GSPartners
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Volume XXIII | No. 26 | July 8, 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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1.49%
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5 Yr Swaps
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1.58%
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12-MAT
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0.18%
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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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2.19%
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10 Yr Swaps
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2.25%
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11th Dist COFI
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0.69%
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6 Month LIBOR
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0.44%
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30 Yr US Treasury
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2.98%
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| | | Transaction Description: | | $125,000,000 Pre-Development and Construction Loan GSP secured the pre-development and Phase I construction loan for the $240,000,000 Celebration Point mixed-use project in Gainesville, Florida. Comprised of over 1 million square feet of mixed-use retail, office, multifamily and hospitality, tenancy will included Bass Pro Shops, Regal Luxury Theater and the 137-key Hotel Indigo. Located on I-75 and Archer Road, the project will be adjacent to the University of Florida campus. This loan works alongside accommodative bond financing for a portion of the infrastructure and includes features that allow different project elements to be sold during the course of the development process. Phase I is slated to open in the fall of 2016. Sized to 54% of cost, the LIBOR based loan requires a repayment guarantee to the primary Sponsor. |
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| | | Transaction Description: | | $6,060,000 Land Acquisition Loan for Two Unentitled Adjacent Parcels GSP successfully placed the $6,060,000 acquisition/bridge loan to acquire two adjacent, unentitled parcels in Beverly Hills, California. Our client’s plan is entitle it for condominium construction. The current tenancy provides some income but is significantly below break-even at 60% leverage. With little development experience and only one other commercial asset in his portfolio, the Borrower’s post-close liquidity and the residential market strength mitigated the underwriters’ exit concerns. Structured to 60% of cost, the loan is fixed for 2 years at 4.25% before options. This recourse loan does not amortize but does pay current from cash flow and Borrower contributions. |
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| | | Transaction Description: | | $3,200,000 Cash-Out San Fernando Valley In-Line Retail Raffi Sarkissian successfully placed the cash-out refinance of a 17,200 square foot in-line San Fernando Valley retail center. This transaction consolidated a previous first and second trust deed, and despite the return of equity, post-close monthly debt service decreased notably. Four of the five units are occupied by local vendors while the fifth unit is being turned and upgraded for a new potential leasee – there are no regional or national tenants at this location. Sized to 57% of appraised value, the 10 year term is fixed at 4.25% while amortizing over 30 years. There is no prepayment penalty for this recourse loan. |
| | Rate: 4.25% | | Term: 10 Years | | Amort: 30 Years | | LTV: 57% | | Prepayment: None | | Recourse | | Advisor: Raffi Sarkissian |
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| | | | On-Book Crowd Funder – a Dichotomy of Characteristics? GSP has originated pref-equity for ground-up construction development for a SoCal commercial real estate asset. This crowdfunding lender is funding debt & pref-equity transactions from $1,000,000 to $5,000,000 across the nation. Their ability to close loans stems from the use of their own balance sheet before raising the capital through crowdfunding sources – the loan is fully funded prior to investor review of the opportunity. This pre-funded layer provides a certainty of execution and expedites the crowdfunding process significantly. Focused on value-add and construction, they have the ability to fund senior, mezzanine, and pref-equity on core asset types and will consider senior positions for unentitled land. |
| | | 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 | | | Speakers Corner |
Founding Principal Steve Bram will be anchoring the Hotel/Motel Panel at the Appraisal Institute SCCAI Summer Conference next Tuesday July 14. Mr. Bram will be also be teaching a commercial real estate class on Wednesday July 15 at the AREAA GLA Super Summit at the Little Tokyo DoubleTree Hotel. Please contact Shannon Bradley at (310) 867-2920 to engage Mr. Bram for future speaking opportunities.
| | | Pascale’s Perspective | Markets Focus on International Issues Worldwide uncertainty has resulted in a flight to quality, the 10 year Treasury is at 2.19%, down about 20 bps during the past two weeks. CMBS spreads are widening with originators watching new pools in the market. AAA’s are approximately Swaps + 110 with more widening in the subordinate classes; we are seeing new 10 year quotes anywhere from Swaps + 215-240, a wide range as originators are less certain how to price. The good news is that lenders are still quoting, locking and closing. All-in coupons for 10 year full leverage are about 4.75%. Greece: The economy of Greece is about the same size as Alabama. Over the past few years, the ECB and IMF have become the chief holders of Greek debt, there is extremely little exposure to Greece by banks and other private institutions. Yet credit, bond and stock markets are reacting (overreacting?) to every development, hoping for another agreement. It’s a study in market psychology. The fear of “contagion” is rampant. Greece seems to be applying “gaming theory” to their negotiations, as they bargain for better terms from their creditors by displaying a willingness to default and cause pain not only in their country, but potentially throughout Europe and beyond. If they get concessions (especially a “haircut” ie debt relief), it could encourage larger economies such as Italy, Portugal and Spain to bargain in a similar fashion. US markets which seemed to be “data driven” early this year (swung by economic reports, etc) are now “headline driven”. All eyes are now on Sunday’s European summit (aka last chance for a deal), Monday’s bondholder meeting in Puerto Rico, China’s stock market, Iran nuclear talks, etc. Everything is connected, example: an Iran deal that removes sanctions combined with further erosion of China’s economy and a Greek exit from the Euro, could accelerate oil’s price decline. This would put the Fed’s and the ECB’s inflation targets farther out of reach, delaying rate hikes and possibly leading to more QE. ….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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