GSPartners
|
|
|
|
Volume XXIII | No. 47 | December 16, 2015
|
|
|
|
|
|
|
|
|
|
KEY RATE INDICES
|
|
Prime Rate
|
3.50%
|
1 Month LIBOR
|
0.29%
|
5 Yr US Treasury
|
1.75%
|
5 Yr Swaps
|
1.69%
|
|
12-MAT
|
0.29%
|
3 Month LIBOR
|
0.53%
|
10 Yr US Treasury
|
2.30%
|
10 Yr Swaps
|
2.20%
|
|
11th Dist COFI
|
0.65%
|
6 Month LIBOR
|
0.76%
|
30 Yr US Treasury
|
3.00%
|
|
|
|
| | We Have ‘Liftoff’, Federal Reserve Raises Short Term Rates for the first time in nearly a decade, ending seven years of ultra-accommodative policy in the wake of the financial crisis.… | The Federal Reserve Open Market Committee voted unanimously to raise the target Fed Funds Rate by 0.25%, ie what the Fed will charge institutions borrowing directly from the Fed. This is a major step in the Fed’s attempt to ‘normalize’ economic conditions. The markets reacted very positively on the combination of: (1) Fed decisiveness: The Fed effectively communicated the rise and pulled the trigger, markets love certainty and today the Fed delivered that; (2) Fed confidence in the economy: During much of the post-crisis era, markets have reacted favorably to bad economic news as the contrarian mentality held that continuing bad news would keep up the extraordinary measures adopted by the Fed. Today’s rate hike is being seen as an affirmation that the US Economy is in recovery; (3) Future rate hikes will be data dependent, markets focused on one word – gradual. The Fed made it clear that future rate hikes will not be quick and steep. They issued guidance indicating about 4 quarter point raises per year, which markets are interpreting as about 2-3 raises per year. Contrast that to the last round of ‘normal tightening, which consisted of 17 quarter point hikes from June 2004 to June 2006. The balance of Mr. Pascale's observations are available here. ...stay tuned... David R. Pascale, Jr. | | | | Transaction Description: | | $15,300,000 Refinance of an Inland Empire Shadow-Anchored Retail Center GSP successfully placed $15,300,000 in non-recourse bridge debt on an 83% leased (including a dark tenant that represents 5% of the space) 1990’s vintage Inland Empire multi-tenant retail property. The asset is shadow anchored by a regional grocer that that is not part of the collateral and does not report sales. The subject is anchored by a drug store with a lease expiring in June 2016 and a four month renewal notice period. As of the time of loan recordation, the drug store had not notified of their intent to renew or vacate. GSP identified a bridge lender willing to fund the loan despite uncertainty of the drug store’s renewal by emphasizing the tenant’s low occupancy cost, its long history at the center, and the depth of potential replacement tenants in the submarket. The 80% as-is leverage loan includes an $800,000 future funding for tenant improvements and leasing commissions as necessary to re-tenant the drug store and other spaces, with interest not paid on the unfunded proceeds until drawn. |
| |
|
| | | Transaction Description: | | $6,000,000 - 16 Day Close Acquisition of Creative Office at 7.0% GSP secured the $6,000,000 acquisition and renovation loan for a 17,000 square foot creative office building in the Koreatown district of Los Angeles. The pioneering aspect of the creative use project in this submarket added challenges to underwriting. GSP presented comparable projects outside the submarket that supported our clients goals and ultimately provided favorable non-hard money terms. Term sheet to funding was 16 days to accommodate the sales escrow. |
| |
|
| | | Transaction Description: | | Return of Equity Refinance for Three Low-Income Multi-Family Properties George Smith Partners successfully sourced the debt for the cash-out refinancing of three, HUD Contract properties in South Los Angeles. Each property is under its own HAP contract and, although the contracts are recently executed, many capital providers were uncomfortable as the HAP contracts pushed rental rates above conventional market rates. The resulting loan per unit was significantly high. Past performance and security of the government backed HAP contracts allowed the lender to underwrite the higher in-place rents. Sized to 75% of value, the 10-year variable rate loan floats at Prime + 0.25%. Terms included a 3.50% floor and 5.50% ceiling for the first 7 years of the loan. There is no prepayment penalty for the life of the loan. |
| |
|
| | | | International Money Center Bank: $40,000,000 to $300,000,000 Well Capitalized International Bank with offices in 20 countries is funding large reposition transactions to 75% of cost. Priced from LIBOR plus 250 to 400; this capital provider will fund dark malls, leasing event roll risks and/or major conversion projects. Transactions under $160,000,000 are approved domestically. |
|
|
|
|
|
©2015 George Smith Partners, Inc. DRE # 00822654 FINfacts is an ePublication of
George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
|
|
|
|
|
|
|
|
