GSPartners
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Volume XXIII | No. 17 | May 6, 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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1.59%
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5 Yr Swaps
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1.75%
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12-MAT
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0.16%
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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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2.25%
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10 Yr Swaps
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2.34%
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11th Dist COFI
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0.69%
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6 Month LIBOR
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0.41%
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30 Yr US Treasury
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3.00%
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| | | Transaction Description: | | $11,000,000 184 Unit Anchorage Multifamily Refinance GSP successfully arranged an $11,000,000 permanent refinance loan for a 184-unit apartment property in Anchorage, Alaska. The property is fully stabilized and now has solid occupancy and strong cash flow post acquisition and completion of a property improvement plan. This was the second financing this year for the Sponsor and this on-book capital provider. As a national apartment owner, the Borrower has strong relationships with a variety of institutional lenders including agencies, insurance companies and banks. GSP successfully identified a new long-term fixed-rate portfolio lender that provided a very competitive non-recourse interest rate with a refreshingly painless closing process and simple loan documentation. The bank locked rate shortly after application at no additional cost. This lender also provided a step-down prepayment penalty and the ability to partially pay down the loan without penalty during the term of the loan. Our Sponsor commented on how refreshing and painless it was to work with an “old school” lender that did not try to micro manage the borrower’s management through loan documents. There are no impounds or reserves. Fixed at 3.0% for 7 years, the non-recourse loan was sized to 50% of value for the 14 year term. Prepayment steps down from 5.0%. |
| | Rate: 3.0% Fixed for 7 Years | | Term: 14 Years | | Amort: 20 Years | | LTV: 50% | | Prepayment: 5,5,4,4,3,2,1 | | Non-recourse | | Advisor: J Jay Brooks |
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| | | Transaction Description: | | $10,887,000 Supplemental Agency Loan for 669-Unit Multifamily Complex George Smith Partners arranged the $10,887,000 fixed rate portfolio loan for a 669-Unit Apartment Complex located in Los Angeles. The low-rise campus was built in the late 1940s with unit mixes of 1 and 2 bedroom configurations. Well located near the new Crenshaw light rail transit line and Baldwin Hills Crenshaw Plaza, the 65 building/40 parcel asset had not traded in 30 years prior to our Sponsor’s 2013 purchase. The acquisition financing and the supplemental financing are each structured as 2 separate loans. Sponsor has divided the property into 2 large multi-building properties, each with their own name/branding and separate leasing offices. Sponsor renovations include unit upgrades (new appliances, countertops, mirrors, finishes, faucets, plumbing, flooring including a mix of refinished hardwood floors and new carpets), new parking lots, improved landscaping, many new roofs, etc. This loan structure fits in with Sponsor’s strategy to acquire properties in improving sub-markets with long-term, fixed-rate debt and renovating units at unit turn without the future permanent loan rate risk. This non recourse, supplemental funding allows for equity recapture and funds to continue property improvements. GSP sourced the initial senior financing in late 2013 at 71% of purchase. This non-recourse supplemental funding was closed 19 months from the purchase and is fixed at 4.59% and will be co-terminus with the senior notes. The combined financings equal 89.25% of original purchase price. |
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| | | Transaction Description: | | $2,600,000 Acquisition for Class C Multifamily to 75% of Purchase Price George Smith Partners successfully placed the acquisition financing for a 52 unit class C multifamily property in the Southwest. The Sponsor had a tight closing window and needed full leverage non-recourse financing. GSP identified a national capital provider who quickly underwrote the asset can closed in 45 days from being introduced to the transaction. By structuring a 5 year term, GSP achieved a loan that maximized proceeds on a lower debt coverage threshold. The inclusion of 1 year of interest only allowed the buyer to maintain an attractive first year cash-on-cash return while they look to enhance the existing cash flow through improved management. Fixed at 3.80% for five year, the non-recourse loan was sized to 75% of the acquisition price. |
| | Rate: 3.8% | | Term: 5 Years | | Amort: 1 Year IO; 30 Years thereafter | | LTC: 75% | | Non-recourse | | Lender Fee: Par | | Advisor: Ameet Chagan |
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| | | | National On-Book Healthcare Bridge/Reposition GSP identified a national portfolio bridge lender providing non-recourse debt from $5,000,000 to $50,000,000 on various healthcare assets including: senior housing, assisted living, skilled nursing facilities, and medical office. On-book transactions are sized to 85% of cost with pricing from 400 over LIBOR for a 5 year term. With the ability to fund at a below break-even debt coverage or zero cash flow at close, this platform targets major rehabilitation prior to a HUD loan exit. |
| | | 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 | Worldwide Government Bond Yields Spike The selloff in bonds continued this week; the 10 year Treasury hit a 2015 high today, over 2.25%. Today’s weak ADP report indicated lower than expected US job creation for April combined with a very weak productivity report (the past 2 quarters were the weakest since 1993, the last time 2 quarters were negative was in 2006). These reports would usually cause yields to drop as they would signal to investors that rate increases are less likely in the near future. Instead, the continued weak demand for treasuries demonstrate how recent low yields here in the US were influenced by ultra low and negative European bond yields. Now European yields are rising - German 10 year Bond up to 0.61% today after drifting near negative territory 2 weeks ago. This has contributed to a weakening US dollar and less demand for Treasuries. Interestingly, the US Treasury faced “direct” competition today from large bond offerings from Apple Computer and Royal Dutch Shell, two of the strongest corporate credits in the world. Treasuries should “drift” over the next day, as focus will be on Friday’s April jobs report, the first major data point for the 2nd quarter. …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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