GSPartners
|
|
|
|
Volume XXIII | No. 32 | August 19, 2015
|
|
|
|
|
|
|
|
|
|
KEY RATE INDICES
|
|
Prime Rate
|
3.25%
|
1 Month LIBOR
|
0.19%
|
5 Yr US Treasury
|
1.50%
|
5 Yr Swaps
|
1.59%
|
|
12-MAT
|
0.19%
|
3 Month LIBOR
|
0.31%
|
10 Yr US Treasury
|
2.12%
|
10 Yr Swaps
|
2.18%
|
|
11th Dist COFI
|
0.65%
|
6 Month LIBOR
|
0.52%
|
30 Yr US Treasury
|
2.82%
|
|
|
|
| | | Transaction Description: | | $25,328,000 Bridge Acquisition Financing for Vacant Denver Office to 65% of Cost George Smith Partners arranged the acquisition financing for a brand new 78,000 square foot office building in the Platte River sub-market of Downtown Denver. The Sponsor had an executed lease for 65% of the building at closing, with an option to take the remainder of the space. Sized to 65% of total cost, the capitalization consists of a $25,700,000 purchase price and $10,300,000 TI/LCs including carry cost. Floating at LIBOR + 475, the non-recourse loan carries a 3 year term before options. |
Challenge: Per the purchase contract, the newly constructed office building would be delivered as a warm shell, with an extensive TI build-out ($130/SF) still to be completed. With 14 months of no cash-flow and the TI build-out to be completed for a startup tenant, the financial market struggled to underwrite the business plan. |
Solution: GSP documented the tenants’ impressive capitalization and national expansion plan. The Denver Office Market is prime for this tenants’ business model and the sub-market strength added to our underwriters’ comfort level. |
| |
|
| | | Transaction Description: | | $7,900,000 Bridge Financing for a 60% Occupied Georgia Medical Office Building George Smith Partners placed the bridge refinance for a newly constructed medical office building in Decatur, Georgia. The 33,685 square foot structure was developed for multi-tenant use. An interim bridge loan was required to finish outstanding tenant improvements, payoff property liens and bring the asset to stabilization for perm financing. In-place cash flow is not sufficient to service the debt; an interest reserve was funded to cover the short-fall. Sized to 72% of As-Is value, the recourse loan is fixed at 11%, Interest Only for 6 months and was funded within four weeks of application. |
Challenge: The existing loan had matured and borrower was in technical default, paying default interest rates. Certainty of execution and speed were compulsory as it was just weeks away from foreclosure. Tenant improvement costs exceeded budget, requiring additional proceeds to complete the build-out prior to occupancy. |
Solution: GSP identified a private capital source who took the time to understand and become comfortable with the Sponsor’s business plan and the property’s intrinsic value. Once the capital’s interest was confirmed, GSP vetted the transaction risk exposure and structured the loan criteria to avoid closing pitfalls, satisfying both Borrower and Lender. Funds were allocated to finish outstanding tenant improvements, payoff mechanics liens and provide for a viable refinance exit. |
| |
|
| | | Transaction Description: | | 100% Cash-Out Refinance for a 10 Unit Santa Clarita Apartment Building George Smith Partners successfully placed the $1,600,000 cash-out refinance of a 10-unit multifamily property located in Santa Clarita, California. The Sponsor requested a return of cash equity to be deployed toward an unrelated development project. The Sponsor has invested in substantial improvements and its’ location one mile from the Newhall Metrolink Station allows the property to perform above the competitive set. Maximum cash-out proceeds were justified by historical performance and market analysis, allowing the capital provider to push proceeds beyond the initial application commitment. Sized to 80% of value, the non-recourse loan is fixed at 3.25% for 5 years; amortized over 30 years after one year of Interest Only. This financing provided over $600,000 return of equity to the Sponsor. |
| | Rate: 3.25% | | Term: 5 Years | | Amort: One Year Interest Only; 30 Years Thereafter | | LTV: 80% | | DCR: 1.20 | | Non-recourse | | Lender Fee: Par | | Advisors: Jonathan Lee, Adam Candler |
|
|
| | | | Asset Based Financing GSP has recently originated and/or placed several loans driven primarily by asset quality and location for less-than credit worth Sponsors. The risked base pricing ranges are wide based on quality and the potential exit although coupons traditionally run between 7.5% and 9.0% to 65% of value for a 2 year term. Fees from these non-institutional lenders run from 1% to 3% and often can be structured in-part as an exit fee to preserve capital at funding. Entitled land tops out at 60% for a slightly wider yield. The requirement for an MAI appraisal and Borrower recourse varies based on transaction and leverage. |
| | | 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 | | | In The Press | Principal Malcolm Davies was recently interviewed by GlobeSt on the dynamics of renting multifamily apartments today. Renters’ interest have expanded to require walkable communities and green measures for energy and water conservation. The entire interview and Mr. Davies comments are available on-line | | | Pascale’s Perspective | Fed Meeting Minutes, Highly Parsed by the Market Today’s release of the July 2015 Fed meeting minutes is the last official release by the Fed until the September’s possible liftoff announcement. The language is unprecedented. In recent years as the Fed said the conditions for policy firming had not yet been achieved; they noted that conditions were approaching that point. This prepares the markets for a September increase (they are trying to avoid the confusion and market volatility from the 2013 taper tantrum), but gives the Fed cover to wait until December. The criteria has always been employment and inflation. Macro employment numbers are strong and exceed stated thresholds. However; inflation is nowhere near the 2.0% Fed target (2.0% inflation was last recorded in 2012). Recent statements by Fed officials have ranged from inclined to move in September (Atlanta Fed President w/agreement from the St Louis Fed President), but raising rates now would be a mistake (op-ed by Minneapolis Fed President). A WSJ poll of economists predicts a September increase but the futures markets seem to predict a December increase. Meanwhile, currency wars rage on as devaluations continue (Vietnam and Kazakhstan today), partially spurred by the expectation of a US rate increase. Today the 10 year T rallied from 2.19% down to 2.12% - it may come down to the data. The next few weeks of reports will be highly scrutinized by market participants. CMBS: Lots of supply, continued uncertainty (China, Fed, etc), etc. Two pools priced this week with 10 year AAAs at SWAPs+120 (compared to a low of S+85 a few months ago). Originators are still quoting and closing, including some very large transactions. Borrowers are still locking attractive rates due to the lower Treasury/SWAP. …stay tuned…. David R. Pascale, Jr. |
|
|
|
|
©2015 George Smith Partners, Inc. DRE # 00822654 FINfacts is an ePublication of
George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
|
|
|
|
|
|
|
|
