GSPartners
|
|
|
|
Volume XXIII | No. 45 | December 2, 2015
|
|
|
|
|
|
|
|
|
|
KEY RATE INDICES
|
|
Prime Rate
|
3.25%
|
1 Month LIBOR
|
0.22%
|
5 Yr US Treasury
|
1.64%
|
5 Yr Swaps
|
1.59%
|
|
12-MAT
|
0.29%
|
3 Month LIBOR
|
0.39%
|
10 Yr US Treasury
|
2.17%
|
10 Yr Swaps
|
2.07%
|
|
11th Dist COFI
|
0.65%
|
6 Month LIBOR
|
0.66%
|
30 Yr US Treasury
|
2.91%
|
|
|
|
| | | Transaction Description: | | $37,000,000 Non-Recourse Financing on a 290,824 Square Foot Office Building with 50% Roll during Loan Term GSP arranged the $37,000,000 non-recourse first mortgage from a regional commercial bank on a Class A multitenant office building in a suburban Southwest submarket. Although the property is currently 97% occupied, the largest tenant (17% of total space) had an expiring lease to be renewed prior to loan closing and an additional 50% of the leased square footage will roll within the three year loan term. Loan proceeds are structured as an initial $34,392,000 loan, with a further $2,608,000 to be funded within six months of closing for tenant improvements and leasing commissions related to the largest tenant. The loan requires no additional leasing reserves, and interest is not paid on the $2,608,000 until drawn. The 67% of purchase price first mortgage priced at one-month LIBOR plus 2.60% and required a LIBOR cap with a 3.00% strike price for the first two years of the term with a renewal for the third year, thereby reducing 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 at a 25-year amortization schedule for the remaining term. |
| |
|
| | | Transaction Description: | | $10,000,000 Term Loan and $4,000,000 Revolving Line of Credit GSP successfully placed $14,000,000 of non-recourse debt on the fully leased in-line component of a 1980’s vintage Inland Empire multi-tenant retail property, shadow anchored by a national grocer and specialty grocer. Although not part of the collateral, neither anchor reports sales while the specialty grocer has a lease expiring in 2019. |
Challenge: Our Sponsor required flexibility to use loan proceeds for purposes unrelated to the collateral on an as-needed basis. The Sponsor requested the capacity to pay interest on the funds only once utilized and did not want a prepayment penalty once the funds were returned to the lender. |
Solution: The Lender structured a 65% total leveraged loan as a $10,000,000 fixed rate facility funded at closing to take out the existing debt on the property. The remaining $4,000,000 in proceeds is structured as a revolving line of credit. The entire loan is structured as a three year initial term with one four year extension option. |
| |
|
| | | Transaction Description: | | $6,500,000 Non-Recourse, $5,000,000 Cash-Out of a 1990’s Vintage West Los Angeles Apartment Community GSP successfully placed a $6,500,000 non-recourse permanent loan on a 36-unit, Class B Apartment community located in West Los Angeles. The loan provided a $5,000,000 return of equity to the Sponsor. Fixed for five years at 3.10%, the loan is interest only for the full five-year term, allowing the Sponsor to maximize cash flow. A free 120-day rate lock was provided at application, which was extended an additional 10 days as a courtesy from the Lender to the Sponsor. Loan documents were minimal and inexpensive, with the lender requiring only an appraisal, survey, and environmental database review. Total lender closing costs were $7,500. |
| |
|
| | | | Small Balance Non-Recourse Reposition Debt GSP is working with a national balance sheet lender funding less-than-stabilized cash flowing assets from $2,000,000 on a non-recourse basis. Core assets are sized to 75% of total capitalization and priced from 5.50% to 6.25% with fees structured as 1 in and 1 out. Hotels are limited to 65% of cost and priced at the upper end of the spectrum. Four year loan terms are possible with a 12 month loss of yield prepayment. Sub-1.0 coverages are supplemented with an interest reserve. |
| | | 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 | | | Congratulations Malcolm Davies | Congratulations to Principal Malcolm Davies who was chosen as the feature for GlobeSt’s ‘West Coast’s 50 Under 40’. The article featuring Mr. Davies and the other candidates is available on-line. | | | Pascale’s Perspective |
The ‘Great Divergence’ is upon us; 10 year yield ‘Unchanged’ for the Year….. Now that the December Fed rate hike is a foregone conclusion and ‘priced into’ bond yields, markets are now focusing on the timing of the next rate hike, and the pace of future hikes. That’s why yesterday’s weaker than expected ISM Manufacturing report saw the 10 year Treasury yield drop about 10 bps to 2.17%. Fed Chair Yellen has issued dovish comments on the speed of future hikes. The rest of this week should be interesting: the ECB is expected to announce major stimulus tomorrow, increasing their bond buying and possibly lowering their deposit rate (the rate it pays commercial banks) again to below negative 0.2%. The intention is to stimulate inflation. This will depress already low European bond yields (the German bond is at 0.48%). The ‘divergence’ of US and European central banks is unprecedented, uncharted territory. The immediate effect will be on US Treasuries, the longer bond yields (10 year) will be pulled lower by the ultra-low European yields, while short term bonds yields (2 year for example) are spiking, creating a flattening yield curve. Also note that the 10 year closed at 2.17% today, the same yield as the end of 2014. …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.
|
|
|
|
|
|
|
|
