GSPartners
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Volume XXI | No. 47 | December 11, 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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1.50%
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5 Yr Swaps
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1.59%
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12-MAT
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0.13%
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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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2.86%
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10 Yr Swaps
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2.92%
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11th Dist COFI
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0.96%
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6 Month LIBOR
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0.34%
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30 Yr US Treasury
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3.88%
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| | | Transaction Description: | | $13,100,000 Non-Recourse Acquisition Financing for a 161-Unit Class B Apartment to 85% of Purchase GSP successfully placed the acquisition debt on a 1990’s vintage, 161-unit multifamily property in a tertiary Montana market. The $13,100,000 non-recourse senior note represented 85% of the initial purchase price. The three year term loan floats at LIBOR plus 6.0% on an interest only basis. |
Challenge: Sponsor required high leverage non-recourse debt on collateral located in a thinly populated market with a high concentration of college students. |
Solution: GSP stressed the high 98% occupancy of the competitive set. Coupled with limited planned supply and the property occupancy at 100% for the past three years, the lender became comfortable with the depth of sustainable demand. |
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| | | Transaction Description: | | $2,700,000 Cash-Out Refinance South Los Angeles Retail Shahin Yazdi placed the 70% Loan to Value for a Strip retail Center that had all “Mom and Pop” tenants. Almost all the leases were coming due in the next 3 years and the center had declining income over the last 3 years. The ten year term is priced at 4.10% for 5 years then it adjusts to 6M Libor plus 2.90%. The loan will amortize over 30 years. |
| | Rate: 4.1% Fixed for 5 Years | | Term: 10 Years | | Amort: 30 Years | | LTV: 70% | | DCR: 1.30 | | Prepayment: 5,4,3,2,1 open | | Lender Fee: Par | | Advisor: Shahin Yazdi |
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| | | Transaction Description: | | $2,500,000 Cash-Out Refinance of Los Angeles Mixed-Use Asset GSP successfully placed the cash out refinance of a Los Angeles mixed-use asset with a regional bank. The property is a combination of 37 residential rental units with four ground floor commercial tenants. The new loan floats for 5 years at WSJ Prime + 1.00%, with a floor rate of 4.85%. The financing was constrained by a 1.20 DCR and 70% LTV. The new loan retires an existing bank loan, and allowed the sponsor to recoup monies invested on recent renovations. Constructed in 1914, the age and mixed-used nature of this asset made it difficult to identify a lender willing to remit the return of equity. |
| | Rate: Prime+1.0% w/4.875% Floor | | Term: 5 Years | | Amort: 30 Years | | LTV: 70% | | DCR: 1.20 | | Prepayment: None | | Recourse | | Lender Fee: 0.5% | | Advisor: Jason Gaffner |
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| | | | Razor thin Pricing for Moderately Leveraged Commercial Real Estate GSP is obtaining aggressive loan quotes on Class B or better Commercial Real Estate assets offering a 1.30 Debt Coverage Ratio. This portfolio lender is seeking to supplement their balance sheet with lower yielding paper on loans of $5,000,000 and up. Five year terms are currently 3.20% with seven year notes at 4.45%. Both structures are non-recourse and amortize over 30 years. |
| | | 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 | Principal and Managing Director Steve Bram is featured in the December 10th issue for BisNow Real Estate. The article on this 30 year industry veterans’ personal and professional life is available on-line. | | | Pascale’s Perspective | Treasury and Regulation Update: Wednesday’s auction of 10 year Treasuries was possibly the last one before the “beginning of the end” of tapering as the Fed meets Dec 18th. The yield is at 2.82%, indicating traders are anticipating less bond buying. Spotlight on Regulations: As we are 5 years post credit crisis, a host of US and International regulations are in focus as they take effect: (1) Basel 3 Capital Requirements: Good news is this should ease “Euro fear factor” as it forces banks there to hold more reserves, but it also may affect spreads and lending for US money-center banks that are adjusting to the new reserve requirements. There is some indication from loan officers that credit spreads may be “up slightly” soon. (2) “Volker rule” sharply limits and regulates proprietary trading by FDIC insured institutions. This will affect money-center commercial banks, but also the spotlight is on the investment banks that became commercial banks “overnight” in September of 2008 so they could access the “Fed window” and remain solvent during the worst of the crisis. Now these banks need to decide what direction to go in as much of their business plan involves risk trading on their own account and for their clients. It is a classic case of the “training wheels coming off” RE their ability to operate as they did pre-crisis. (3) Dodd-Frank Risk Retention impacts CMBS; the regs are scheduled to go into effect next year. The rules now require issuers to hold a greater portion of the risk together (“retention”) along with a "premium capture cash reserve account" for the life of the securities. This may affect banks and non-bank issuers differently and if the rules are not re-written, may cause spreads to spike approximately 40 bps according to some bankers. The final rule implementation is still in flux. ...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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