GSPartners
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Volume XXIII | No. 30 | August 5, 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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1.64%
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5 Yr Swaps
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1.72%
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12-MAT
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0.19%
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3 Month LIBOR
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0.30%
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10 Yr US Treasury
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2.27%
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10 Yr Swaps
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2.30%
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11th Dist COFI
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0.66%
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6 Month LIBOR
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0.47%
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30 Yr US Treasury
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2.94%
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| | | Transaction Description: | | $24,562,500 Acquisition Financing on a 344 Unit San Bernardino County Multifamily Property GSP arranged the $24,562,500 first mortgage on a value-add, 55+ age-restricted multifamily asset built in 1989. A regional commercial bank provided 65% of the purchase price plus 100% of reposition costs. The LIBOR+225 interest rate (2.50% all-in coupon with a 25 basis point LIBOR floor) requires a rate cap at a 3.25% strike price for the first two years of the term with a required renewal for year three. This structure reduces the overall cap cost to Borrower by shortening the cap’s duration. The three year term is Interest Only for the first 24 months and requires principal and interest payments over a 30 year amortization schedule for the final 12 months of the term. The loan is non-recourse, with carve-out guaranties to a capitalized entity. |
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| | | Transaction Description: | | $7,675,000 Acquisition/Bridge to 80% of Purchase for San Antonio Multi GSP secured the $7,675,000 non-recourse acquisition loan for the purchase of a 132 unit multifamily project located in San Antonio, Texas. Located in the Alamo Heights neighborhood, the initial funding was 80% of the purchase price and 100% of the renovation budget. This transaction represented a notable value-add opportunity that will allow the property’s rental rates to be reset, matching similarly upgraded properties in the area ranging from $1.03 to $1.25 psf. Renovation is anticipated to cost in excess of $7,500 per unit in addition to a $500,000 budget for common areas. Priced at LIBOR plus 4.75%, the three year interest only term is floored at 5.25%. The Borrower may prepay the loan without penalty or premium during the 18 months prior to the maturity date. |
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| | | Transaction Description: | | $1,900,000 Acquisition Unentitled Land & $600,000 Cash-Out Triplex Refinance GSP successfully arranged the $1,900,000 senior loan for the acquisition of an unentitled three-parcel assemblage in the Pico/Robertson area of Los Angeles, in conjunction with a refinance of a Culver City triplex. Cash-out proceeds from the triplex were credited to the acquisition of the land assemblage. The same capital provider funded both transactions in order to accommodate the timing of a 1031 exchange. The land assemblage and triplex were both sized to 60% of the purchase price/value and priced at 8.9% and 8.4% respectively for the 12 month term. The entire transaction executed within 8 days of GSP being introduced to the opportunity. |
| | Rate: 8.90% & 8.40% | | Term: 12 Months + Options | | Amort: Interest Only | | LTV: 60% | | LTC: 60% | | Recourse | | Lender Fee: 1.5% & 2.0% | | Advisors: Jonathan Lee, Adam Candler |
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| | | | Balance Sheet CMBS Lender??? GSP identified a balance sheet lender providing a CMBS execution merging the best of higher leveraged conduit with the servicing and certainty of execution of a portfolio lender. All transactions are funded off the fully discretionary balance sheet and held for favorable securitized market conditions, mitigating EU actions and market turmoil. There is no mandate to securitize every 30 or 60 days. B Pieces are held on their balance sheet with Special Servicing rights. Higher mezz-like tranches to 85% of value are sized in a single note – there is no tri-party agreement as there is no subordinate collateral in this one-note execution. Traditional SWAP pricing applies with loan request from $10,000,000 to $100,000,000. Some interest-only term is available at lower loan-to-value offerings, and step-down prepayment after year seven can be priced for an increase in spread. |
| | | 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 Gary M. Tenzer spoke at the Locke Lord Commercial Real Estate Forum on Wednesday. The Los Angeles presentation was simulcast to the Locke Lord Sacramento and San Francisco offices. Please contact Shannon Bradley to schedule Mr. Tenzer for future speaking engagements. | | | Pascale’s Perspective | Searching for Meaning in the Yield Curve In normal economic conditions (pre-2008 crash, before massive central bank stimulus became the norm), a flattening yield curve usually meant a recession was anticipated by the market. It indicated that long bond buyers were betting on slowing growth and a decrease in inflation. Now we are in uncharted territory without precedent where the aforementioned stimulus is not having the usual stimulative effect on prices and wages. Commodity prices remain low with the specter of China’s slowdown and worldwide demand slackening. With the Fed in data driven mode, last Friday’s wage index report was highly scrutinized. The report indicated a 0.2% increase for Q2 after 0.6% was reported for Q1, well below the Fed target of 2.0% annual inflation. This caused the 10 year treasury to rally, dropping to about 2.16%. Then came this week’s comments from Atlanta Fed President Lockhart that the Fed is close to raising short term interest rates in September and that there is a high bar to not acting. Those comments now cast a new light on data; it seems that only substantially negative news will deter the Fed from raising in September. Two schools of thought on the yield curve: (1) Short term rates (6 month to 2 year treasuries) are rising in anticipation of the Fed raising its short term rate, while long term rates (10 year and 30 year Treasury Bonds) are staying low as they are reflective of inflation expectations; or a more esoteric view is (2) Short term rates are rising in anticipation of the Fed raising rates, but it is raising too early and derailing the recovery, thereby dampening the long term picture. ….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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