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| Volume XXI | No. 42 | October 30, 2031 |
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| KEY RATE INDICES |
| Prime Rate |
3.25% |
1 Month LIBOR |
0.17% |
5 Yr US Treasury |
1.32% |
5 Yr Swaps |
1.45% |
| 12-MAT |
0.14% |
3 Month LIBOR |
0.24% |
10 Yr US Treasury |
2.54% |
10 Yr Swaps |
2.68% |
| 11th Dist COFI |
0.96% |
6 Month LIBOR |
0.36% |
30 Yr US Treasury |
3.64% |
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| Transaction Description: |
| $4,464,000 Cash-Out Refinance of a West Los Angeles Four-Property Apartment Portfolio George Smith Partners successfully arranged the cash-out refinance of a four-property, 24-unit apartment portfolio in West Los Angeles. The loans are fixed at 4.10% for 7 years, before adjusting to 2.25% over the 6 month LIBOR index for the remaining 23 year term. There is no balloon although the loan opens to prepayment without penalty after the 7th year. |
Challenge: The properties had recently undergone an intra-family transfer due to the death of the prior owner. This transition resulted in a simultaneous change in property management that complicated the process of obtaining clear historical operating information. The majority of the new capitalization was a return of as well as a return on equity. The Borrowers required a 30 year loan term without a balloon date. |
Solution: GSP highlighted the financial strength of the Sponsors and the in-fill locations of the subject properties as compensating factors for the lack of clear operating history and large cash-out component to this transaction. GSP identified a portfolio capital provider offering a 30-year loan term. |
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| Transaction Description: |
| $3,010,000 Non-Recourse Cash-Out Refinance of Two Multifamily Echo Park Buildings to 90% of Total Capitalization GSP successfully placed the cash-out refinance on two apartment buildings in the Echo Park neighborhood of Los Angeles. The Borrower had acquired the dilapidated buildings with low leverage debt before investing personal equity to overhaul the buildings and stabilizing the cash flow with market rate rents. GSP identified a lender that agreed to factor in “sweat equity” and return 90% of the Borrower capital. The new 10 year fixed-rate loan is non-recourse and amortizes over 30 years. The cash-out allowed the Sponsor to lower their yield to their equity investor, achieving a higher return on cost. |
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| Rate: 5.50% |
| Term: 10 Years |
| Amort: 30 Years |
| DCR: 1.25 |
| Prepayment: Yield Maintenance |
| Non-recourse |
| Lender Fee: Par |
| Advisors: Jonathan Lee, Shine Chang |
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| Transaction Description: |
| $1,300,000 Cash-Out Refinance of a 9 unit multifamily Ameet Chagan placed the cash-out refinance of a 9 unit multifamily asset with a portfolio lender. The rate was locked during application, just prior to a huge bond movement. The 7 year fixed term was locked at 4.16% and amortizes over 30 years. The loan will float at LIBOR plus 2.25% and self-liquidate over the remaining 23 years of the term. The Sponsor occupies the largest unit with the bulk of the rental income from this unit, treated as a market-rate rental. This loan was funded within 30 days of application. |
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| Rate: 4.16% Fixed for 7 Years |
| Term: 30 Years |
| Amort: 30 Years |
| Prepayment: 4,4,3,3,2,1,1 open |
| Lender Fee: Par |
| Advisor: Ameet Chagan |
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| Regional Bank Debt – Multifamily Non-Recourse to 65% GSP is funding transactions from Seattle to San Diego on stabilized commercial and multifamily assets to 75% of value. Core products and self-storage are reviewed from $1,000,000 to $15,000,000 on a 30 year amortization schedule. The 10 year term is fixed based on risk and offers a step-down prepayment structure. Non-Recourse financing is available to 50% LTV for commercial and 65% for multi-family. A future funding (earn-out) may be structured and pre-approved, with the entire capitalization rate-locked at the initial funding, mitigating future bond movements. |
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| Speakers Corner |
GSP Founding Member Steve Bram will be a speaker at the 9th Annual Real Estate Syndication Summit Saturday November 2nd at the Luxe Hotel in West Los Angeles. The event kicks off at 8:30 and will feature a forum of 14 industry veterans discussing the metrics of a successful syndication. Registration and more information on the summit is available on-line.
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| In The Press |
Managing Director David Rifkind was recently interviewed by GlobeSt dot com on commercial investments vs the on-going residential boom. The opinion piece discusses the option of bypassing the residential buying frenzy and focusing on the acquisition of residential land instead. This exclusive interview is available on-line.
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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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