GSPartners
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Volume XXI | No. 27 | July 16, 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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1.80%
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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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2.65%
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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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3.35%
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| | | Transaction Description: | | $32,000,000 Cash-Out Refinance of a Northern California Ethnic Grocery-Anchored Retail Center GSP successfully placed a $32,000,000 cash out refinance on a stable 1980’s vintage retail center in Northern California; anchored by an ethnic grocer emerging from bankruptcy. The Lender agreed to indemnify the Sponsor for Lender’s legal costs until Lender’s credit approval. The 4.55% fixed rate ten year loan has interest only payments for the first five years and amortizes on a 30 year schedule for the remaining five years of the term. Funded at par, the non-recourse loan carries a defeasance prepayment penalty. |
Challenge: The grocery anchor was in Chapter 11 bankruptcy at the time of loan application. Sponsor faced a maturity deadline on the existing loan that required payoff in approximately 30 days. |
Solution: GSP leveraged lender relationships and strong sponsorship to identify a capital source willing to underwrite the loan concurrent with the anchor’s bankruptcy proceedings in order to meet the closing timeline. Despite the anchor’s Chapter 11 proceedings, the Sponsor obtained a full leverage loan with a significant interest only payment period resulting in significant cash out at closing, increased cash flow during the loan term, and a low fixed interest rate for ten years. |
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| | | Transaction Description: | | $4,390,000, 18 Unit Ground-Up Apartment Construction Loan GSP arranged the financing for the ground-up development of an 18 unit apartment building in the Warner Center area of Los Angeles. The developer had recently purchased the land before entitling it. Because of the strong housing demand in the Warner Center sub-market, the Borrower was able to syndicate equity amongst friends and family. GSP successfully negotiated for imputed equity to round-out the capital stack in lieu of an additional cash investment. Sized to 75% of cost, the 18 month term floats over LIBOR but requires a 5.5% interest rate floor. |
Challenge: The Borrower’s previous construction projects were financed by private lenders with high interest rate coupons. While financially sound, with two other projects under construction, the Borrowers’ contingent liabilities pushed underwriting standards. |
Solution: GSP worked with the capital provider to demonstrate a clear pipeline of projects based on existing assets under construction. Because of the construction progress in the other assets, GSP was able to demonstrate that several recourse construction loans were about to roll to non-recourse debt within six months of funding. |
| | Rate: 5.5% | | Term: 18 Months + one 6 Month Ext | | Amort: Interest Only | | LTC: 75% | | Recourse | | Lender Fee: 0.75% | | Advisors: Jonathan Lee, Adam Candler |
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| | | Transaction Description: | | $2,715,000 98% Loan to Acquisition Price Raffi Sarkissian placed the acquisition loan of a 23,300 square foot industrial distribution center in a suburban Ventura County market. Sized to 90% of value, the 3rd party appraisal allowed for additional improvements to be funded through the loan that represented 98% of the initial purchase price. Comprised of a 1st and 2nd Trust Deed, the blended coupon of 4.9% is fixed for 20 years and carries a 10 year step-down prepayment to 1% in years 5 through 10. |
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| | | | National Non-Recourse Small Balance Program GSP is working with a bank funding 10 year term commercial and multifamily product on-book and nationwide. Transactions from $1,000,000 to $10,000,000 are funded floating over LIBOR on a non-recourse basis to 75% of appraised value. Debt yields from 8% and up are underwritten on core assets plus self-storage. Most transactions are amortized over 30 years and allow for a flexible pre-payment structure. |
| | | 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 |
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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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