GSPartners
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Volume XXIII | No. 7 | February 25, 2015
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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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1.45%
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5 Yr Swaps
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1.59%
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12-MAT
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0.13%
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3 Month LIBOR
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0.26%
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10 Yr US Treasury
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1.97%
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10 Yr Swaps
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2.08%
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11th Dist COFI
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0.69%
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6 Month LIBOR
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0.38%
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30 Yr US Treasury
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2.57%
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| | | Transaction Description: | | $11,600,000 – 147 Unit Anchorage Apartment Cash-Out Financing with Step-Down Prepayment GSP successfully arranged the $11,600,000 cash-out refinance for a 147-unit apartment property in Anchorage, Alaska. The property has solid occupancy and strong historical cash flow however it has a large military concentration. The Borrower, a prominent apartment owner, executed numerous Agency loans during his development career. GSP successfully introduced a new portfolio capital relationship capable of executing long-term fixed rate non-recourse debt. Rates and other terms were superior to Agency terms with a substantially smaller processing checklist. An early rate lock was executed shortly after application with no additional spread premium. There are no capital reserves or tax/insurance impounds. A step-down prepayment is underwritten with the last two years open without penalty. Our Sponsor remarked how “refreshing and painless it was to work with an “old school” lender that does not try to micro manage the asset through the loan docs”. Fixed for 10 years at 3.55% and amortized over 20 years, the non-recourse loan was sized to the requested 65% LTV. |
| | Rate: 3.55% | | Term: 10 Years | | Amort: 20 Years | | LTV: 65% | | Prepayment: 5,5,4,4,3,3,2,2,0,0 | | Non-recourse | Advisor: J.Jay Brooks
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| | | Transaction Description: | | $3,025,000 100% Acquisition of an Un-Entitled Land Assemblage GSP successfully arranged the $3,025,000, 100% of cost acquisition financing of the third parcel in a three-parcel assemblage. The Sponsor purchased two of the three parcels in 1998 and 2011, and entitled the two sites for a 19-unit multi-family structure. A purchase contract for a third parcel was recently executed allowing for a total of 29 units upon completion of the entitlement process. The two contiguous parcels were pledged as additional collateral to secure the 100% loan to purchase from an institutional capital provider. Fixed at 4.5%, the 18 month loan did not require an origination fee. |
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| | | Transaction Description: | | $5,230,000 Multi-State Retail NNN Acquisition Portfolio GSP assisted a clients’ 1031 exchange requirement by securing the acquisition debt on a portfolio of several unrelated net-leased assets. Given the dearth of available product, the Sponsor elected to acquire several assets in multiple states from unrelated sellers. The capital provider will close in two phases to accommodate the various sellers. The first $5,230,000 phase includes Pier 1 Imports, Lindora Medical, Cox Solutions, and Pacific Dental, all as stand-alone assets. Fixed at 4.70% for 10 Years and amortized over 30 Years, the non-recourse loan was sized to 75% of purchase price. |
Challenge: Our Sponsor required non-recourse debt to facilitate his partnership exchange requirements. Non-credit single tenant assets with moderate term leases are difficult to obtain significant leverage. This 1031 mandated higher leverage, north of 71% LTV to avoid “boot” paid to the IRS. Time was of the essence and certainty of execution was required to comply with IRS timelines. |
Solution: GSP structured the underwriting of the portfolio as a single transaction with multiple tenants to mitigate the single-tenant concerns, utilizing the stronger tenants to off-set weaker tenant credit and shorter lease terms in order to reach the necessary leverage. The two-loan, two-phase close from an institutional capital provider helped managed timing constraints placed on the multiple escrows as dictated by the numerous sellers. Mr. Shaffer targeted a long-time GSP capital source who has consistently executed “as applied for” professionally and in a timely manner. |
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| | | | LifeCo Debt from $5,000,000 George Smith Partners is securing small balance termsheets from a direct Life Insurance Capital provider. Transactions from $5,000,000 to $60,000,000 are underwritten to 65% of value to 75% for quality multifamily on a national basis. Coupons start in the mid-3s priced at par for the 30 year amortized transactions with 10 year balloons. Step-down prepayments may be structured for additional yield. |
| | | 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. | | | Speakers Corner | Founding GSP Principal Gary M. Tenzer will participate in panel discussions at the BOMA Real Estate Asset Conference March 11th at the Century City Hyatt Regency. Registration and event information is available on-line. Mr. Tenzer will also moderate the “Inside the Capital Stack” panel at the RealShare Conference March 19th, also at the Hyatt Regency. Event information and hotel accommodations are available here. | | | Pascale’s Perspective | |
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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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