GSPartners
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Volume XXI | No. 20 | May 28, 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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1.48%
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5 Yr Swaps
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1.58%
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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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2.44%
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10 Yr Swaps
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2.54%
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11th Dist COFI
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0.70%
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6 Month LIBOR
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0.32%
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30 Yr US Treasury
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3.29%
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| | | Transaction Description: | | $13,000,000- 66% Loan to Value, Bridge Refinance GSP successfully placed the $13,000,000 bridge loan of a 170,000 square foot 2-building office complex located in Charlotte, North Carolina. The property experienced increased vacancy during the 2008-2012 recession, dropping occupancy to as low as 40%. The Charlotte market had bottomed and is now experiencing an upturn, returning to historic stabilized occupancy levels. Both properties are now positive cash flowing with solid renewal activity and a new major lease. The properties, 73% leased at funding, are well maintained and managed by the sponsor’s locally based management company. Floating over LIBOR with a 6.0% floor, the non-recourse loan offers a 2-year term before two – 6 month options. |
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| | | Transaction Description: | | $2,496,000 Acquisition Financing for an Industrial Multi-Tenant Facility w/Excess Land GSP successfully placed the short term acquisition financing on a multi-tenant industrial facility with excess land in Azusa, California. The 3.2 acre site is leased to two tenants; a nationwide electrical contractor and commercial fleet fueling facility. Tenant leases are set to expire one year before loan maturity. The 5.0% fixed rate term is amortized over 25 years and has a step-down prepayment. |
Challenge: Capital providers are typically un-comfortable with a fueling facility on site. The short term remaining on both leases exposes the loan to 100% vacancy just prior to loan expiration. The Sponsorship has a foreign citizen as a controlling member that many lenders look for a repayment guarantee. |
Solution: GSP identified a local portfolio lender who understood the property use and focused on the quality of the real estate first, and the repayment guarantor strictly as an alternative to the cash flow. Our lender did not require the foreign citizen to guarantee the loan and became comfortable with the asset use (fueling facility) with a clean Phase I. |
| | Rate: 5.0% | | Term: 5 Years | | Amort: 25 Years | | LTC: 60% | | Prepayment: 5,4,3,2,1 | | Recourse | | Advisor: Ryan Parker |
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| | | Transaction Description: | | Cash-Out Refinance: Single Tenant Retail George Smith Partners arranged the cash-out refinance of a single-tenant property located in the southwestern United States, occupied by a Canadian mattress company. The Borrower purchased the property all-cash at the end of 2013 and sought to recapitalize his liquidity to acquire additional investment properties. Without a US parent company, many capital providers were hesitant on quoting this opportunity. GSP identified a local portfolio lender comfortable with the corporate lease guarantor and underwrote the location and long-term value of the property. The 10-year term is fixed for five years at 4.50% and does not carry a pre-payment penalty. |
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| | | | National Portfolio Perm Lender from $1,000,000 GSP is actively funding stabilized commercial purchases and refinances with a national portfolio lender to 75% of appraised value; 80% by exception. Unlike the typical Life Company execution, this capital provider funds the 5, 7 or 10 year term from as low as $1,000,000. Loans over $15,000,000 are approved on a by-exception basis. Rates range from 4.25% to 5.0% and are locked at application. Core assets plus flagged hospitality, assisted living and self-storage are considered with a repayment guarantee. Specialty assets including gas, car-wash and single-tenant (see mattress company above) uses are underwritten with a 25 year amortization, 30 year amortization for more traditional uses. Prepayment penalties are step-down or non-existent in many cases without a spread premium. |
| | | 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 | | | The GSP family keeps growing!! | CONGRATULATIONS TO GSP’S ALLISON HIGGINS AND HUSBAND EARL!! Allison, Earl and big sister Lexie welcomed Zachary Eli Weinstein to their family this past weekend. Highlights: (1) Time/Date: 12:07 a.m., Sun., May 25th, (2) Weight: 7lbs., 13oz; (3) Allison and Baby: Resting comfortably. Our heartfelt congratulations go to Allison, Earl, Lexie and Zachary from all of us at GSP. | | | Pascale's Perspective | How do we get from the “New Normal” to “Normalization”? Last week’s Fed minutes indicated that the tapering process is set with all bond buying to end this fall. The new buzzword from the minutes and some recent Fed Governors’ remarks is “normalization”. Investor speculation is now focused on the raising of the short term rates which affects LIBOR and Prime lending indices. However, the Fed may experiment with other tools such as Reverse Repurchase Agreements (RRPs) which drains liquidity from the system as the Fed sells assets with an agreement to buy it back the next day or so. This results in an “implied short term rate” based on the length of time, and the difference between the sale price and the repurchase price. This may be a more effective and “gentle” tool rather than the traditional rise in the Fed Funds and Discount Rates. It will be very interesting to see how LIBOR indices react to this as they usually would move simultaneously with the traditional methods. ….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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