GSPartners
|
|
|
|
Volume XXIII | No. 8 | March 4, 2015
|
|
|
|
|
|
|
|
|
|
KEY RATE INDICES
|
|
Prime Rate
|
3.25%
|
1 Month LIBOR
|
0.17%
|
5 Yr US Treasury
|
1.59%
|
5 Yr Swaps
|
1.74%
|
|
12-MAT
|
0.14%
|
3 Month LIBOR
|
0.26%
|
10 Yr US Treasury
|
1.93%
|
10 Yr Swaps
|
2.05%
|
|
11th Dist COFI
|
0.69%
|
6 Month LIBOR
|
0.38%
|
30 Yr US Treasury
|
2.71%
|
|
|
|
| | | Transaction Description: | | $21,000,000 Construction Financing to 80% of Cost Multi-Family Development Jonathan Lee arranged the ground-up construction financing for 49 unit multi-family rental building in Brentwood, California. The subject will be mapped for condominiums for additional exit flexibility. Sized to 80% of cost, the 30 month loan is priced at LIBOR + 2.5%, netting an all-in coupon of less than 3.0% today. Recourse is limited to the top 50% of the loan amount. |
Challenge: Project features units that are larger than typical rental products in this market, resulting in a higher total rental dollar per unit. A high land basis was required to support the Sponsor equity contribution. |
Solution: Market research, area demographics and asset quality supported the larger unit footprints and thus the higher gross dollar rents underwritten. Exit flexibility added additional comfort to support the higher land basis and value created by the Sponsor through his assemblage and entitlements. |
| |
|
| | | Transaction Description: | | $6,900,000 Cash-Out Refinance of a Georgia Multifamily Portfolio GSP placed a singular loan covering a three-property portfolio of newly renovated, working class apartment projects in Suburban Atlanta. The Sponsor purchased these assets out of foreclosure prior to performing extensive renovations and leasing the units up to market occupancy. The new financing offered a return of equity to the Borrowers’ original capitalization. Fixed at 4.13% for 20 years, amortized over 30 years, the non-recourse loan is priced comparable to 10 year term financing. |
Challenge: The recently stabilized buildings have little seasoning. The Sponsor requested longer than traditional term fixed rate with a 30 year amortization period to maintain loan proceeds. Georgia Multifamily property values have not kept up with the national market appreciation. |
Solution: GSP demonstrated the upward income trends at all three properties, improvements in the Atlanta housing market, the Sponsors’ operating plan and prior market success. GSP identified a national capital provider with the flexibility of structuring a 20 year fixed term that would not self-liquidate, allowing for longer amortization to maintain debt coverage and maximize proceeds. |
| |
|
| | | | Small Balance CMBS w/Capped Closing Costs GSP is securing applications from a national CMBS capital provider who recently added a fixed-cost small balance platform to their portfolio of products. Standard five and ten year terms are funded, amortized over 30 years on a non-recourse basis for transactions from $1,000,000 to $10,000,000. Typically lender closing costs and legal fees are prohibitive for smaller transactions and do not justify CMBS execution for loans under $5,000,000. This small balance program limits all lender, 3rd party inspections and legal costs to $25,000 for core assets to 75% of value. No lock-box or cash management system is required. |
| | | 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 | Interest Rates/Walmart Relationship? The bond market is constantly reacting to economic reports from the government and of course, statements from the Federal Reserve. But Treasury watchers should consider Walmart’s recent announcement that they are increasing worker’s wages. Starbucks, TJX (Marshalls and TJ Maxx parent) and Gap have all made similar announcements last month. These pay increases may indicate that the infamous “slack” in labor markets the Fed has referenced for years to justify their ongoing patience may finally be tightening. Employee raises at this level should spur further spending. Will all of this be enough to hit the Fed’s target inflation rate of 2%? Interest rate hikes are predicted to occur once this 2% threshold has been realized. …stay tuned… David R. Pascale, Jr |
|
|
|
|
©2015 George Smith Partners, Inc. DRE # 00822654 FINfacts is an ePublication of
George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
|
|
|
|
|
|
|
|
