GSPartners
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Volume XXI | No. 44 | November 13, 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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0.17%
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5 Yr US Treasury
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1.35%
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5 Yr Swaps
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1.49%
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12-MAT
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0.14%
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3 Month LIBOR
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0.24%
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10 Yr US Treasury
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2.70%
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10 Yr Swaps
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2.84%
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11th Dist COFI
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0.96%
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6 Month LIBOR
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0.35%
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30 Yr US Treasury
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3.82%
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| | | Transaction Description: | | $11,700,000 Bridge 80% Loan to Purchase for Value-Add Multifamily Portfolio in Odessa, Texas Bryan Shaffer placed the 80% LTV acquisition debt of a 3 property/172 Unit Multifamily portfolio in Odessa, Texas for a 30 day closing. An additional property/phase will close by year-end, bringing the total loan to $13,100,000 for the 201 units. The non-recourse loan is priced at LIBOR+5.75 with a 6.0% floor. There is no prepayment penalty after the 1st year lock-out. |
Challenge: Although Odessa is a very fast growing market, it is one of the smaller MSAs in the country. Rents increased rapidly, so only a limited number of lenders felt comfortable with the market sustainability. The Borrower would not accept a hard money yield. All the properties are 30 years or older and require capital upgrades. Our Sponsor is experienced in multifamily but new to Odessa. The acquisition required a quick 30 day close, adding to the desire for a high leverage, low cost bridge loan. |
Solution: GSP highlighted market potential based on strong employment and lack of product with temporary housing currently filling the void. Mr. Shaffer quickly identified a capital provider who was comfortable with this tertiary market and its’ recent growth. The loan carries a highly structured earn-out that fulfilled the Borrower request while providing a format comfortable to the lender that they are not over-extended. The detailed market study and business plan demonstrated a significant upside within one of the fastest growing, but untested markets in the nation. GSP worked with the lender to accept a recent bank ordered MAI already on file that enabled the lender to close on the purchase within the 30 seller mandate. |
| | Rate: LIBOR + 5.75% | | Term: 24 Months | | Amort: Interest Only | | LTV: 80% | | Prepayment: Locked for 1 Year, then none | | Non-recourse | | Lender Fee: 1% In/1% Out | | Advisor: Bryan Shaffer |
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| | | Transaction Description: | | $4,270,000 Cash-Out Refinance of Mid-West Apartment Building George Smith Partners arranged the cash-out refinancing of a 153 unit multi-family property in a major mid-western MSA. The property is 96% occupied with a history of maintaining +90% occupancy. The Borrower intends to use surplus proceeds for the acquisition of another investment property. The subject is located at the epicenter of a revitalization of a 1.5 square mile downtown redevelopment where a private investor has committed to investing $350,000,000 in what is known as the “Downtown Project.” Amortized over 30 years, the 10 year term is fixed at 5.0% yet does not carry a pre-payment penalty. |
Challenge: Although the “Downtown Project” will invest $200,000,000 in real estate, $50,000,000 in small businesses, $50,000,000 in education, $50,000,000 in tech start-ups and will created almost 500 new jobs; this MSA is still viewed by most lenders as slow to recover. Due to a lack of multifamily sales in this market, there was concern as to the appraised value for the subject. |
Solution: GSP identified a portfolio capital provider not currently vested in this market who understood the “ground floor” opportunity to be part of this renaissance. The lender was willing to maximize the cash-out proceeds to 70% of appraised value. The deal team supplied out-of-market but current and relevant sales information to the appraiser to support the valuation. |
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| | | Transaction Description: | | $1,450,000 Non-Recourse Refinance of 11,704 square foot Santa Barbara Office Building George Smith Partners arranged the 45% LTV, $1,450,000 non-recourse refinance of an 11,704 square foot Santa Barbara office building. The rate & term loan (no cash out) is fixed for six years at 4.50% before floating at 2.90% over the 6 Month LIBOR index. The total term of the loan is 10 years, amortized over 25 years. |
Challenge: Through various entities, the owner effectively occupied 68% of the total GLA, presenting an owner/user scenario. The complex ownership structure and tenant’s sporadic revenue model made traditional owner-user financing very difficult to obtain. The sponsor required non-recourse debt, typically unavailable for owner-user transactions. |
Solution: George Smith Partners identified a capital provider who was able to overcome the challenge of financing an owner-user transaction with investment property underwriting. GSP highlighted the financial strength of the sponsorship and their commercial real estate experience. This added comfort to the lender's credit committee, who agreed to limit individual recourse to standard non-recourse carve-outs. |
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| | | | Perm Debt: Multifamily to 80%; Anchored Commercial to 75% on Market Rate Capitalization GSP identified a National Life Insurance Company winning business away from securitized originators for Class A stabilized assets. All transactions are underwritten with market rate capitalized values from $5,000,000 to $50,000,000. Amortization will be scheduled for 25 or 30 years on a 3, 5, 7 or 10 year call date. Core assets and destination resorts will be considered from the mid-4% range. Higher leverage will not require a mezzanine layer for high quality assets. |
| | | Pascale's Perspective | |
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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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