GSPartners
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Volume XXI | No. 12 | March 26, 2014
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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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0.15%
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5 Yr US Treasury
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1.67%
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5 Yr Swaps
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1.77%
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12-MAT
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0.13%
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3 Month LIBOR
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0.23%
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10 Yr US Treasury
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2.69%
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10 Yr Swaps
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2.81%
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11th Dist COFI
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0.77%
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6 Month LIBOR
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0.33%
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30 Yr US Treasury
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3.54%
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| | | Transaction Description: | | $32,100,000 Acquisition Financing for 75% LTC Inland Empire Anchored Retail GSP successfully placed a $32,100,000 non-recourse acquisition loan on a 285,775 square foot retail center in Riverside County: anchored in part by a discount movie theater and fitness center. Sized to 75% of purchase and an 8% debt yield, the five year term allows for three years of interest only before amortizing over 30 years. Fixed at 4.47%, the yield maintenance prepayment penalty opens the last five months of the term. |
Challenge: The Sponsor requested maximum leverage yet minimal debt service payments to meet cash-on-cash return hurdles. |
Solution: GSP identified a lender willing to provide a five year fixed rate term with three years of interest only payments, significantly increasing Sponsor’s cash flow after debt service and allowing him to realize his cash-on-cash requirements. |
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| | | Transaction Description: | | $5,016,000 Mix-Use Refinance Mini-Perm George Smith Partners arranged the no-cash-out refinance of a 91,405 square foot mixed-use multi-tenant office, retail and self-storage property located in Van Nuys, California. Proceeds were used to retire the current debt that ballooned. The five-year term was sized to 72% LTV and is fixed at 5.0%; amortized over 25 years. There is no prepayment penalty. |
Challenge: The property had questionable proforma revenue resulting from short-term leases with weak tenants. Below market rents impacted the property valuation and debt coverage covenant. Office vacancy was high with no new leasing prospects at the time of funding. The existing loan had come due last year and extended once with no further extensions possible. The multiple mixed-use combination made it difficult for the appraiser to properly value the property. |
Solution: GSP identified a portfolio lender who understood the mixed-use configuration. Loan proceeds were maintained by reinforcing the desirability of the location and future value once cosmetic upgrades are completed and retail rents are rolled to market. A 1.20 debt coverage constraint was negotiated in our term sheet. The appraiser documented that the product mix was a benefit in that it created a unique and positive synergy compared to other properties in the area, while diversifying income risk from any singular market segment. |
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| | | Transaction Description: | | Cash-out Refinance of an REO Apartment Building George Smith Partners successfully structured a 75% loan to value refinance of a well-located Los Angeles apartment building. This asset was acquired through a foreclosure sale 12 months prior to this loan funding. This new loan offered a return of equity and represented 91.5% of the original acquisition just one year ago. The portfolio loan is fixed for five years at 3.85% before rolling to a floating rate for the remainder of the loan term. Although funded at 91.5% of cost, the 3rd party appraisal confirmed a 75% of value. |
Challenge: The investor required a high leverage loan to recapitalize his liquidity for additional acquisitions. The property was purchased through a foreclosure sale and historical operating statements, maintenance records, and other financials were not available for lender’s due diligence. |
Solution: GSP identified a capital provider knowledgeable about this location and marketplace and is comfortable with the investor’s expertise, level of guarantee, and business plan. GSP vetted the risk exposure upfront and worked to structure loan criteria to satisfy the borrower and lender, resulting in a highly leveraged loan for the Borrower that closed in 33 days from application. |
| | Rate: 3.85% | | Term: 5 Years Fixed; 5 Years Floating | | Amort: 30 Years | | LTV: 75% | | Prepayment: 3,2,1 Open | | Advisor: Loren Bedolla |
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| | | | Small Portfolio Perm Lender GSP is working with a national portfolio lender for stabilized assets from $2,000,000 to $6,000,000. Spreads vary based on risk and product type although all fixed coupons are priced over treasuries, a 15 to 20 basis point savings over comparable Swaps. Core assets and student housing in major MSAs are underwritten to 75% of value/1.25 dcr on a non-recourse basis. Terms vary from 5 to 15 years, amortized over 30 years and carry a yield maintenance prepayment penalty. |
| | | 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 |
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©2014 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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