GSPartners
|
|
|
|
Volume XXII | No. 3 | January 22, 2014
|
|
|
|
|
|
|
|
|
|
KEY RATE INDICES
|
|
Prime Rate
|
3.25%
|
1 Month LIBOR
|
0.16%
|
5 Yr US Treasury
|
1.70%
|
5 Yr Swaps
|
1.80%
|
|
12-MAT
|
0.13%
|
3 Month LIBOR
|
0.24%
|
10 Yr US Treasury
|
2.87%
|
10 Yr Swaps
|
2.98%
|
|
11th Dist COFI
|
0.78%
|
6 Month LIBOR
|
0.33%
|
30 Yr US Treasury
|
3.76%
|
|
|
|
| | | Transaction Description: | | $7,100,000 Pre-Development Land Loan on 521 Acre Tract GSP placed the cash-out refinance of a 521 acre land tract to be permitted for 921 single family residential lots, 434 multifamily units and an additional 270,000 square foot commercial project in Orlando, Florida. The two and a half year term is fixed at 5.85% with no personal repayment guarantee. Recourse is limited to a capitalized entity. |
Challenge: Still 18 months from final permitting and actual site development, the Sponsor was seeking to increase his equity yield by appropriately leveraging the land. Traditional bank-style pricing was required yet a personal repayment guarantee was not available. |
Solution: GSP identified a residential lender that understood the value in the land and became comfortable with the expertise and experience of the Sponsor. The Borrowers’ business plan was vetted through market research and the capital provider became comfortable that demand will only increase during the duration of the permitting process. |
| |
|
| | | Transaction Description: | | $5,700,000 Refinance for Neighborhood Retail Center w/Civic Controlled Parking Structure George Smith Partners arranged the $5,700,000 fixed rate financing for a four-tenant retail center with civic parking garage. The 1960s vintage center was a 16,500 square foot single tenant grocer at acquisition in 2002, supported by an “at grade” parking lot. The Sponsor later entered into a development agreement with the City to build a 187 space, three-story parking structure with three street facing units adding 7,500 square feet of additional net-rentable retail to the collateral. At garage CofO, the City entered into a 34 year lease (approximately 24 years remaining today) with a “reversion” structure where the City will take title of the garage and all of the expanded retail space at the end of the lease term. Upon reversion, the Sponsor will lease the retail spaces from the City for $1 per year for 99 years. All of the retail tenants are granted parking rights in the garage in perpetuity. The three in-line spaces have been 100% occupied for most of the 10 years since construction. In mid-2013, the Sponsor executed a new 10 year lease with a privately held national discount store chain that initiated operations in September but did not start rent commencement until late December. The loan was rate-locked and funded prior to rent commencement. A 20 year fixed rate, self-liquidating loan was essential as the balloon risk would be problematic given the termination of the garage income stream and reduction of collateral through the reversion. |
| |
|
| | | Transaction Description: | | $2,100,000 Construction Loan for a “For-Sale” Residential Development George Smith Partners successfully structured a 79% loan-to-cost construction loan for the ground-up development of a “For-Sale” townhome project in Denver, Colorado. At close, the project was fully entitled, permits were ready to be pulled, and the developer had pre-sold several units. The 18 month term is priced at Prime plus 1.0%, floored at the start rate. There is no prepayment penalty. |
Challenge: The developer required a highly leverage loan in order to complete the project and re-establish his development track record since the recession. Despite the housing recovery in most major markets, many lenders remain apprehensive about lending on new ground-up for-sale residential projects. |
Solution: GSP sourced a capital provider knowledgeable with this specific location and depth of the marketplace. The lender became comfortable with the developer’s expertise and business plan. GSP vetted the risk exposure in advance of completing the application with the lender to structure objective criteria that satisfied both the developer and the lender. |
| | Rate: Prime+1.0% | | Term: 18 Months | | Amort: Interest Only | | LTC: 79% | | Prepayment: None | | Recourse | | Advisor: Loren Bedolla |
|
|
| | | | Life Company: 3% Fixed for Three Years to 65% LTV An on-book Life Insurance Company is seeking institutional sponsors for stabilized transactions sized $10,000,000 to $30,000,000; with razor thin pricing. Three year fixed terms start at 3.0% to 65% leverage on 10% debt yields or greater. 9% debt yields are possible for stronger assets & high net-worth borrowers. Multiple terms may be structured including 3+3+3, 25/25, 30/30 or the more traditional 30 years due in 10 years. Prepayment options are also negotiable for this non-recourse execution. |
| | | Pascale’s Perspective |
US Treasuries and Tapering... Treasury yields rose today (10 year up to 2.86%) as tomorrow’s manufacturing and housing reports are expected to be strong. The consensus on the weak labor report seems to be that it was a seasonal anomaly and the Fed will continue tapering bond purchases by another $10 - $20 billion next month. Spotlight on CMBS: Market opened the year strong as both regular multi-loan pools and large single asset pools issuance faces strong demand. The market is further stoked by data indicating that legacy loans in special servicing (non-performing) is declining to 4 year lows. The benchmark AAA bonds are pricing at about 85 over swaps (down from about 100 late last year). New loans are pricing "around Swaps + 200" so some aggressive originators are quoting coupons under 5.00% for best product. …..stay tuned….. David R. Pascale, Jr.
|
|
|
|
|
©2014 George Smith Partners, Inc. DRE # 00822654 FINfacts is an ePublication of
George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
|
|
|
|
|
|
|
|
