GSPartners
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Volume XXIII | No. 9 | March 11, 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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1.61%
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5 Yr Swaps
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1.76%
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12-MAT
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0.14%
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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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2.11%
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10 Yr Swaps
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2.22%
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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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2.69%
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| | | Transaction Description: | | $13,600,000 Non-Recourse Debt and JV Equity to 97% of Total Capitalization for Ground-Up Multifamily GSP successfully arranged $13,600,000 in debt and equity financing for the ground-up construction of a 34-unit luxury lifestyle apartment complex. This capitalization represents 97% of total cost for this fully entitled transit-oriented apartment development in a prime Southern California infill location. The non-recourse senior tranche is advanced to 60% of construction cost at traditionally priced bank debt with the balance of capital provided by the Sponsor and Joint Venture Partner. Additional terms and pricing are confidential. |
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| | | Transaction Description: | | $5,750,000 Multi-State NNN Portfolio Retail Acquisition GSP arranged portfolio financing to assist in a $17,000,000 1031 exchange. Given the size of the required down-leg, a portfolio of several unrelated net-leased assets was identified that covered multiple states from unrelated sellers. The capital provider closed in two separate escrows to accommodate the various sellers. This segment includes a Walgreens and two Arby’s; 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 the 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 tenant 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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| | | Transaction Description: | | $1,800,000 Construction Financing to 75% of Cost Multi-Family Development Jonathan Lee arranged the ground-up construction financing for a 5 unit multi-family rental building in Hollywood, California. The project will feature attached two-car garages, city views from 3rd story roof-top decks and unit mixes that range from 1,174 to 1,385 square feet. Positioned to draw renters that desire walkable neighborhoods, the subject offers convenient access the cluster of entertainment industry employers nearby. Sized to 75% of cost and floating at Prime + 0.75% w/a 5.0% floor, the 18 month construction term carries a six-month option for an additional fee. |
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| | | | National Stabilized Portfolio Lender GSP is actively closing acquisition and refinance transactions with a non-recourse portfolio lender on a national basis. This treasury based lender offers step-down prepayment options and/or up to five years of interest only for a minor bump in spread. Transactions priced from 3.75% for ten years fixed, amortized over 30 years sized to 70% of value. High dollars per square foot and secondary locations are considered with market support. |
| | | 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 moderate the “Capital Stack” panel at the RealShare Conference March 19th at the Hyatt Regency. Event information and hotel accommodations are available here. | | | Pascale’s Perspective |
Fed and ECB Moving In Opposite Directions, Markets at Crossroads This week the ECB started a massive bond buying program - effectively “printing” Euros. Bond yields in Germany, Spain, France and other countries hit record lows. The yield on German 5 year note hit negative 0.125% (compares to the 5 year US Treasury at 1.60%). The Euro itself has suffered a record decline against the dollar and is now near parity (1 euro = 1 dollar). Meanwhile the Fed is in a quiet period leading up to next week’s meeting in which it is expected to remove the word “patient” from their outlook. This clears the way for an expected rate increase in June. Treasury yields are being pulled in both directions, with the 10 year Treasury closing at 2.10%, down from nearly 2.20% last week... ...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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