GSPartners
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Volume XXIII | No. 20 | May 27, 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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1.53%
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5 Yr Swaps
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1.67%
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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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2.13%
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10 Yr Swaps
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2.21%
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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: | | $81,000,000 Non-Recourse Acquisition Bridge Financing for 385 Unit Multifamily to 75% of Purchase George Smith Partners successfully placed the non-recourse acquisition bridge financing for a 78% leased, 385 unit newly developed apartment project located in Montclair, California. Sized to 75% of purchase, the loan is interest only throughout the five year term. With a coupon currently below 3.50%, the loan will float at 3.23% over the 30 day LIBOR. |
Challenge: The Sponsor’s objective was to acquire the property with an interim bridge loan so that the property could be fully stabilized prior to securing permanent financing. Initially, close of escrow was structured to occur upon the earlier of the property reaching 90% occupancy or a date certain. The loan was structured and approved to close with the 90% precondition. When the rate of lease-up lagged, the investor still chose to close prior to the deadline. Since the loan was approved to fund at 90% occupancy, closing at a lower occupancy required the loan be restructured, re-approved and closed within a very short period of time. |
Solution: GSP worked with the lender to support the property’s economics at a lower occupancy level to fund prior to the termination date specified in the Purchase and Sale Agreement despite its 78% occupancy. The revised structure contained a small hold-back to be funded when the property reached 90% occupancy. No additional guarantees or credit support was required of the borrower to facilitate the earlier closing. This transaction was one of the last loans funded by GE Capital prior to their finance division being sold. |
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| | | Transaction Description: | | $4,270,000 Bridge/Reposition Refinance of a Texas Multifamily Out of Technical Default George Smith Partners placed the refinance of a 63% occupied multifamily asset in San Antonio, Texas. The existing cmbs loan had ballooned and the Sponsor was facing eminent foreclosure. One of the 11 housing structures had recently suffered total roof failure and although had been replaced, additional water damage repairs were necessary prior to releasing the vacant building. Additional capital repairs were also required around the campus in order to re-stabilize the property. An initial $4,050,000 was funded at close to satisfy the current lender default while $220,000 was set-aside to fund immediate repairs. Sized to 60% of stabilized value, the two year interest only loan is priced at 7.875% and carries a 1 point exit fee. |
| | Rate: 7.875% | | Term: Two Years + Options | | Amort: Interest Only | | LTV: 60% of Stabilized Value | | Prepayment: 1 Year Yield Maintenance | | Recourse | | Lender Fee: 0.5% | | Advisor: David Stepanchak |
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| | | | Long-Term Fixed Flexible Prepayment to 80% LTV GSP is working with a portfolio capital provider funding non-recourse fixed rate debt from $10,000,000 to $50,000,000 nationwide. With the ability to lend up to 75% of value/8.0% Debt Yield on office/retail/warehouse and 80% of value on multi-family, rates range from 4.25% to 4.75% fixed for 10 years. Beyond core asset classes, at lower leverage points, this lender will finance hospitality, medical office, and senior independent living assets into secondary and tertiary markets. Prepayment is flexible with the first half of term locked out, and a step-down prepayment thereafter |
| | | 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 Rate Increases on Pause Until September: June is upon us...... Remember, June 2015 was the likely "liftoff date" for the Fed to raise interest rates. The consensus is that the Fed keeps hitting the snooze button on rising interest rates. Investors can sleep well as the new consensus is September. In economic news, this week's durable goods report (aka core capex) showed a 1.0% increase after excluding the volatile aircraft sector. This is one of the first major glimpses of the "spring thaw", as the US emerges from the cold winter and port shutdown. This week's buzzword is "mismeasurement." A major bank research note recently indicated that the traditional economic data measurement and report methods may understate the productivity and inherent inflationary aspects of rapidly changing technology. Some Fed presidents are touting "GDP Plus", which tracks incomes Americans earn from the output of goods/services, not just the output itself. This could speed up rate increases and give hawks cover........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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