GSPartners
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Volume XXIII | No. 2 | January 14, 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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0.17%
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5 Yr US Treasury
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1.32%
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5 Yr Swaps
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1.46%
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12-MAT
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0.12%
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3 Month LIBOR
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0.25%
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10 Yr US Treasury
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1.85%
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10 Yr Swaps
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1.96%
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11th Dist COFI
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0.69%
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6 Month LIBOR
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0.36%
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30 Yr US Treasury
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2.46%
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| | | Transaction Description: | | $45,600,000 Permanent Financing on Secondary Market Industrial Property GSP successfully arranged the $45,600,000 refinance of a 2.1 million square foot industrial/office property in Northern California. The asset is a beautifully redeveloped military base and the financing was coordinated to allow the borrower to acquire the fee interest in the land. Cash flow was recovering from a downward trend caused by the recession, however diversified sustainable income from a variety of business types – from very small to very large - gave the Sponsor the flexibility to provide space as the local market demanded. Fixed for 10 years at 4.33%, the non–recourse loan is interest only throughout the term. There are no reserves beyond tax and insurance impounds. |
| | Rate: 4.33% | | Term: 10 Years | | Amort: Interest Only | | Non-recourse | | Advisor: J.Jay Brooks |
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| | | Transaction Description: | | $9,800,000 Cash-Out Refinance/Class C Multifamily Workforce Housing GSP successfully placed the $9,800,000 cash out refinance of a 330 unit Class C apartment community in Houston, Texas. In 2013, GSP arranged bridge financing to acquire the distressed project from a receiver. That loan also provided funds to rehab and renovate the project. Twelve months later, GSP secured long term financing to allow the ownership group to extract value created through the Sponsors’ improvement program and lock in long term non-recourse fixed-rate financing. GSP closed the transaction 30 days of going under application. |
Challenge: Formerly in receivership and only recently stabilized, several capital providers were reluctant to proceed without a longer operating track record. The overall asset age, quality and working class Houston neighborhood also created concern with underwriters. The buyout of several partners required a significant return of equity to the sponsorship. |
Solution: GSP utilized it relationships to identify a non-recourse lender who understood this market and confirmed continued improvement in cash flow. This capital provider underwrote the Sponsor operational experience and strengths as well as the financial merits of the asset. |
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| | | Transaction Description: | | $2,300,000 Two-Tenant Creative Office, Glendale, California GSP secured the $2,300,000 permanent acquisition loan for the purchase of a 15,000 square foot creative office building. One tenant representing 95% of the gross rentable was in-occupancy but in a free-rent period at the time of funding. The 4.90% non-recourse 10 year fixed loan was priced to 73% LTC and amortizes on a 30 year schedule. The loan offers a step down prepayment that opens after the 5th year. There are no interest reserves or holdback deposits for tenant occupancy. |
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| | | | Western United States Portfolio Construction from $2,000,000 GSP identified a regional portfolio capital provider funding ground-up construction, bridge/reposition and mini-perm transactions from $2,000,000 to $30,000,000 in the Western United States. Leverage up to 80% loan-to-cost is possible on core product types including small lot subdivision and tract family housing developments. Rates start at LIBOR+300. Non-Recourse will be considered below 65% loan-to-cost. |
| | | 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 | Where’s the Floor? Bond Market Rally has Lenders “Finding the Floor”. Today’s disappointing retail sales report (down 0.9% compared to expectations of a 0.1% decline) caught the equity markets by surprise. Bond markets rallied on speculation that 2015 would see no rate increases by The Fed. This is most likely an overreaction as investors are on edge due to Europe woes. The 10 year plunged to 1.85% today. The ultra-low treasuries have many fixed rate lenders looking at quoting coupons (all-in rates) instead of spreads, comparing mortgage rates to similar corporate bonds and other fixed rate instruments. Many life companies are flooring 10 year terms in the 3.50%-3.75% range, CMBS is in the “high 3’s for apartments, very low 4’s for commercial” as lenders are watching whether the Treasury is going to settle for an extended period or spring back up above 2.00%. ....stay tuned…. David R. Pascale, Jr. |
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©2015 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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