GSPartners
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Volume XXI | No. 22 | June 11, 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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1.70%
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5 Yr Swaps
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1.77%
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12-MAT
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0.21%
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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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2.64%
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10 Yr Swaps
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2.74%
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11th Dist COFI
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0.68%
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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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3.46%
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| | | Transaction Description: | | $62,200,000 in Sub 5% High Leverage Non-Recourse Bridge Financing on a Large California Hotel GSP successfully placed a high leverage non-recourse loan on a large ageing California resort. The bridge loan provides the Sponsor three years to execute a business plan that includes entitling the resort in part for a higher and better use. $59,600,000 of the on-book financing was funded at closing, with the remaining $2,600,000 to be future funded for property improvements. Interest will not be paid on the future funding until disbursement. The initial funding is subject to an 8.5% minimum debt yield. The interest rate floats at L + 4.80% for the three year term with a 4.95% coupon floor; Sponsor purchased a two-year rate cap at closing with a required renewal in the third year. |
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| | | Transaction Description: | | $3,970,000 Cash Out Refinance of Creative Office During Lease-Up George Smith Partners successfully arranged the $3,970,000 bridge loan for the repositioning of a creative office with ground floor retail in the Wilshire Business District of Los Angeles. The subject property is a historic, multi-story retail/office building built in the 1920’s with great “bones”. Our client purchased the property from a bank while nearly vacant and invested a considerable amount of capital tastefully repositioning it to attract creative use tenants. The property required significant lease up of the retail space. This new execution recapitalized the Sponsor prior to his reaching full stabilization. Loan terms and structures are confidential. |
Challenge: Our client sought a return of equity from an asset that was not yet fully stabilized. The shorter lease structure of the creative office space created an underwriting challenge for many lenders. There are few sales comps in the market that mirrored the quality and superior location of this property. |
Solution: GSP identified a lender that became comfortable with the sponsor’s track record, the market “story” and gave credit for the significant capital expended to date. GSP demonstrated the merits of the property and its place in a burgeoning arts and creative “corridor” along with the property’s proximity to public transportation. The efforts demonstrated the demand for small office space that provides flexible leases to small business would cater specifically to start-ups, consultants, and artists. The low rate, bank bridge financing featured a LIBOR rate with a very low coupon and provides ample time for our borrower to completely stabilize the building and maximize its value. |
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| | | Transaction Description: | | Acquisition Financing for Multifamily Brick Construction Shahin Yazdi successfully placed the $3,455,000 acquisition loan to 65% of cost on a 59 unit brick apartment building constructed in 1917 – a 97 year old building. The 10 year term is fixed for five years a 3.65% before floating, and is amortized over 30 years. Despite general market unwillingness to lend on brick construction buildings, GSP identified a lender who was comfortable in funding brick structures while providing a great deal of flexibility in the loan structure. |
| | Rate: 3.65% Fixed for 5 Years | | Term: 10 Years | | Amort: 30 Years | | Prepayment: 2,1, open | | Recourse | | Advisors: Shahin Yazdi, Henry Elder |
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| | | | Nationwide Hybrid-Arm On-Book Non-Recourse Multifamily GSP is soliciting applications for stabilized multifamily for an on-book execution for a national institutional capital provider. Terms self-liquidate over 30 years, fixed for five years before floating over 6 month LIBOR for the remaining 25 year term. The streamlined processing targets loans from $2,000,000 to $5,000,000 to 75% LTV on a non-recourse basis. Rates range from 3.5% to 3.75% with concessions offered on lower LTV executions. Pre-payment steps down each year from 5% then opens after the 5th year. Only major MSAs are considered at this time. |
| | | 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 | | | Speakers Corner | GSP Founding Partner Gary M. Tenzer will be a panel participant at the June 19th Opus Connect’s Real Estate Finance Panel in Century City/Los Angeles. Mr. Tenzer will also moderate the CMBS panel during the June 25th Real Share Investment Conference held in downtown Los Angeles. Additional information concerning each event is available on-line and hot linked here. | | | Pascale’s Perspective | $21 Billion Auction… Today’s $21 billion auction of 10 year notes saw yields bounce around from 2.61% to 2.66%, finally settling at 2.64%. Now we will see how trading is for existing supply. Some traders are expecting a rally based on last week’s European Central Bank announcement of negative rates and the arbitrage between other 10 year instruments such as German 10 year bonds yielding 1.40%. Markets are pricing in deflation across the EuroZone as the Spanish bond yields recently matched those of the US, a huge surprise given Spain’s recent troubles as yields hit 8.00% in 2012. However, markets seem to anticipate “normal” inflation to return to the US much sooner Europe. CMBS is still very aggressive as loans price tighter to break even spreads with more interest only and other “bells and whistles”. All-in coupons are being priced at 4.50% or below…..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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