GSPartners
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Volume XXII | No. 47 | December 17, 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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1.61%
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5 Yr Swaps
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1.74%
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12-MAT
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0.11%
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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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2.14%
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10 Yr Swaps
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2.26%
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11th Dist COFI
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0.67%
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6 Month LIBOR
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0.34%
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30 Yr US Treasury
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2.72%
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| | | Transaction Description: | | $8,500,000 Acquisition Financing for Gas Station/Car Wash/C-Store to 85% of Purchase George Smith Partners successfully arranged the acquisition debt for the purchase of a Chevron Gas Station; ideally located to the fast growing, upscale Playa Vista area with easy access to the 405 freeway. The 11,000 square foot, 10 island/20 pump gasoline facility was constructed in 1995 and is environmentally clean. The facility also includes a mechanized car wash with cloth machinery, a large convenience store and a deli. Fixed for two years at 8.25%, the loan was sized to 85% of the acquisition price. There are no reserves or holdbacks from funding. |
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| | | Transaction Description: | | $3,820,000 Bridge/Reposition Refinance of an Unanchored Retail Center GSP successfully placed the $3,820,000 non-recourse bridge loan on a multi-tenant Pacific Southwest retail property. The Sponsor purchased this value-add retail center that was only 25% complete for $2,000,000. This bridge loan paid out the higher yielding 1st Trust Deed while providing additional capital for off-site, TI/LC, and restaurant out-parcel building improvements. Parcel releases were structured to allow for the sale of pads. Capitalized to 85% of total project costs, the loan funded within weeks of accepting the application. The 12 month term is interest only and does not carry a pre-payment penalty. |
| | Rate: Prime + 6.75% | | Term: 12 Months | | Amort: Interest Only | | LTC: 85% | | Prepayment: None | | Non-recourse | Advisors: Steve Bram, Jonathan Lee
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| | | Transaction Description: | | $7,100,000 Non-Recourse 75% Permanent Acquisition Loan for Fresno Shopping Center GSP secured a $7,100,000 permanent loan for the acquisition of a Burlington Coat Factory anchored retail center. While the center is 95% leased, the anchor occupies 65% of the center with a lease expiring in four years. GSP demonstrated that the tenant will likely extend upon renewal since there are no other vacant spaces in the market large enough for Burlington Coat Factory and their rent is significantly below market. Priced at 4.45%, the non-recourse loan was sized to 75% of purchase and includes the first two years of interest only rolling to a 30 year amortization for the 8 year balance of the term. |
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| | | | $10,000,000 Senior Bridge Debt from 4.0% GSP is placing non-recourse reposition transactions with a national debt fund priced from 4.0% to 5.0%. Some cash flow is required at close unless significantly pre-leased. An interest reserve may be funded for sub-1.0 coverage at the time of funding. Loans from $10,000,000 to $60,000,000 are advanced to 80% of stabilized value for up to five year terms. Primary and secondary markets are sought for core products, fractured condos and hospitality. |
| | | 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 | Parsing the Fed Statement; Oil “Shock” Rattles Credit Markets; Russian Crisis 2; Potential S&P “Ban” Today’s Fed statement and subsequent Yellin press conference notes: “Normalization” is closer and replaced the key “considerable time” reference to how long rates will remain at virtually zero (since December 2008). The language now indicates the Fed will be patient, but the message is to look for rates to rise in mid-2015, noting that normalization (rate increases) would start after a “couple” of meetings, and further defined a couple as “two”. However, the “dots” that indicate predictions show a consensus rate of 1.125% by YE 2015, down from 1.25%, notably less than the full 1% rate hike predicted for 2015. Also noteworthy was the language regarding employment; “underutilization continues to diminish” indicating that the closely watched “slack” in the labor market was tightening, further clearing the way for rate hikes. Treasuries sold off after the Fed statement with the 10 year closing at 2.14%, after hitting lows of 2.05% over the last week on global slowdown fears (China, Europe, etc). Credit Spreads: CMBS spreads “gapped out” 10-15 bps in the last week. Why? (1) Credit spreads across the board are widening due to a major sell-off in high yield bonds (aka “junk” bonds). A large share of high yield bonds are tied to companies in the energy sector, plunging oil prices are causing those spreads to spike and the other credit spreads (corporate, CMBS, etc) are widening. (2) Russia’s currency crisis (also tied to energy among other factors) and last week’s largest rate rise since 1998 spurred a currency panic, bringing back memories of 1998’s Russian debt crisis which caused a major disruption in CMBS. Some things are different now, such as the hedging mechanisms used by CMBS issuers (back then they shorted Treasuries), but the uncertainty is causing prices to fall and spreads to widen. (3) Last week’s news that regulators may require S&P pull out of the CMBS rating market adds more uncertainty, especially in the single borrower (large) securitization market. Other agencies (Fitch, Moody’s, etc.) have different risk models, etc. …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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