GSPartners
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Volume XXIII | No. 25 | July 1, 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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0.19%
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5 Yr US Treasury
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1.71%
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5 Yr Swaps
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1.82%
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12-MAT
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0.17%
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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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2.42%
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10 Yr Swaps
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2.51%
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11th Dist COFI
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0.68%
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6 Month LIBOR
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0.44%
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30 Yr US Treasury
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3.21%
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| | | Transaction Description: | | $8,250,000 Cash-Out Refinance for a Non-Credit Single Tenant Industrial SoCal Property GSP successfully arranged the $8,250,000 cash-out, permanent refinance for a 40,000 square foot industrial building net-leased to a non-credit tenant. The Southern California asset was purchased less than a year ago by our Client who completed an extensive renovation/conversion to a cold storage facility, pre-leased at the close of escrow. As a start-up, the non-credit tenant had no historical financials at funding. Now fully stabilized, the loan sized to 70% of current value netted a full return of equity as well as a return on equity to our Sponsor. Floating at WSJ Prime + 0.5%, the seven year loan amortizes over 30 years and is coterminous with the single-tenant lease. There is no prepayment penalty. |
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| | | Transaction Description: | | $2,200,000 Class-C Office Refinance Jason Gaffner successfully arranged the refinance of a recently purchased Upland, California office building. The asset was acquired 8 months ago while only 30% occupied. Our Client used high-yield private funds at 11% to acquire the asset and close escrow. After purchasing the asset, the Sponsor renovated the main lobby and restrooms. A marketing campaign brought occupancy up to 89% although a lack of seasoning precluded the Borrower from securing long-term fixed rate debt. Floating at WSJ Prime + 1.0%, the debt service was reduced by just under $9,000 per month after allowing for the 25 year amortization versus the interest-only private money acquisition financing. There is no prepayment penalty during this five year loan term. |
| | Rate: Prime + 1.0% w/4.75% Floor | | Term: 5 Years | | Amort: 25 Years | | LTV: 75% | | Prepayment: None | | Recourse | | Advisor: Jason Gaffner |
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| | | Transaction Description: | | 100% Non-Recourse Multifamily Refinance – No Carve-Outs GSP replaced a high yielding private money acquisition loan for a multifamily asset located in the Koreatown district of Los Angeles. The five Tenant-In-Common (TIC) borrowers purchased this asset through their respective IRA accounts. Each IRA is its’ own legal and financial entity and is unable to have interest beyond the individual IRA holding, thus no level of repayment or carve-out guarantee was available under this TIC ownership structure. Unit permitting issues with the city also precluded any level of institutional debt. GSP identified an asset-based lender willing to override the normal requirements for a carve-out guarantor. A long-term conventional lender has been identified as a potential take-out option subject to the unit permitting issue being resolved with the City of Los Angeles. Priced at 7.9% for 12 months, the interest only loan does not carry any prepayment penalty. There is no personal or entity level guarantee including carve-out previsions. |
| | Rate: 7.90% | | Term: 12 Months | | Amort: Interest Only | | Prepayment: None | | Non-recourse | | Lender Fee: 2 Points | | Advisors: Bryan Shaffer, Jon Shapiro |
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| | | | Small Balance Non-Recourse Portfolio Permanent Debt GSP is working with a national portfolio lender funding long-term, non-recourse, fixed rate financing from $2,000,000 to $20,000,000. Sized to 70% of value, pricing starts roughly 2% over the corresponding SWAPs for their 5, 7, 10 or 12 year fixed terms; amortizing over 30 years. 20 year fully-amortizing structures are also available with similar pricing for this alternative to CMBS execution. Core assets in the top 100 MSA’s will be considered. |
| | | 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 | Markets React to Greece, Puerto Rico, etc: Credit spreads widen, Treasury Yields Drop and then Bounce Back Worldwide financial markets have been roiled by the Greece default and possible consequences. Puerto Rico’s ability to make debt payments is also a concern. Greece: Lots of drama this week with Greece and its creditors in a standoff amid conflicting signals from Greece’s leadership. Greece has defaulted on an IMF payment; becoming the first developed country to do so (others include Cuba, Sudan, Zimbabwe). Sunday’s referendum on austerity may or may not lead to a compromise and bailout. Markets abhor uncertainty and this is definitely uncharted territory. The issues are 1) Direct exposure to Greece debt, this is minor, especially among US banks and other financial institutions; 2) “Contagion” if an entity has exposure and that entity is involved in counterparty transactions with other entities, things can spread (think Long Term Capital Management during the 1997-1998 Asian and Russian debt crises). Also, MBIA and other bond insurers could undergo major stress, diminishing their ability to back other debt they insure (this is an issue with Puerto Rico debt). So far, the issues seem to be more of a “dislocation” and “not a meltdown” as US Treasury yields dropped to 2.32% last week before coming back up to 2.42%. So we have not seen a major “flight to quality” panic. CMBS: Spreads have widened about 20 bps over the past 2 weeks. 10 year AAA spreads which were trading as low as Swap + 84 in May are now expected to trade at Swap + 100 to 105, the lower classes of bonds are widening also. The next few pools will be closely watched. Many expect summer to be “choppy” with a rally in the fall, especially if there has been some resolution or “containment” in Europe. New 10 year full leverage loans are pricing at about Swap + 210 to 220 or higher; coupons around 4.70% (remember that we were at 4.00% in late 2014/early 2015). The Fed: Two schools of thought: 1) US economic data continues to be strong (payroll, home sales, retail sales), tomorrow’s jobs report is expected to be strong. Some Fed members have spoken recently in favor of sticking to the schedule, ie “liftoff” in September; or 2) Greece and other issues have given the Fed “cover” to wait until 2016. …..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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