GSPartners
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Volume XXIII | No. 40 | October 21, 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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0.20%
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5 Yr US Treasury
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1.35%
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5 Yr Swaps
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1.36%
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12-MAT
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0.24%
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3 Month LIBOR
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0.32%
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10 Yr US Treasury
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2.03%
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10 Yr Swaps
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1.98%
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11th Dist COFI
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0.64%
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6 Month LIBOR
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0.52%
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30 Yr US Treasury
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2.87%
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| | | Transaction Description: | | $11,625,000 Non-Recourse 75% Retail Acquisition George Smith Partners arranged the $11,625,000 permanent loan for the acquisition of a stabilized retail center. The largest tenant is an investment grade pharmacy that accounts for 34% of the net rentable area and has been in occupancy for over 25 years. Historical occupancy and long-term tenants mitigated potential property turnover as 85% of the economic income rolls during the next 6 years. A small reserve was structured to address renewal TI’s. Sized to 75% of the purchase price, the 10-year non-recourse loan offers two years of interest only prior to amortizing over 30 years for the remainder of the term. |
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| | | Transaction Description: | | $5,600,000 Mixed-Use Non-Recourse Cash-Out Refinance; +100% of Cost GSP placed the cash-out refinance of a 49 unit, brick, mixed-use apartment and retail building in Hollywood, California. Acquired last year by the Borrower, our Sponsor initiated a significant capital improvement program that repositioned the three ground-floor retail tenants and added other improvements to the 1920s vintage real estate. The turn-around as supported by numerous area comparables justified an earn-out that netted in excess of 100% of costs for the Borrower. Sized to 75% of the appraised value and fixed for 5 years at 3.09%, the 20 year loan will float for the remaining 15 year term at LIBOR + 2.4%. The loan amortizes over 30 years after the initial one year interest only period. Pre-payment penalty steps-down from 5% for this non-recourse loan. |
| | Rate: 3.09% | | Term: 20 Years | | Amort: 1 Year IO; 30 Years Thereafter | | LTV: 75% | | Prepayment: 5,4,3,2,1 Open | | Non-recourse | | Lender Fee: Par | | Advisors: Shahn Yazdi, Jeremy Michaelson |
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| | | Transaction Description: | | Limited Service Hotel Refinance in Secondary Market at 3.85% GSP arranged the $4,950,000 refinance of a 72 key limited service hotel in Central California. The borrower built the subject property in 2002 and was seeking new debt to replace his higher yielding coupon, yet requested a loan that would allow for future flexibility. There was a small return of equity funded through this refinance. Located in a high barrier to entry, the subject is surrounded by an abundance of walkable retail and restaurants. GSP identified a portfolio capital provider who understands hospitality and was comfortable with the historically consistent cash flow despite the secondary location. Fixed for five years at 3.85% before floating over Prime for the remaining two years, the 25 year amortized loan steps-down from 5%. |
| | Rate: 3.85% for Five Years | | Term: 7 Years | | Amort: 25 Years | | LTV: 70% | | Prepayment: 5,4,3,2,1 open | | Recourse | | Lender Fee: 0.5% | | Advisors: David Rifkind, Ameet Chagan |
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| | | | Pac Rim Multifamily Debt at 3.70% GSP identified a regional portfolio lender funding long-term, fixed rate, non-recourse loans on multifamily assets from $5,000,000 to $15,000,000; sized to 70% loan to value. Loans with a 30 year term and 30 year amortization can be fixed for 7 years at 3.70% then floats for the remaining 23 year term. With no debt yield requirement and step-down prepayment options, this offers an attractive alternative to CMBS executions. Interest Only periods are offered on sub-65% leveraged assets. Class A & B assets in primary and secondary markets from San Diego to Seattle are 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. | | | Fed Rate Hike Impact on Housing and ICSC Western Division Conference Comments | GSP Principals Jonathan Lee and Steve Bram were recently quoted in the Western Real Estate Business on-line newsletter. Mr. Lee penned an article (page 44) on how The Fed Rate Hike may impact single family housing and multifamily development in the Western US. Founding Principal Steve Bram (page 52) was quoted from his panel participation on development in a competitive environment at the ICSC Western Division Conference. | | | Pascale's Perspective | Global Growth Weighs on Long Treasuries, Debt Ceiling Deadline Disrupts Short Term, CMBS Still Looking for Firm Footing: The 10-year Treasury yield dropped back down to 2.03% today after yields rose early in the week after a positive report on US Housing. Global issues are again in focus by investors looking for flight to quality; Japan exports hit a 13 month low, Canada downgraded its growth outlook for the next 2 years, another China stock market selloff, oil prices drop after recent rallying. The 10-year Treasury and Swap have settled in a trading range of about 2.00% for the past few weeks. Watch for markets to focus increasingly on the US Congress, Senate, and President dynamics: RE; negotiations over the upcoming Debt Ceiling deadline (November 3 according to the Treasury Secretary). Recent short term Treasury yields have spiked from 0% to 0.18%, the highest yield in 2 years - since the last debt ceiling deadline in 2013. As the deadline gets closer, longer term treasuries, credit spreads, LIBOR, and other indexes may get volatile, depending on the news from Capitol Hill. As for the Fed, an October rate increase is highly unlikely, especially before the debt ceiling is resolved. CMBS: New pools are pricing with AAA 10-year expected to hit Swap + 125. Spreads remain soft with some widening as the lower tranches widen, especially in the BB and B (lowest rates pieces). This is causing B piece buyers (they buy BB, B and unrated bonds) to increase their yield requirements 200 basis points (to 17%) and flexing their rights to kick out loans they don’t like. New 10-year full leverage applications are pricing S+250/280; all-in coupons in the 4.50% to 4.80% range. ….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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