GSPartners
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Volume XXI | No. 40 | October 16, 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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1.39%
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5 Yr Swaps
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1.55%
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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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2.66%
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10 Yr Swaps
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2.81%
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11th Dist COFI
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0.96%
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6 Month LIBOR
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0.36%
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30 Yr US Treasury
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3.72%
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| | | Transaction Description: | | 85% of Total Capitalization Non-Recourse Acquisition and Reposition Financing on Class B Apartments Closed in 25 Days GSP successfully placed high leverage non-recourse debt on a Class B multifamily property in Denver. The Sponsor’s business plan includes renovation of the units and common areas, of which the lender will fund to 100% of cost. The three year term is priced at LIBOR + 6.25%, interest only for two years before rolling into a 25 year amortization schedule. |
Challenge: The acquisition had a very short due diligence period and the seller provided minimal historical information on the property. A repayment guarantor was not available for this acquisition. |
Solution: GSP used existing relationships and current knowledge of the lending market to quickly pinpoint a suitable capital source able to close the transaction in 25 days. This capital provider was able to focus on the Sponsor’s business plan and prior performance with similar deals when underwriting the transaction as opposed to on the property’s historical performance. |
| | Rate: 30 Day LIBOR+6.25% | | Term: 3 Years+Two (1) Year Options | | Amort: 2 Years IO; 25 Years | | LTC: 85% | | Prepayment: 15 Months Spread Maintenance | | Non-recourse | | Lender Fee: None | | Advisors: Gary E. Mozer, Katie Rodd, Michael Anderson |
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| | | Transaction Description: | | Father and Son Business Expansion George Smith Partners placed the $4,043,000 acquisition financing for a single tenant, family owned business to expand operations with the purchase of a new San Fernando Valley facility. Corporate operations are centered on drying, cleaning and damage repair of residential and commercial properties impacted by water. Poor historical recording keeping was off-set by a strong business plan and consistently increased sales. The 90% of purchase price debt was fixed at 4.50%, amortized over 25 years. Funding was timed to meet the seller expectations of the 60 day escrow. |
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| | | Transaction Description: | | Cash-Out Loan on San Diego Mixed-Use Asset to Off-Set High Interest Rate Debt on Stand-Alone Starbucks GSP successfully placed cash-out refinance for a mixed-use commercial property in San Diego. The borrower originally contacted GSP to obtain replacement debt on a much higher yielding single-tenant Starbucks in Alabama with less than 5 years remaining on their lease. After evaluating the client’s portfolio, GSP recommended repositioning the debt onto the mixed-use asset owned in San Diego, allowing a portion of the cash-out proceeds to pay-off the Starbucks loan. The 10-year term loan is fixed at 4.625% for 7 years and was sized to 65% LTV with flexible options for prepayment; terms much more favorable than the single tenant Starbucks would have yielded. The Starbucks property was not collateralized and is now Free & Clear. |
| | Rate: 4.625% Fixed for 7 Years | | Term: 10 Years | | Amort: 30 Years | | LTV: 65% | | Prepayment: 1,1 open | | Recourse | | Advisors: Stephen Stein, Teddy Stutz |
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| | | | Bridge/Reposition/Perm Mezzanine and Pref-Equity from $3,000,000 George Smith Partners is working with a Pacific Northwest fund who just completed a $75,000,000 equity raise and is seeking to distribute it on smaller performing and sub-performing capitalizations. Second-tier tranches of mezz and pref-equity will be funded from $3,000,000 to $10,000,000 to 85% of value. Transactions in Texas and Denver West will be underwritten for up to five year hold periods. Core assets must have some level of cash flow at funding. Yields will range from 12% to 15% based on risk. |
| | | 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 | Deal? Looks like yes! The Senate approved the compromise just now, as I type this. An agreement appears to be imminent: US Government funded until January 15 and Debt Ceiling raised sufficiently to February 7. Retailers are exhaling as the holidays will now be free of government deadlines and Federal workers come off furloughs, pent up demand may boost consumer spending. Short term (30 day) US Treasuries rallied today with yields almost cut in half, the 10 year T hit a recent high of 2.75% as talks were collapsing Monday/Tuesday of this week, now 9 bps tighter at 2.66%. However, the lateness/drama of the process caused Fitch to put the USA on negative outlook, China to call for a “de-Americanization” of the money system, the shutdown is estimated to have cost 0.3%, etc. Perhaps a key part of the agreement will turn out to be the Budget Conference that is tasked with delivering a long term “sensible” plan by December 13. ….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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