GSPartners
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Volume XXIII | No. 16 | April 29, 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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1.43%
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5 Yr Swaps
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1.56%
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12-MAT
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0.15%
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3 Month LIBOR
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0.28%
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10 Yr US Treasury
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2.05%
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10 Yr Swaps
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2.12%
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11th Dist COFI
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0.70%
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6 Month LIBOR
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0.41%
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30 Yr US Treasury
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2.76%
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| | | Transaction Description: | | $7,000,000 Bay Area 5 Day Close Prior to Foreclosure GSP placed a complex quick-close refinance for a San Francisco asset in monetary default and pending foreclosure. The 47,000 square foot office/warehouse industrial building is located in the South of Market District of San Francisco. Vacant at funding, there was no cash flow generated from the real estate. Once the project is re-leased, the overall value is anticipated to increase by more than 50% based on market rate metrics. Funding occurred one week prior to foreclosure. Our Sponsor was not required to contribute new cash equity to the loan although the lender did fund an $800,000 re-tenanting reserve. The non-recourse loan is fixed at 7.9% for 6 months and does not carry a pre-payment penalty or exit fee. |
Challenge: The current mortgage was in default and weeks away from foreclosure. There was no income to cover operating costs and the Sponsor had significant financial issues. No lease LOIs were in hand and TI funds were not available to be invested into the reposition. |
Solution: GSP quickly conducted a detailed market study and researched sales and lease comps to establish a suitable reposition plan. Sales comparables supported a much higher asset value on a per square foot basis. Sized to 60% of stabilized value, this transaction closed within 5 days from our engagement. |
| | Rate: 7.90% | | Term: 6 Months | | Amort: Interest Only | | LTV: 60% | | Prepayment: No Prepay, No Exit Fee | | Non-recourse | | Lender Fee: 1.0% | | Advisors: Bryan Shaffer, Jon Shapiro |
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| | | Transaction Description: | | 5,800,000 Non-Recourse Land Loan to 75% of Purchase and Pre-Development Costs GSP successfully placed the $5,800,000 acquisition loan for a parcel of land that is zoned, but requires site plan approval before breaking ground. City of Los Angeles approval is estimated to take 15 months from close of escrow. This loan includes funding for entitlement, permits costs as well as an interest reserve. The site will be for a build-to-suit for a tenant that had executed their lease prior to close. The non-recourse loan is fixed at 10% for 18 months and opens to pre-payment without penalty after nine months and was sized to 75% of total capitalization. |
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| | | Transaction Description: | | Refinance of Three South Los Angeles Low-Income Multi-Family Properties George Smith Partners successfully placed the cash-out refinance of three, HAP Contract properties in South Los Angeles. Sized to 75% of value, the 10 year term floats at Prime + 0.25% subject to a 3.50% floor and a 5.50% ceiling for the first 7 years of the loan. There is no prepayment penalty for the life of the loan. Each property held its own Low-Income HAP Contract dictating resident income for these Section 8 properties. Past property performance and the security of the HAP contracts allowed the lender to underwrite a substantive return of equity to the Sponsor. |
| | Rate: Prime + 0.25% w/3.5% Floor | | Term: 10 Years | | Amort: 30 Years | | LTV: 75% | | DCR: 1.20 | | Prepayment: N/A | | Recourse | | Advisor: Shahin Yazdi |
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| | | | Ground-Up Non-Recourse Construction Debt GSP is working with a national bridge capital provider who has expanded their platform to include non-recourse construction debt from $10,000,000 to $50,000,000. Initially states west of Colorado are targeted for construction. Rates range from 4.5% to 5.5% with leverage up to 75% of cost. Core assets in primary and secondary markets are the focus, although condominiums and hospitality will also be considered for strong sponsors. A completion guarantee and standard carve-outs will be a requirement for funding. |
| | | 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 | Fed Tosses Out Calendar, Asian Central Banks Get in on QE, Worldwide Debt -- Today’s Fed Meeting Notes removed all calendar references, indicating that rate hikes will be data driven. The consensus is still anticipating a September hike. First quarter GDP, reported today, was an anemic 0.2%. This continues the trend of recent years of sluggish, inconsistent growth (two good quarters followed by a sharp slowdown, first quarter GDP was negative in 2011 and 2014). Treasury yields actually rose today (10 year T hit 2.05% today, as investors now are looking forward to expected strong 2nd and 3rd quarter numbers that would stimulate inflation and higher interest rates. Supply also came into play as the US auctioned $28b in 7 year notes and lots of new government debt issues in Europe (Italy, UK, Portugal, and Germany). Meanwhile, China is expected to engage in their own version of quantitative easing. They will boost liquidity by allowing banks to swap local government bailout bonds for loans. Note: Local governments act as quasi-corporations in China, developing real estate, etc. Thailand got in the act, cutting their central bank rate today. Spotlight on Fannie and Freddie: The FHFA was appointed conservator of Fannie Mae and Freddie Mac in the wake of the financial crisis and placed annual production limits on multifamily loan production. Those limits are close to being reached already in May/June of this year. Small loans (50 units and under) and affordable projects are exempt from this tally. Fannie and Freddie have raised spreads in recent weeks as they are “putting on the brakes” and slowing production. Who will fill the gap for apartment lending? CMBS and bank lenders are seeing a spike in multifamily loan requests. This is good news for CMBS, as multifamily loans should improve pool quality, execution and therefore loan pricing. ….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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