GSPartners
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Volume XXI | No. 13 | April 2, 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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1.79%
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5 Yr Swaps
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1.87%
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12-MAT
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0.12%
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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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2.80%
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10 Yr Swaps
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2.92%
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11th Dist COFI
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0.71%
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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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3.64%
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| | | Transaction Description: | | $4,500,000 Non-Recourse Acquisition Quick Close Charter School GSP successfully placed the $4,500,000 non-recourse acquisition loan for the purchase of a 41,000 square feet commercial office building located in Oakland, California. The property is currently being utilized and serves as the main campus for a local Charter School. Our Sponsor manages the school which has 650 students ranging from kindergarten to eighth grade. The school lease to the prior real estate owner was about to expire and the financing sourced by George Smith Partners allowed the tenant to take advantage and exercise their option to acquire the property. A second trust deed was recorded at closing bringing the total debt allocation to 73% of cost. The interest only, non-recourse loan closed in three weeks from application to funding. |
Challenge: The Borrower had been under contract to acquire the property for over 4 months and received several loan rejections as most lenders are not comfortable financing charter schools. Pending litigation threatened the future of the charter and thus the viability to service the debt. Timing became critical as the Seller received other higher bids. A portion of the buyers’ capital was in the form of a recorded second trust deed, typically a prohibition in the debt markets due to “cram-down” should the asset get moved into bankruptcy. |
Solution: GSP identified a reliable private equity capital provider who understood the pending lawsuit and is comfortable with the Sponsors’ business plan and the ultimate exit strategy. A higher than anticipated valuation (as confirmed by the sellers’ additional bids) added more comfort to the senior lender; ie allowing a recorded second trust deed, etc. The entire financing process took three weeks to fund and maintain the escrow. |
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| | | Transaction Description: | | $3,600,000 Cash-Out Refinance of Los Angeles Shadow-Anchored Retail Center GSP successfully placed a $3,600,000 non-recourse loan on inline retail space shadow-anchored by an ethnic grocer in an industrial suburb of Los Angeles in the San Gabriel Valley. The anchor has no obligation to report sales. Sponsor has owned the property since 1980 and the transaction provided a significant return of equity to the Sponsor, who was able to lock in sub 5% financing for ten years in addition to the cash-out. The 70% LTV, 10 year loan is fixed at 4.92% (SWAPs + 2.05%) and amortized over 30 years. |
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| | | Transaction Description: | | $1,910,000 Acquisition Financing to 90% of Purchase Price George Smith Partners successfully placed the acquisition financing of a 4,570 square foot office/warehouse in Torrance, California. The Borrower was leasing an adjacent property but required more space. The purchaser took advantage of this program to relocate to space that would accommodate the company’s growth and provide for the transition from tenant to owner. Fixed for 7 years at a sub-5.0% coupon, the 90% of purchase price loan has a 20 year call date. |
Challenge: This area of Los Angeles’ South Bay is plagued with environmental contamination. Although specific environmental reports indicated there was no environmental exposure to the subject property, the phase one report was initially rejected. The seller required closing to occur on a date certain leaving a limited window of time to complete the transaction. A low appraisal put loan proceeds at risk of being reduced due to an LTV constraint. |
Solution: GSP identified a capital provider that had completed similar loan requests in the business park and worked diligently with the lender to provide the information necessary for the environmental report to be accepted. The lenders’ knowledge of the market allowed us to further expedite the process and meet the sellers’ timeline. The LTV constraint was modified to compensate for the appraisal and thus maintain the original loan amount. |
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| | | | Joint Venture Equity Capital for Single and Double Tenant NNN Property Development Nationwide A Fiduciary Fund Manager is providing JV Equity for one and two tenant developments throughout the United States. Tertiary markets are included for all credits and product types including medical office, office and retail. Equity commitments range from 80% to 100% of the required capital. The Fund will invest as little as $500,000 up to $20,000,000 of equity per asset. Programatic relationships with NNN developers is sought to complete multiple transactions. |
| | | 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 | Treasury Yields Spike 10-year T hit 2.81% as long awaited “Spring Thaw” economic reports came in strong, both jobs and factory orders indicated that the weak January/February numbers were skewed lower due to bad weather. Investors obviously believe that tapering will continue unabated. Interestingly, it was reported this week that the Fed’s inflation targets have been missed for the last 22 consecutive months. Will fears of deflation play into future decisions? Perhaps tapering will end, but followed by a long period (1-2 years?) of near zero rates. ….Stay tuned… David R. Pascale, Jr |
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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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