loan proceeds for this distressed asset. There is significant street level competition in the area with more modern facilities. Parking is very limited, not subsidized and expensive for fast food clientele. |
Solution: GSP identified the correct capital provider who realizes the tremendous opportunity to transition the food court into a modern, hip and aesthetically pleasing dining environment. GSP worked with the lender to structure reserves for releasing the funds at various project stages. Our due diligence confirmed a very high foot-traffic count as customers will be predominantly pedestrian or utilize the convenient mass transit in the area. Some people do walk in LA. |
| | Rate: Prime+1.25% | | Term: 3 Years | | Amort: Interest Only | | LTV: 84% | | Prepayment: 9 Month lock then Open | | Recourse | | Lender Fee: 0.50% | | Advisors: Gilda Rivera, Salar Royaei |
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| | | | Commercial Real Estate Ground-Up Construction Debt GSP is funding transactions with a West Coast portfolio lender originating ground-up construction debt for multifamily, office, industrial and retail assets to 75% of cost. Non-recourse execution is available for a 15 basis-point reduction in LTC. The LIBOR based loan will carry the option of rolling into a mini-perm at CofO or being paid off without an exit fee or penalty. Transactions from $10,000,000 will be considered in the western states and Texas. Product types w/full recourse will include homebuilding and entitle land for future homebuilders. |
| | | Hot Money | Mid-Market Joint Venture Equity from $4,000,000 GSP is working with a recently formed discretionary fund providing equity capital from $4,000,000. While most funds are targeting “bigger is better”, this organization is addressing a much needed niche for developers with project capitalizations from $15,000,000. Transactions considered are from Denver west and will include core assets plus hospitality. Management plays or physical reposition is favored although some ground-up construction will be underwritten. High IRR executions may allow for a refinance upon stabilization to return capital and postpone the sale for a longer hold period. | | | 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 |
FOMC Minutes??? Traders found today’s highly anticipated scheduled FOMC minutes release ambiguous. The minutes revealed no overall consensus that tapering will begin (there was some hesitancy revealed among the members) but the release was not enough to slow the overall selling off of treasuries. The 10 year yield now stands at 2.89%. There are two prevailing theories: (1) The Fed will start tapering in September and yields are on their way up to the 3.00%-3.50% range by year end, or (2) there are potential headwinds for the economy in September including German elections (which may lead to a resumption of sovereign debt crises in Europe), continued tepid American economic growth, and upcoming potential fiscal brinksmanship over continuing resolution and debt ceiling. Note that the debt ceiling raises the issue of the possible massive selling or massive buying of treasuries. ...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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