GSPartners
|
|
|
|
Volume XXIII | No. 43 | November 11, 2015
|
|
|
|
|
|
|
|
|
|
KEY RATE INDICES
|
|
Prime Rate
|
3.25%
|
1 Month LIBOR
|
0.19%
|
5 Yr US Treasury
|
1.72%
|
5 Yr Swaps
|
1.69%
|
|
12-MAT
|
0.26%
|
3 Month LIBOR
|
0.33%
|
10 Yr US Treasury
|
2.33%
|
10 Yr Swaps
|
2.24%
|
|
11th Dist COFI
|
0.65%
|
6 Month LIBOR
|
0.56%
|
30 Yr US Treasury
|
3.12%
|
|
|
|
| | | Transaction Description: | | $60,000,000 Preferred Equity Financing GSP arranged the Preferred Equity financing for the development of 1,500 acres/384-Residential lots surrounding a Ben Crenshaw & Bill Coore golf course. Amenities will include Clubhouse, Tennis Courts and Swimming Pools post development. GSP was retained at the end of 2014 to create the strategies necessary to bring in the remaining capitalization needs of the development. The capital arraigned allows the developer to complete the remaining infrastructure, build out of amenities and deliver the residential lots to buyers for vertical construction. While several capital structures could potentially fulfill this capital request, a Preferred Equity financing structure from a Private Equity group offered the most flexibility and favorable terms. Our Sponsor has already embarked on the remaining infrastructure and lots will be ready for sale mid-2016. Sized to 33% of completed value, financing terms are confidential. |
| |
|
| | | Transaction Description: | | $3,400,000 Non-Recourse Refinance for a Single-Tenant Walgreens George Smith Partners successfully placed the senior debt refinance of a standalone Walgreens in St. Joseph, Missouri. The Property consists of a single 14,550 square foot structure and is one of three Walgreens serving St. Joseph, a city of 76,000 residents; 55 miles north of Kansas City. This recordation occurred prior to the Walgreens/Rite Aid acquisition announcement. Fixed for 10 years at 4.56%, this non-recourse loan was sized to 65% of appraised value and amortizes over 25 years. |
Challenge: Our Sponsor purchased the Subject in 2005 with 10-year full-term interest-only financing, enjoying strong cash flow since acquisition, and sought to maintain his ample cash flow post refinance. Tenant unit sales declined due to competing Walgreens in the St. Joseph market. |
Solution: GSP reached out to Walgreens and learned that a new management team had recently been installed, with an immediate impact on store performance. A GSP coordinated lender visit conveyed the market growth and a narrative that led to a favorable outcome. The Sponsor secured 10-year non-recourse financing fixed at 4.56%, amortized over 25 years that allowed the retention of approximately 65% of cash flow compared to the previous interest-only structure. |
| |
|
| | | Transaction Description: | | Five-Unit Cash–Out Refinance of a Section 8 Multifamily Asset George Smith Partners successfully placed the cash-out refinance of a five-unit, HAP Contract multifamily rental property in South Los Angeles, California. The property was part of a four building HUD Portfolio that was sub-divided before being refinanced earlier this year. A later HAP contract start date for this property precluded it from being financed with the balance of the portfolio. The past performance of the properties and security of the HAP contract allowed the lender to underwrite using in-place rents rather than the slightly lower market rate income. Sized to 70% of value, the floating rate loan is priced at Prime + 0.50% for the 10 year term, subject to a 4.0% floor and 5.5% ceiling for the first five years of the loan. Amortized over 30 years, there is no prepayment penalty. |
| |
|
| | | | Non-Credit Single Tenant NNN Leased Construction National non-bank construction lender funding up to 100% of cost for pre-leased NNN build-to-suit, to 80% of completed value. Sub-investment grade and non-credit leases are acceptable as demonstrated by a recent auto-collision tenant. Asset sale upon CofO is not required as there is no IRR calculation, the lender yield is a fixed return. Alternative take-out perm financing is anticipated for this non-CTL loan structure. All pre-development functions must be completed prior to funding; permits and a fully executed lease must be in hand with ground breaking to follow immediate post close. |
| | | 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 | Treasuries, Hedging, CMBS: Yesterday’s auction of 10 year notes was strong, with lots of bidders attracted by the higher yields. Note that the US 10 year T at 2.32% is well above the German 10 year (0.62%) and other European benchmark bonds. The 10 year seems to be settling into a new range of about 2.30% after weeks in the 1.95-2.05% range as investors watch ‘the data’ for clues to the Fed’s next move (expected to be ‘liftoff’ in December…..) CMBS: Recent pools have seen the 10 year AAA bonds price at about Swap + 125-127, with bond buyers differentiating between pools, depending on types of collateral (hotel concentration, etc.), overall LTV and subordination levels. Some technical/hedging issues are in the forefront: (1) Swaps: the 10 year Swap has traded about 10-20 bps above the corresponding treasury for the past few years, and is now 10 bps below the Treasury. The Swap is used as a hedging strategy (since approx. 1998) for CMBS originators with regard to Treasury volatility. However, this new ‘inversion’ has made that hedging strategy somewhat uncertain, as bond buyers may now be looking at the yield over the higher index (the Treasury). We are seeing virtually all originators now price new loans over the Swap or Treasury, whichever is higher. So as of now, new loans are being priced over the Treasury, just like the mid 1990’s. (2) The CMBX index, (an overall CMBS bond index) is what CMBS originators use to hedge credit spread volatility, typically traded very close to new issue CMBS. Now that index has ‘inverted’, dropping 10-15 bps below new issues. With their hedging instruments diverging, originators are being careful with new quotes until a number of pools sell in this new environment. We are seeing new loan quotes anywhere from 250 to 300 over the Treasury; all in coupons at 4.80-5.30%. ….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.
|
|
|
|
|
|
|
|
