GSPartners
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Volume XXI | No. 44 | November 19, 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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1.64%
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5 Yr Swaps
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1.77%
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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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2.36%
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10 Yr Swaps
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2.48%
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11th Dist COFI
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0.66%
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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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3.08%
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| | | Transaction Description: | | $95,000,000 Ground-Up Construction for 317-Key Luxury Hotel GSP successfully placed the 70% of cost financing for the development of a newly branded Southern California luxury hotel, subject to a 99 year ground lease. The Non-Recourse debt allowed the Sponsor to break ground on a project that had been in the works for many years. Terms of the Non-Recourse construction loan are confidential. |
Challenge: Leasehold ownership is secured with a 99-year ground lease to a private land owner. The Developer required a Non-Recourse structure in a capital market that is now only reviewing hospitality construction. Over 50% of the hotel’s revenue will be generated from Food & Beverage. |
Solution: GSP was able to underwrite the true value of the ground lease to articulate the gross lease payments were below the actual cost of what the land acquisition would have been to the project, ie it was less expensive to lease the land rather than acquire in an arms-length transaction. GSP sourced a lender who has extensive knowledge in the luxury hospitality market and was comfortable to provide the Non-Recourse financing. With a large F & B allocation, GSP documented like kind hotels in the market to assure that the project’s figures were indeed inline to the performance of the hotel. |
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| | | Transaction Description: | | $8,700,000 Refinance of a San Bernardino County Shadow Anchored Retail Center GSP successfully placed the $8,700,000 cash-out refinance for a strong sponsor on an Inland Empire multi-tenant retail property anchored by a national discount retailer and shadow anchored by a regional grocer. At loan closing, a new tenant contributing ten percent of the underwriteable income was not yet in occupancy, and rent commencement is scheduled for late first quarter 2015 due to a rent abatement period. The 75% leverage non-recourse loan has a 4.55% fixed coupon. The 10 year term is Interest Only for the first five years and requires principal and interest payments at a 30 year amortization schedule thereafter. |
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| | | | 90% Leverage Mezzanine and JV Equity George Smith Partners identified an institutional capital provider with the flexibility to capitalize cash flowing and non-cash flowing commercial projects utilizing mezzanine, preferred equity, and joint venture equity on a nationwide basis. Minimum sub-debt/equity capital investment of $8,000,000 are required; leveraged up to 90% for existing assets and 85% for construction projects on the sub-debt structure. Preferred property types include the four core asset types; hotels, and non-licensed healthcare use. JV programs vary based on asset and business plan although a 90/10 co-invest forms the basis for ground-up development. |
| | | 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 Press | Founding Principal Gary M. Tenzer was recently interviewed by GlobeSt.Com on the expanding crowdfunding market and recent progress made in the commercial real estate world. Mr. Tenzer’s observations and the balance of the article are available on-line. | | | Pascale’s Perspective | It’s back to “the data”….. Today’s release of the Fed minutes from Oct 28-29 is closely watched as it is the beginning of the “stasis” period (after bond purchases have stopped but before hiking of short term interest rates). The minutes indicate a close watch on inflation as the Governors feel that the risk of inflation remaining “persistently” below their goal had ebbed and they expect the US to hit the 2% inflation target (for raising rates) in the “medium term” Translation: The Fed is not worried about deflation, falling gas prices, etc. and it intends to diverge from Japanese and European central banks which are ramping up stimulus. The Fed feels they are on track for a rise mid-2015, indicating little concern of “European contagion”, and will focus on domestic economic reports. Credit Spreads with a focus on non-traditional collateral: A sign of the continuing comeback of securitization: we just heard that a golf course loan is being securitized, supposedly the first one in the “2.0” era (post 2010). Also some pools of SFR rentals, single borrower, floaters, etc are coming in the next few weeks. …..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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