GSPartners
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Volume XXI | No. 29 | July 30, 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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1.77%
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5 Yr Swaps
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1.89%
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12-MAT
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0.12%
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3 Month LIBOR
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0.24%
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10 Yr US Treasury
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2.56%
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10 Yr Swaps
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2.69%
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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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3.31%
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| | | Transaction Description: | | $12,200,000 Acquisition Financing for a Florida Retail Center GSP successfully placed the $12,200,000 senior loan for the acquisition of a Grocery-Anchored retail center in Orlando, Florida. The Sponsor was seeking maximum loan proceeds which were constrained by 75% of the purchase price. The non-recourse 10 year loan is fixed at 4.50% and offers three years of interest only before rolling to a 30 year amortization schedule for the remaining 7 year term. |
Challenge: While the center was 100% occupied when it was placed under contract, the subject lost two tenants during due diligence period. The grocery anchor tenant had declining sales for the previous three years. |
Solution: Despite the occupancy decrease during due diligence, the center still performed at market occupancy. GSP highlighted that over 60% of the tenants (by square footage) had been in occupancy for more than ten years and 34% had been in occupancy for over 20 years. Although the anchor posted declining sales, GSP documented that their sales per square foot were still within the operating norm of other grocery stores within the chain. |
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| | | Transaction Description: | | $7,050,000 Non-Recourse Cash-Out Refinance to 75% LTV Founding Partner Gary M. Tenzer placed the $7,050,000 cash-out refinance of a 102,000 square foot Southern California self-storage facility. The non-bank CMBS originator allowed for loan structuring flexibility that is not traditionally afforded by FDIC regulated institutions. Fixed for 10 years, the non-recourse loan amortizes over 30 years. The 749 unit facility cash flows to a 9.0% debt yield. There was no lender origination fee. |
Challenge: As the building had recently been converted from a distribution building to its current self-storage use, the asset was still in lease-up and lacked a meaningful trailing collection and expense history. A return of equity was also a requirement of this loan request. |
Solution: GSP promoted the Sponsor’s financial strength and extensive experience developing and operating self-storage facilities. Mr. Tenzer identified a capital provider who underwrote the loan in advance of the property being fully stabilized and gave credit to the strong market characteristics and rapid lease-up. While equity was returned to the developer, the Sponsor still had real cash invested up and beyond his sweat equity. Supporting market demographics and positive leasing trends added comfort to the underwriters’ approval of this execution. |
| | Rate: 4.82% | | Term: 10 Years | | Amort: 30 Years | | LTV: 75% | | DCR: 1.25 | | Non-recourse | | Lender Fee: Par | | Advisor: Gary M. Tenzer |
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| | | Transaction Description: | | Partnership Acquisition and Rehab Refinance Financing for Stabilized Multifamily Shahin Yazdi successfully placed the 60% LTV, cash-out refinance for a 10 unit multifamily building in the South Bay Area of Los Angeles. The Sponsor acquired the remaining 50% interest in a jointly-owned apartment complex from their partner, and will use the remaining funds to rehab the building. The global cash flow of the Sponsor was below the lender’s requirement and the expenses have been above market for the last two years. Mr. Yazdi demonstrated that the expenses were capital related although expensed on the P&Ls. The moderate LTV mitigated concerns concerning the borrower global cash flow. The Sponsor requested a flexible financing plan to maximize exit options upon completion of his business plan. The 15 year term loan amortizes over 30 years and has no prepayment penalty, allowing the Sponsor multiple options after completion of rehab. The 4.50% rate is fixed for five years before floating over the WSJ Prime Rate + 1.25%. |
| | Rate: 4.50% | | Term: 15 Years | | Amort: 30 Years | | LTV: 60% | | DCR: 1.15 | | Prepayment: None | | Recourse | | Advisors: Shahin Yazdi, Henry Elder |
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| | | | Life Company Debt from $1,000,000 GSP is submitting loan requests direct to a small Life Insurance Company currently funding permanent loans on stabilized assets from the Dakotas to Texas and West to the Pacific Coast. This capital source will finance the four primary product types from $1,000,000 to $6,000,000 for three, five, five + five or 10 year terms; amortized over 30 years. 75% acquisition financing is available, 70% for refinances, both limited by a 1.30 DCR. Rates range from 3.95% to 4.20% fixed for five years. A step-down prepayment is available for three and five year terms. Ten year loans carry yield-maintenance pre-payment penalties. |
| | | 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 | | | Pascale’s Perspective | GDP Surprises, Fed Hawks Squawk Louder During much of this week, the 10 year treasury was nearing the 2014 low of 2.44% which loomed as a key technical “bottom”….. Today’s 2nd quarter GDP report indicating a 4.0% annualized growth rate surpassed expectations. The Fed minutes today contained the expected language re tapering, ie bond purchases cut to $25 billion ($10 billion in MBS and $15 billion in treasuries). The Fed statement deleted the reference to unemployment being elevated (which may indicate a raising of short term rates is sooner than we thought), but the statement also said that there is “significant underutilization” of labor resources. This shows that the Fed is looking beyond the regular unemployment rate and considering other factors such as long term unemployed leaving the job force, part time workers unable to find full time jobs, etc. Philadelphia Fed President Plosser dissented from today’s statement (the last few have been unanimous). That combined with the mention of inflation being “near target” may indicate growing sentiment among certain Fed members to raise sooner. ….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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