GSPartners
|
|
|
|
Volume XXI | No. 35 | September 17, 2014
|
|
|
|
|
|
|
|
|
|
KEY RATE INDICES
|
|
Prime Rate
|
3.25%
|
1 Month LIBOR
|
0.15%
|
5 Yr US Treasury
|
1.83%
|
5 Yr Swaps
|
1.98%
|
|
12-MAT
|
0.12%
|
3 Month LIBOR
|
0.24%
|
10 Yr US Treasury
|
2.61%
|
10 Yr Swaps
|
2.75%
|
|
11th Dist COFI
|
0.68%
|
6 Month LIBOR
|
0.33%
|
30 Yr US Treasury
|
3.37%
|
|
|
|
| | | Transaction Description: | | $34,000,000 Cash Out Refinance for Premier Silicon Valley Hotel GSP successfully placed the $34,000,000 senior loan for the cash out refinance of a premier hotel in the heart of Silicon Valley. The hotel is a contemporary, boutique style hotel with modern architecture, unique technical aspects, and an atmosphere that encourages socialization. The hotel was designed as LEED Silver and has pioneered several cutting edge technology features. |
Challenge: The Sponsors were refinancing to pay off the bridge loan and requested a return of equity on an asset that was just recently stabilized. They needed to close within 30 days to avoid the extension fees on their bridge loan. |
Solution: Working closely with GSP, the lender accelerated the reports and closed in 30 days. |
| |
|
| | | Transaction Description: | | 70% Loan to Purchase Inland Empire Retail Center Ameet Chagan placed the $4,060,000 acquisition loan for a 34,101 sf. retail center anchored by a Goodwill Center in the Inland Empire. The purchase was sized to 70% of cost and is fixed for five years at 4.75% before rolling for the final two years of the seven year term. Amortized over 25 years, the recourse loan offers a step-down prepayment option. |
Challenge: The Purchase and Sale Agreement did not contain a financing contingency; deposits went non-refundable after a 30 day diligence period. The seller was not aggressively marketing the vacant space that negatively impacted the underwritten cash flow. One tenant representing 11% of the net-rentable is currently paying above market rent with a lease renewal date 60 days after the scheduled closing. The appraisal did not support the contracted sale price and the seller was unwilling to negotiate. |
Solution: GSP worked closely with seller and buyer’s broker to assimilate all due diligence requests and engaged an appraiser with a two week turn. GSP demonstrated that the major tenant with the lease exposure was a captive tenant with municipal credit and tied to the adjacent court house. This tenant has been in occupancy since 2001. GSP detailed incorrect assumptions in the appraisal and though the value was not significantly impacted, the market information added comfort to the lenders’ decision to advance to 70% of purchase price. |
| | Rate: 4.75% Fixed for 5 Years; P+0.75% | | Term: 7 Years | | Amort: 25 Years | | LTV: 70% | | Recourse | | Advisor: Ameet Chagan |
|
|
| | | Transaction Description: | | $1,430,000 Refinance of a Day Care Facility GSP successfully placed the $1,430,000 refinance of a 13,754 square foot family owned Day Care Facility what was operating under a Chapter 11 bankruptcy. The Day Care Facility serves 140 students from kindergarten to 4th grade. Sized to 65% LTV, the 8.99% coupon is fixed for the 12 month term. |
Challenge: The Borrower was in default with debt service payments and was unable to refinance the asset due to contingencies with its business partner. Our Sponsor filed Chapter 11 bankruptcy in an attempt to negotiate a mutually beneficial resolution. Sufficient proceeds were needed to pay off the existing loan, buy out a shareholder and cover outstanding property taxes. |
Solution: GSP identified a capital provider who was comfortable with the on-going operating cash flow and agreed to fund the transaction out of bankruptcy. This proposal was ultimately approved by the court. |
| | Rate: 8.99% Fixed | | Term: 12 Months w/two-6 Month Ext | | Amort: Interest Only | | LTV: 65% | | Prepayment: 6 Months Yield Maintenance | | Recourse | | Advisor: Gilda Rivera |
|
|
| | | | National Small Balance Non-Recourse Portfolio Perm Lender The surge of capital has added the challenge of identifying national portfolio lenders willing to consider transactions under $5,000,000 on a non-recourse basis. GSP is working with a national institutional lender for stabilized assets from $2,000,000 to $6,000,000. Spreads vary based on risk and product type although all fixed coupons are priced over treasuries, a 15 to 17 basis point savings over comparable SWAPs. Core assets and student housing in major MSAs are underwritten to 75% of value/1.25 dcr on a non-recourse basis. Terms vary from 5 to 15 years, amortized over 30 years and carry a yield maintenance prepayment penalty. |
| | | 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 | Treasuries Up After Parsing of Fed Statement…..Today’s Fed statement contained plenty of info for traders to sort through this afternoon…..(1) This morning’s CPI report was a shocker as it indicated a decline in consumer prices, the first such decline since April, 2013. Although “deflationary” by definition, this does not indicate European style QE is warranted, but it gives some pause to inflation “hawks”; (2) The Fed will most likely end the bond buying program next month; (3) However, the Fed will continue to re-invest maturing bonds instead of selling them off, and will not decrease the size of their balance sheet until it decides to raise short term rates. This statement now defines the next “era” in post credit crisis policy, there will be a period of “stasis” with no bond buying or selling as the Fed is obviously concerned with the ripple effects of selling bonds. This contradicts the road map the Fed laid out in 2011 (the balance sheet was much smaller then), (4) The question is when is the short term rate raise? Today’s forward guidance poll of Fed governors indicated a higher predicted Fed Funds rate for end of 2013 (June’s poll indicated 1.125%, today’s was 1.375%), this forward guidance spooked the bond market and send the 10 year Treasury yield to 2.63%....stay tuned… David R. Pascale, Jr. |
|
|
|
|
©2014 George Smith Partners, Inc. DRE # 00822654 FINfacts is an ePublication of
George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
|
|
|
|
|
|
|
|
