GSPartners
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Volume XXI | No. 24 | June 25, 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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0.16%
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5 Yr US Treasury
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1.65%
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5 Yr Swaps
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1.75%
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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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2.54%
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10 Yr Swaps
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2.66%
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11th Dist COFI
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0.68%
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6 Month LIBOR
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0.33%
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30 Yr US Treasury
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3.38%
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| | | Transaction Description: | | $93,500,000 Ground-Up Non-Recourse Retail Construction Financing to 70% of Total Cost GSP successfully placed a two-tranched combined loan of $93,500,000; consisting of a $56,500,000 Senior Loan and a $37,000,000 Mezz loan from two lenders, for the development of a 191,000 square foot retail center in Huntington Beach, California. Set to open in summer 2015, the project will be a unique retail center, situated on a spectacular site overlooking the iconic Huntington Beach Pier and Pacific Ocean. Pacific City’s architecture features a 2-story open design providing virtually all of the tenant spaces with ocean views. Tenancy will include a mix of national retailers representing iconic California lifestyle brands, several name restaurants, and an Equinox fitness center. The center will also include a marketplace called Lot 579 featuring a mix of distinctive local and regional food artisans in a farmer’s market style setting, similar to the Ferry Building in San Francisco or the Chelsea Market in New York. The retail center will provide a perfect showcase for the retail tenants looking beyond the “mall mentality”. Because of the borrower’s strong experience with development and leasing and the property’s superior location, these lenders structured the financing as a non-recourse loan with minimal preleasing required. |
| | Rate: Floating over LIBOR for Senior: Fixed for Mezz | | Term: 3 Years + Extensions | | Amort: Interest Only | | Recourse: Completion Guarantee only. Preleasing: 30% for Senior, None for Mezz. Advisors: Steve Bram, David R. Pascale, Jr. |
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| | | Transaction Description: | | $6,250,000 Refinance of a Suburban Retail Center anchored by a National Discount Retailer and Future Gym GSP successfully placed a $6,250,000 on-book loan with a money center bank for the refinance of a 91,000 square foot, 1970’s vintage retail center in Northern California. The “all-in” rate of 2.40% floats monthly over LIBOR and is interest only for the two year term on the 65% LTV no-cash-out refinance. The loan will start to amortize should the borrower execute their option to extend. Personal recourse is limited to the top 40% of the loan. Locked for 12 months, the loan opens to prepayment without penalty after the 1st year. |
Challenge: The property was 55% occupied at closing, with an additional 29% of space to-be-built out and occupied by a regional fitness chain paying no rent until early 2015 to offset construction costs funded by the tenant. Submarket retail vacancy is high at over 18%. |
Solution: GSP lender relationships and a strong Sponsor allowed us to structure a loan that gave credit to the income attributable to the unopened gym at closing despite almost a year between loan closing and rent commencement. The loan also funded 100% of the buildout and leasing commission costs associated with the future gym, as well as 100% of additional capital expenditures tied to the remodel of an existing pad immediately after closing. This loan structure permitted Sponsor to execute its business plan without contributing additional equity to the transaction. |
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| | | Transaction Description: | | $6,000,000 Class-C Multifamily Cash-Out Bridge w/Future Funding Bryan Shaffer secured the cash-out refinanced of a 200 unit multifamily property in Texas. The loan provides for additional capital to complete an improvement program and also allows for a supplemental equity return to the remaining Sponsor as he enhances the project value. The two-year term was sized to 75% of current value with future funding limited to 75% of the improved value. Priced at 5.5% over LIBOR, the non-recourse loan does not carry a prepayment penalty. |
Challenge: Class C assets are always a challenge, but the need for high leverage and the return of capital to buy out a partner added to the complexity. |
Solution: GSP worked with an institutional bridge lender to structure a highly leveraged “as-is” product and would facilitate the earn-out as an incentive to further improve the net asset value. A detailed market study confirmed the anticipated upside in the market for this reposition business plan. |
| | Rate: 5.5% + LIBOR | | Term: 24 Months | | Amort: Interest Only | | LTV: 75% | | Non-recourse | | Lender Fee: 1% in/1% out | | Advisor: Bryan Shaffer |
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| | | | SoCal Regional Bank Funding Perm-Debt Nationally GSP is actively securing qualified applications for the acquisition of stabilized core assets from a Southern California portfolio lender on a national basis. Transactions from $1,000,000 to $10,000,000 are being funded to 75% LTV for terms up to 10 years – with step-down prepayments; yet without the headaches of agency or cmbs capital. All executions are held on-book and serviced by the lender. Sub-65% LTVs will be considered on a non-recourse basis. This program is going head-to-head and winning executions from Fannie Mae. |
| | | 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 President Steve Bram will be speaking at the 10th Annual Real Estate Syndication Summit at the LUXE Hotel in West Los Angeles on Saturday July 19th. Other guest speakers and registration information is available on-line | | | Pascale’s Perspective | Treasury yield “inevitable rise” Not so fast! Just when you thought it was safe to believe the common wisdom of most market watchers and economists; the 10 year march to a 3.25% yield, actual events conspired to drive the 10 year yield down to its’ lowest rate in weeks. This week saw a surprising 1Q GDP downward revision and continued geo-political tensions in the Mideast. Add in the lower durable goods number today and the 10 year yield dropped to 2.54%, the lowest level in weeks. Analysts and pundits are scrambling to parse the GDP data (Jan/Feb vs. March, healthcare spending missing expectations, etc) and 2Q numbers will be closely scrutinized. The recent economic numbers will definitely give cover to the Fed dove wing who is seeking to push the inevitable (?) rise in the discount rate to late 2015 and possibly later. ….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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