GSPartners
|
|
|
|
Volume XXI | No. 10 | March 12, 2014
|
|
|
|
|
|
|
|
|
|
KEY RATE INDICES
|
|
Prime Rate
|
3.25%
|
1 Month LIBOR
|
0.16%
|
5 Yr US Treasury
|
1.59%
|
5 Yr Swaps
|
1.68%
|
|
12-MAT
|
0.13%
|
3 Month LIBOR
|
0.23%
|
10 Yr US Treasury
|
2.83%
|
10 Yr Swaps
|
2.83%
|
|
11th Dist COFI
|
0.77%
|
6 Month LIBOR
|
0.33%
|
30 Yr US Treasury
|
3.67%
|
|
|
|
| | | Transaction Description: | | $12,100,000 Non-Recourse Cash-Out Refinance of a Los Angeles Grocery-Anchored Shopping Center GSP successfully placed a $12,100,000 on-book non-recourse loan on a 93,593 square foot grocery-anchored shopping center in West Los Angeles. The stable asset was built in the 1950’s and both anchor leases will expire during the loan term. The floating rate loan was priced at LIBOR + 300 but SWAPped at closing, fixing the coupon for five years at 4.73%. Despite the fixed rate SWAP, the loan allows for a step-down pre-payment after the second year. |
Challenge: The Sponsor required maximum proceeds structured as a non-recourse fixed rate loan. CMBS execution was not an option due to servicing restrictions and the lack of flexibility to pre-pay the loan and/or redevelop the property in the future. Life companies were unable to reach the required proceeds due to the asset age and expiring anchor leases. Moderate leveraged, non-recourse flexible pre-payable fixed rate capital providers willing to lend on assets facing potential reposition are not widely available. |
Solution: GSP optimized execution by achieving non-recourse proceeds comparable to CMBS, competitive pricing, and the flexible prepayment structure of a portfolio lender to allow for future redevelopment. To minimize interest rate risk Sponsor executed a five year Swap with a 4.73% total coupon at closing. |
| | Rate: LIBOR+3.0%; Swapped at 4.73% | | Term: 5 Years | | Amort: 30 Years | | LTV: 60% | | Prepayment: 24 Month Locked, Step-down Prepay thereafter | | Non-recourse | | Lender Fee: 0.5% | | Advisors: Gary E. Mozer, Katie H. Rodd, Michael Anderson |
|
|
| | | Transaction Description: | | $19,071,000 Senior Construction Financing for 55+ Active Adult Community George Smith Partners placed the ground-up construction of an age restricted active adult community in the Pacific Northwest. The loan equates to $170,277 per door for the 112 luxury unit complex. Sized to 60% of cost, the three year loan does not require a warm body repayment guarantees. A 60% Limited Recourse component is exclusive to a capitalized entity during construction but burns down to 30% at stabilization. There are no warm body repayment, completion or carve-out guarantees. Priced at LIBOR + 350; the capital structure did not require additional mezzanine debt to execute. |
Challenge: A top west coast Multifamily Development & Investment Company was embarking on their first Age Restricted Development. The 112-Unit Development plans called for luxurious amenities, large floor plates, all elevator access units catering to the 55+ Active Adult Community. This significantly increased construction costs over similar market rate multifamily developments in the region. While these amenities matched the consumer demand, it was necessary to articulate that the revenue demand generated by this would match and/or exceed the additional construction cost expenditures. While the Active Adult Single Family markets are well accepted, the Multifamily Active Adult sector is still in its infancy. |
Solution: Initially retained to secure mezzanine financing for this transaction, GSP proved their contribution by working with the Sponsor and demonstrating their knowledge of Adult Active Communities and product demand in this market. The Borrower then retained GSP to secure the entire capital stack. GSP secured a Senor Loan without the necessity of more costly mezzanine debt by utilizing a combination of deferred fees and excess land as equity contribution which accounted for over 10% of the capitalization. GSP negotiated all guaranties solely to the capitalized corporate entity including all standard ‘warm body’ carve-outs. |
| | Rate: LIBOR+350 | | Term: 3 Years+Two - 1 Year Extensions | | Amort: IO | | LTC: 60% | Recourse: Limited to a Capitalized Entity: 60% during construction burning down to 30% at stabilization
Advisor: Malcolm Davies |
|
|
| | | Transaction Description: | | 100% of Cost Financing For Asset Coming Out Of Bankruptcy GSP successfully placed the 100% note acquisition financing for a single tenant owner/user distressed asset that was in bankruptcy. The prior senior note was retired and replaced with a new capital structure at close. The Borrower was placed in default by original lender and the deed of trust was sold through an auction company to a third party who forced the Borrower to file BK or lose his equity in the 1985 vintage West Covina office building. The two year term loan is priced at 9.99% and is Interest Only. Lender legal fees were capped at $6,500. |
Challenge: The originating institutional lender sold the note to a third party at the first indication of non-performance without consideration to the equity in their collateral. The third party had no intention of working out a repayment program and was pursuing judicial foreclosure to gain access to the asset. Without many options, the Sponsor proceeded to file bankruptcy to save his equity. The court did not look favorably at the distressed situation and chances of the bankruptcy standing were slim. |
Solution: Due to the type of asset, age and location, George Smith Partners secured financing to pay off both the first and second deed of trust and have the bankruptcy dismissed. Both the first and second lien holders were paid in full without any discount. Certainty of execution was vital since the court was ready to grant a release from stay if the lender could not fund on time. |
| | Rate: 9.99% | | Term: 2 Years | | Amort: IO | | LTC: 100% | | Prepayment: 4 Months Interest | | Recourse | | Lender Fee: 2.0% | | Advisors: Gilda Rivera, Salar Royaei |
|
|
| | | | California Ground-Up Construction George Smith Partners is working with a regional bank actively funding new construction projects statewide. Recourse debt is available for all core assets to 75% LTC plus flagged hospitality (65% LTC) and for-sale stick-built & condominium projects. Other Special Use assets will be considered to 60% of cost. Transactions to $10,000,000 may also qualify for a floating or fixed rate mini-perm upon stabilization. Rates and terms are project specific. |
| | | 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 | Safe Haven Rally Lowers Treasury Yields, “Perfect Storm” for All-In Rates Continues as CMBS Competition Stays Hot Treasuries rallied today despite an auction of $21 billion of new 10 year bonds. The 10 year T dropped about 9 bps in the last week, closing at 2.71%. Why? (1) Geopolitical concerns continue as tensions in the Ukraine show no signs of abating; (2) China concerns: a Chinese solar company defaulted on their bonds with no bailout, the first such occurrence on mainland China in recent memory. This combined with a disappointing report on China exports last weekend also caused a huge plunge in copper prices, which is used as loan collateral in the Chinese “shadow banking” system; (3) The copper plunge also raised the specter of deflation, especially in Western Europe which is not hitting its inflation targets. There are worries that the ECB may act too late and therefore Western Europe could be “the next Japan”. Deflation concerns feed treasury buying…. All of this is occurring as CMBS spreads continue to narrow, credit spreads in the US have not been affected by the international concerns, most full leverage CMBS and Life company loan quotes continue to be sub 5.00% for most transactions. …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.
|
|
|
|
|
|
|
|
