GSPartners
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Volume XXI | No. 48 | December 18, 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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1.54%
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5 Yr Swaps
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1.60%
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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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2.88%
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10 Yr Swaps
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2.94%
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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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3.90%
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| | | Transaction Description: | | $42,500,000 Acquisition Financing for South Los Angeles 669-Unit Multifamily Complex George Smith Partners arranged the $42,500,000 (71% of acquisition) fixed rate portfolio loan for a large 669-Unit Apartment Complex located in Los Angeles. Property Specs: 669 Units, 65 buildings (low rise structures), late 1940s vintage, 40 separate parcels, the majority are 1 and 2 bedroom units. The Property is well located near the new Crenshaw light rail transit line. This acquisition was a unique opportunity, a huge infill parcel that had not traded in 30 years. This asset fits in with Sponsor’s strategy to purchase properties in improving areas with long-term, fixed-rate debt and renovating units at unit turn without the future permanent loan rate risk. Unique Loan Structure Features: (1) Two separate loans to maximize opportunities for future “evergreen” loans; (2) Five separate reverse exchanges allowing Sponsor to structure including tenants in common, master lease structure, etc. This will allow the Sponsor to sell other assets and exchange into the subject property over the next few months; (3) Loan closed in 6 weeks from application on a strict acquisition timeline with massive documentation and “moving parts”. GSP provided financing for over 20 transactions for this Sponsor dating back to 1999. |
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| | | Transaction Description: | | $2,360,000 Ground-Up Student Housing Leasehold Construction GSP structured the ground-up construction debt for a 33-bed student housing project several blocks from University of Southern California. The 18 month construction loan is subject to a 50 year unsubordinated leasehold. Total capitalization represents 70% of the development cost and floats at Prime plus 1.50%. The loan also presents a pre-approved 5 year mini-perm option at stabilization at then market rates. |
| | Rate: Prime + 1.5% w/5.5% Floor | | Term: 18 Months w one - 6 Month Extension | | Amort: IO | | LTC: 70% | | Prepayment: None | | Recourse | | Lender Fee: 1.0% | | Advisors: Jonathan Lee, Shine Cheng |
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| | | | West Coast Portfolio Future Funding Locked Today GSP is processing applications with a California Regional Bank structuring earn-outs based on future valuations but rate locked at today’s low yields. Commercial and multifamily assets are sized and funded to a 1.20 debt coverage today but rate locked up to 75% of proforma value with funds released upon confirmation of the improved NOI. Core assets and self-storage will be considered from $1,000,000 to $15,000,000 on a 30 due in 10 year basis. All Western States considered with non-recourse available on lower leveraged executions. |
| | | 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 | The Tapering is Here and the Sky is Not Falling…… Today’s long anticipated announcement by the Fed that they are pulling back on QE3 was met by a stock market rally and bond yields did not rocket skyward, so fears were overblown. The 10 year T closed at 2.89% today….. Why? By starting the “taper talk” in May (which rocked equity and bond markets for months), the actual news was not shocking as markets were well prepared. It was an inverse of the old adage “buy the rumor, sell the news”. Also, investors realized that the Fed is still very active in the market; it is still scheduled to purchase $75 billion in bonds next month ($40 billion in Treasuries, $35 billion in MBS, $5 billion less of each). Also, markets are feeling positive as this marks the beginning of the end of massive extraordinary central bank stimulus and hopefully a return to a normalized economy….. The Fed also pushed back the time frame for raising short term rates, now confirming that 2014 should be free of any increases as they see the next increase in early 2015….. Budget Compromise: Today’s “other news” was the approval of a budget agreement in Washington. The good news is that there was no fiscal cliff/government shutdown style drama and brinksmanship which have roiled worldwide credit markets in 2011, 2012 and 2013. It seems to greatly lessen the probability of any such drama in the next 2 years (although there are still debt ceiling deadlines). Unfortunately, the agreement also signals the end of any hopes for the “grand bargain” on tax and entitlement reform, essentially “kicking the can” on major structural reform of the US balance sheet up to the next Presidential election year of 2016….. ...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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