GSPartners
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Volume XXI | No. 38 | October 2, 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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1.38%
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5 Yr Swaps
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1.54%
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12-MAT
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0.14%
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3 Month LIBOR
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0.25%
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10 Yr US Treasury
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2.61%
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10 Yr Swaps
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2.79%
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11th Dist COFI
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0.96%
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6 Month LIBOR
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0.37%
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30 Yr US Treasury
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3.70%
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| | | Transaction Description: | | $6,500,000 Senior Land Development Financing George Smith Partners placed the $6,500,000 Acquisition & Senior Land Development Financing for the 30 acre First Phase of a 233-acre master development project in Indian Trail, North Carolina, an outer-ring suburb of Charlotte. The loan will fund development of 76 single family lots, including all municipal infrastructure services, and allow the Sponsor to deliver serviced single family lots for sale to homebuilding companies. The Sponsor plans a total of four phases in the 233-acre development, which will encompass a total of 582 single family lots, as well as horse stables and pastures, equestrian trails, and other recreational facilities. An existing development marketed alongside the project has been 85% developed and includes 527 single family homes, 89 townhomes, and 10 live/work units. |
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| | | Transaction Description: | | $5,175,000 Multi-Family Acquisition Loan in Litigation Shahin Yazdi placed the acquisition of a 35 unit multi-family property in a prime West Hollywood location. The seller was embroiled in litigation that impacted title and operations of the subject property. The 75% of purchase loan is fixed for five years at 3.65% and includes the first three years at interest only. There is no balloon as the loan will self-liquidate over the 30 year term. |
Challenge: The property litigation prevented access to meaningful financial cash flow history. A 30 day escrow was mandatory without opportunity to extend. Loan guarantor liquidity was limited and threatened the purchase as compounded by a DCR constraint. |
Solution: Ample market information was used in underwriting operating expenses. All third party reports were rushed and used to compile an asset credit file. The bank agreed to accept updates post-funding. Investor liquidity was proven to support the transaction despite the lack of a repayment guarantee from this individual. Market strength and Borrower experience further solidified the underwriting process. A below market management fee was underwritten allowing for a more acceptable DCR as the property will be self-managed going forward. |
| | Rate: 3.65% Fixed for 5 Years; 6Mo LIBOR+250 | | Term: 30 Years | | Amort: 3 Years IO; 27 Years | | LTC: 75% | | DCR: 1.15 | | Prepayment: 3,1,1,1 Open | | Recourse | | Advisor: Shahin Yazdi |
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| | | | Portfolio Lending Nationwide from $1,000,000 GSP is funding acquisition and refinance of multifamily and commercial assets with a regional portfolio lender. All loans for this national capital provider are held on-book and serviced locally. Single tenant story deals are underwritten on a common sense basis and not exclusively pegged to tenant credit and remaining lease term. Stable special use assets including restaurants, fitness centers and non-credit medical office are fixed for five year (5+5) and amortized over 30 years to 70% of value. Market rate caps are used to confirm value. |
| | | Hot Money | California Regional Bank Funding sub-1.0 DCR George Smith Partners is originating construction and reposition debt with a Regional Bank funding in California, Washington and selective cities in other Western States. Some level of recourse will be required with burn-off at stabilization. All core assets and assisted living from $5,000,0000 to $25,000,000 is underwritten for experienced developers. Pricing @ L+300 is designed to allow for additional credit risk. Loan-to-cost will top out at 70%. | | | 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 | Founding Partner Gary M. Tenzer and Vice President Bryce Overend were recently quoted in GlobeSt.com on structured debt and joint venture equity trends. Various methods to capitalize developments based on reposition and construction programs, permitting the Developer to retain ownership and grow a portfolio of income producing assets. | | | Pascale's Perspective | Government Shutdown Edition – I have spoken to multiple lenders that are having internal calls/discussions regarding risks associated with the government shutdown. The consensus is, “hopefully it won’t last too long” as the ripple effects on the macro economy may grow. The real concern to the capital markets is the debt ceiling, as it needs to be raised by approximately October 17th. Even a perception of default could roil credit markets considerably. It now seems that any agreement to reopen the government will be combined with a raise in the debt ceiling. A repeat of 2011 may spike treasury rates this time (as investors lose faith in US debt), or cause a “flight to quality” with spreads blowing out, its uncharted territory and markets loathe uncertainty. ...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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