GSPartners
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Volume XXI | No. 25 | July 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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1.71%
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5 Yr Swaps
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1.79%
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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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2.63%
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10 Yr Swaps
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2.73%
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11th Dist COFI
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0.67%
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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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3.46%
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| | | Transaction Description: | | $11,750,000 Cash-Out Boutique Hotel Refinance GSP successfully placed the cash-out refinance of a boutique hotel in a tertiary Southern California market. The $11,750,000 loan on the boutique, lifestyle oriented hotel returned over $5,000,000 of equity to the owner for this seasonal operating hospitality asset. The proceeds were 70% of the appraised asset value. Underwritten to a 10% debt yield, the non-recourse five year term is fixed at 4.59% with one year of interest only and 30 year amortization thereafter. |
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| | | Transaction Description: | | $5,600,000 Cash-Out Refinance for a 28,000 Square Foot Unanchored Retail Center Shahin Yazdi successfully placed the $5,600,000 refinance of a 95% leased retail center near the Port of Los Angeles. The ten year term is fixed for five years at 3.975%, before resetting at the 5-Year Seattle FHLB Rate + 1.95%, and amortizes over 30 years. |
Challenge: The property presented a series of challenges, including all leases rolling over within four years and a lack of credit tenants. The out-of-state Sponsor requested no reserves, and had no other retail assets to demonstrate retail experience. |
Solution: GSP demonstrated that the average tenant had been in place for over ten years, mitigating the Lender’s concerns regarding rollover and tenant credit to the point that Lender willingly waived their reserve requirement. The Sponsor’s length of ownership and use of a local management company alleviated Lender concern over Sponsor’s inexperience and out-of-state location. |
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| | | Transaction Description: | | $2,150,00 Acquisition Industrial for a Start-Up Raffi Sarkissian successfully placed the acquisition debt for the purchase of a 20,000 square foot single-tenant industrial building in the San Fernando Valley of Los Angeles. The tenant/buyer is a foreign national who will occupy and operate from this location, but has yet to initiate any business here in the States. The capital provider became comfortable with the business plan of feeding existing overseas operations from this location. The vanilla industrial use in a strong market added comfort to the loan execution. |
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| | | | Capital Climbing GSP is working nationally with a regional bank actively funding ground-up and reposition assets for core and mixed use projects. Previous program loan constraints of 1 year ago have now increased by 10% in costs and $10,000,000 of proceeds. Transactions from $1,000,000 to $25,000,000 are funded to 75% of total cost on primary product types. Hospitality is also considered under more restrictive terms. Mini-perm and perm take-out is also an option upon stabilization. Full recourse is required until Certificate of Occupancy. |
| | | 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 | | | In The News | GSP Founding Member Gary M. Tenzer was recently quoted in a GlobeSt report from the RealShare National Investment conference held last Thursday. Mr. Tenzer discusses Wall Street's participation on the current lending environment in addressing if we are currently in a lending bubble. The entire article is available on-line. | | | Pascale's Perspective | Spiked Yields… Treasury yields spiked in the past few days, “giving back” the entire recent rally. The 10 year closed at 2.63% today, back up to last Tuesday’s levels. Some of the selling was less buying after a month/quarter end rally in purchases. As we enter the third quarter of the year, economic reports are being closely watched for signs of growth and/or inflation. Tomorrow’s employment reports may move markets, if the non-farm payroll increase exceeds 250,000 or is well below 200,000, the treasury could move significantly. The yield curve is quite flat, with the difference between 5 and 30 year yields approaching the lowest level since 2009. The shorter term treasuries are more sensitive to expectations of the next raise in short term rates by the Fed, while the long term rallied on geo-political tensions. Signs of increased economic activity and inflation should cause some steepening. However, a continuation of the recent “mixed bag” of reports (example: the ISM showed slower than expected June activity but higher than expected new orders), are expected to keep the 10 year below 3.00% for the near term….. although unexpectedly high inflation signs could push yields higher than the consensus as that may force the Fed’s hand… …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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