GSPartners
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Volume XXIII | No. 46 | December 9, 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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0.29%
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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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1.58%
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12-MAT
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0.29%
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3 Month LIBOR
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0.49%
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10 Yr US Treasury
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2.22%
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10 Yr Swaps
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2.10%
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11th Dist COFI
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0.66%
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6 Month LIBOR
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0.72%
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30 Yr US Treasury
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2.97%
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| | | Transaction Description: | | $12,400,000 Reposition Debt for Class-C Multifamily Properties to 78% LTV Salar Royaei placed the 78% loan-to-value bridge financing for a portfolio of 479 Class-C Apartments in Oklahoma City. The current loans on all three assets matured. The Subjects were mismanaged and underperforming, precluding perm lenders from underwriting the take-out. Additional funds were needed for rehabilitation and upgrades to remain competitive in the market. The two year non-recourse loan is priced at 525 over LIBOR and is paid monthly on an interest only basis. There was no lender origination fee or exit fee beyond the 12 month yield maintenance schedule. |
Challenge: A recent short sale and pending litigation with the loan servicer prevented most institutional lenders from underwriting the Sponsor. Occupancy dropped while completing the due diligence. |
Solution: GSP identified a reliable lender who was comfortable with the property condition and understood the upside potential post-rehab. Litigation exposure was qualified and quantified; the Sponsor showed amply equity to mitigate if necessary. Market strength and asset location combined with an executable business plan allowed the capital provider to underwrite future occupancy and work through the balance of Sponsor blemishes. |
| | Rate: LIBOR + 525 | | Term: 2 Years + Two 12 Mth Options | | Amort: Interest Only | | LTV: 78% | | Prepayment: 12 Months | | Non-recourse | | Advisor: Salar Royaei |
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| | | Transaction Description: | | $6,930,000 Hampton Inn Refinance George Smith Partners negotiated the refinance of an 88 unit Hampton Inn initially arranged by GSP four years ago. Our Sponsor sought to consolidate the first and second trust deeds, but preferred to maintain the existing senior banking relationship. GSP was retained to survey market rates to support the credit committee memorandum that resulted in a significantly reduced interest rate to current market terms. This modified financing closed within two weeks of engagement. Loan terms are confidential. |
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| | | Transaction Description: | | $4,300,000 Cash-Out Multifamily Refinance over 100% of Cost GSP placed the non-recourse cash-out refinance of a 40 unit brick apartment building in the Koreatown district of Los Angeles. The property was acquired by the Borrower less than two years prior to this transaction that netted a return of all cash equity plus a nominal return on equity. Sized to 75% of the appraised value and fixed for 5 years at 3.23%, the loan will float over LIBOR for the remaining 15 year term. Interest Only for the first year of the term, the loan will amortize over 30 years for the 19 year term balance. |
Challenge: Southern California Flood Maps had recently received updates, placing the property in a flood hazard zone, changing insurance costs and requirements. The preliminary appraised value came in short of where it was underwritten, potentially impacting loan proceeds. |
Solution: Mr. Yazdi worked with both the borrowers’ and lenders’ insurance representatives to understand the revised flood maps and mitigate required coverage limits given the low likelihood of a flood at this specific location of the flood zone. The appraiser modeled dated operating income and had not taken into account recent leasing at higher rents. Once current collections were documented, the appraiser revised his initial draft as supported by other multifamily properties in the same market. |
| | Rate: 3.23% | | 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: Shahin Yazdi, Jeremy Michaelson |
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| | | | National Life Insurance w/L+225 Floaters for Core Product George Smith Partners is sourcing loan applications from a national insurance provider for cash flowing assets from a 9% debt yield at sub-3% rates. Non-recourse debt is priced from LIBOR + 225 (all-in coupon currently 2.54%) for core assets in major metropolitan areas nationwide. Only immediate fundings are considered with closing to occur Q1 2016. |
| | | 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 | Congratulations to Principal David Rifkind who was interviewed by GlobeSt on his predictions on market trends of 2016 in the article 'Cycles Don't Die From Old Age'. Read the full article here on-line. | | | Pascale's Perspective | The Calm before the Calm?........ The end of the Fed’s zero interest rate policy period is upon us, with ‘liftoff’ scheduled for next week. Treasury yields have been steady over the past few weeks, ie since they jumped 30 bps as the inevitability of the first rate hike in seven years became apparent. So will next week’s announcement be a ‘non-event’ with little or no volatility in Treasuries? Most of the ‘action’ will be in the statement and Yellen’s press conference as investors watch for clues regarding the pace of future increases. …..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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