GSPartners
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Volume XXIII | No. 10 | March 18, 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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0.18%
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5 Yr US Treasury
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1.39%
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5 Yr Swaps
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1.55%
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12-MAT
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0.14%
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3 Month LIBOR
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0.27%
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10 Yr US Treasury
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1.92%
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10 Yr Swaps
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2.03%
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11th Dist COFI
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0.69%
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6 Month LIBOR
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0.40%
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30 Yr US Treasury
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2.51%
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| | | Transaction Description: | | $6,320,000 Owner-User Acquisition Financing for a Beverly Hills Medical Office Building GSP successfully arranged a $6,320,000 permanent acquisition loan of an owner-user medical office building in Beverly Hills, California. The Sponsors occupy over 50% of the building, qualifying for owner user financing. This is the first commercial property the Sponsors own and they will self-manage the property. The subject includes a two story 8,600 square foot medical office footprint with a 3,750 square foot surgical center, numerous doctors’ offices and a private parking lot. The surgical center caters to a very high end client base that enjoy luxury surroundings, designer furnishings, a plush waiting room, private patient suites, three state of the art operating rooms and six private room recovery beds. This size medical building with its’ own surgical center is rare in Beverly Hills; the surgical center use is grandfathered. The property is adjacent to a 5-Star Hotel, providing overnight stays for extended patient recovery. GSP identified a bank that was creative on the loan structure while providing competitive terms including a very competitive rate and no lender origination fee. The loan was sized to 80% loan-to-value ($734 psf), with a 10 year fixed term at 3.42%, amortized over 25 years with a step-down prepayment penalty. |
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| | | Transaction Description: | | Bankruptcy Rescue Loan on a Los Angeles Apartment Building Our client filed Chapter 11 Bankruptcy and incurred over $1,000,000 of legal and bankruptcy fees. His entire portfolio of properties had existing debt and his equity in those assets exceeded his debts. His request to allow the debts to be restructured was refused by the courts. GSP secured a quick-close real estate based bridge loan for one year fixed at 7.9% on an interest only basis. The non-recourse loan carried a two-point lender origination fee. All other terms (size and LTV) are confidential. |
Challenge: The Sponsor filed for personal bankruptcy and had a court appointed Bankruptcy Trustee who was ordered the liquidation of assets unless the Sponsor could quickly restructure and cover fees. A sizable return of equity to a credit impaired Sponsor in order to meet all financial obligations and exit bankruptcy. |
Solution: GSP reviewed the Borrowers’ schedule of real estate and identified a Westwood Apartment Building that was undervalued on his balance sheet. By focusing on the “value per pound”, GSP secured a non-recourse, quick close non-institutional loan that allowed the Sponsor to pay off his existing debt and cover all bankruptcy attorney and bankruptcy trustee fees. With the bankruptcy proceedings se- aside, GSP will be secure a long-term institutional capital provider for this well positioned asset. |
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| | | Transaction Description: | | $2,840,000 Cash-Out Refinance for Burbank Multifamily George Smith Partners successfully placed the cash-out refinanced a 15 unit multifamily asset located in the heart of Burbank, walking distance from Burbank Town Center. The 8,140 square foot property had been acquired less than a year ago and received renovations to 6 of the 15 units as well as cosmetic improvements to the exterior. Mr. Yazdi secured 80% of current value, allowing a majority return of cash equity. Fixed for 5 years at 3.22%, it rolls to a LIBOR based floater plus 2.75% for the next 15 years, amortized over 30 years. There was no lender origination fee for this non-recourse loan. |
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| | | | Debt Fund Financing for the Entire Capital Stack GSP is working with a national capital provider with highly flexible, borrower tailored capital for non-recourse ground up construction and bridge financing. Loan requests from $15,000,000 to $200,000,000 are considered to 85% of total capitalization. Transaction specific pricing starts at 400 basis points over LIBOR. Higher risk transactions such as land and zero cash flow acquisitions will be considered at higher yields. |
| | | 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 | Treasuries rally on Fed’s “lack of patience” as investors “connect the dots”….. Today’s Fed statement and press conference by the Fed Chair Yellen managed to rally both debt and equity markets. The 10 year Treasury yield rallied to 1.92% from this morning’s 2.04% pre-statement yield. Investors were on edge in recent days as the Fed was expected to remove the word “patience” from their statement regarding the timing of the next interest rate hike. Usually this would spook markets, as Fed Chair Bernanke did in 2013 with the “taper talk” press conference which led to a volatile rise in interest rates, ie the “taper tantrum”. In fact, last week’s volatility indices were eerily similar to those of the summer of 2013. Yellen is cognizant of this history, and of the lessons of 1937 (“false dawn”) and 1994 (Greenspan’s sudden and premature rate increases). Both of those incidents derailed recoveries. Key takeaways included: (1) Yellen’s statement that the language change did not indicate “impatience”, signaling that the Fed is in no hurry to raise rates and has not decided on the timing, ie there is no “road map”; (2) Indications that there will be no rate hike at the next two meetings, the consensus for the first rate hike has moved from June to September; (3) The “dot plot” (predictions of future rates by FOMC participants) shows a slower pace of rate hikes than previously anticipated; (4) It’s about the data. The Fed statement notes that any raises will be “data dependent” and also noted that even with the recent robust jobs numbers, there is still some “slack” in the job participation and wage growth statistics; (4) Lack of inflation, the aforementioned “slack” combined with worldwide sluggish growth and plunging oil prices give the Fed some breathing room on inflation. ….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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