FINfacts™ XXIV – No. 150 | January 15, 2019

MARKET RATES
Prime Rate 5.50
1 Month LIBOR 2.51
6 Month LIBOR 2.85
5 Yr Swap 2.62
10 Yr Swap 2.74
5 Yr US Treasury 2.53
10 Yr US Treasury 2.71
30 Yr US Treasury 3.08

RECENT TRANSACTIONS
$212,250,000 Non-Recourse Senior Construction Financing for the Ground-Up Development of a Montage and Pendry Resort & Residences, La Quinta, CA

All terms of the financing are confidential.

Transaction Description:

George Smith Partners successfully placed $212,250,000 of non-recourse, senior construction financing for the development of a 240-key, dual-branded, 5-star Montage and Pendry resort in La Quinta California. The 525-acre project encompasses multiple construction and financing phases and will offer luxury residential and hospitality spaces. The Hotel and Residences are designed around a world-class Arnold Palmer golf course. The Project’s design aesthetic combines modern elements with classic desert architecture.

This initial financing includes a 140-key Montage Resort, a 200-key Pendry Resort, a shared-services building, and a golf club house as well as several Montage and Pendry branded residences and condominium units. The financing also included up to an additional $100MM of capital for the development of up to 29 Branded Montage Residences and 66 Branded Pendry Condominium Residences. Three additional planning areas that are currently contiguous with the development site will be sold off to third party homebuilders, with the proceeds from these land sales being recontributed into the Project.

GSP was able to source a lender who not only shared the Sponsor’s vision and passion for the Development, but also recognized the Sponsor’s ability to execute complex, large-scale master planned developments. Despite the complex takedown structure, GSP devised, planned and executed a creative structure that provided the Sponsor with sufficient loan proceeds, while minimizing the Lender’s risk profile throughout the development.

Advisors

Malcolm Davies
Principal/Managing Director
Evan Kinne
Senior Vice President
Zachary Streit
Senior Vice President
Alexander Rossinsky
Vice President
Rachael Lewis
Vice President
Aiden Moran
Assistant Vice President

$11,650,000 (72% Loan-to-Value) Non-Recourse, Cash-Out Refinance of a Grocery Shadow-Anchored Salt Lake City Retail Center

Rate: 5.15%, Fixed
Term: 10 years
Amortization: Three years interest only; 30-year amortization thereafter
LTV: 72%
Prepayment: Defeasance
Guarantee: Non-recourse
Lender Fee: None

Transaction Description:

GSP successfully sourced $11,650,000 of non-recourse, cash-out, permanent first mortgage debt sized to 72% loan-to-value to refinance out a maturing bridge loan on a 62,500 square foot, grocery shadow-anchored Salt Lake City multi-tenant retail property. The borrower recently completed its re-tenanting business plan that upgraded the tenant base and stabilized the 1960s vintage retail property at nearly 100% occupancy. Although many lenders are increasingly becoming more conservative regarding leverage and interest only terms on retail properties, GSP sourced a lender that relied on the borrower’s substantial real estate experience, strong submarket performance, and a diverse tenant mix to provide a full-leverage, non-recourse loan that repatriated substantial equity to the borrower and included three years of interest only payments followed by 30-year amortization.

Advisors

Gary E. Mozer
Principal/Co-Founder
Katie H. Rodd
Senior Vice President
Michael Anderson-Mitterling
Senior Vice President
Kyle Howerton
Senior Vice President
Akash Rohera
Assistant Vice President

$8,000,000 Bridge Loan for Riverside County Medical Office

Rate: Prime + 1% (6.25%)
Term: 12 months with two 6 month extensions
Amortization: Interest Only
Prepayment: None

Transaction Description:

George Smith Partners placed an $8,000,000 bridge loan for the refinance of a 40% occupied medical office building in Riverside County. The loan floats at a rate of Prime + 1% with interest only payments. The initial term is 12 months and two 6-month extensions are available. Proceeds are structured as $5,800,000 in initial funding, with an additional $2,200,000 that can be drawn down as the property leases up.

Challenges were encountered when discussing the transaction with lenders. Several years ago, the Borrowers financed their acquisition of the near-vacant property with a bridge loan. Although the Sponsor’s business plan was progressing well, some lenders were not willing to refinance a bridge loan with another bridge loan. Additionally, the Property is located in a secondary market in Riverside County, about an hour east of Los Angeles. Finally, an estoppel and SNDA was required from the largest tenant, but these documents took a long time to negotiate.

George Smith Partners emphasized that the Sponsors had recently successfully negotiated a long-term lease with a well-known anchor tenant. They also invested $1.4MM in capital expenditures resulting in a total renovation of the property. Since signing the Anchor Tenant, the Borrowers have successfully negotiated long term NNN leases with several other smaller tenants. Although the Property is located in Riverside County, GSP emphasized the strong population growth, especially of retired individuals, in the submarket. This has resulted in increased demand for medical services in a market with limited supply of renovated medical office properties. As a result the selected lender became comfortable with the strength of the asset and the ability of the Sponsors to continue lease-up. The Lender also provided for 60 days after closing to obtain the estoppel and SNDA.

Advisors

Shahin Yazdi
Principal/Managing Director
Jonathan Lee
Principal/Managing Director
David Stepanchak
Senior Vice President
Matthew Kirisits
Vice President
Olga Alworth
Senior Vice President
Samuel Sarshar
Assistant Vice President

SPEAKERS CORNER

Please join the GSP team at the IMN Winter Forum on Real Estate Opportunity and Private Fund Investing taking place at the Montage Resort & Spa in Laguna Beach January 16-18.  On Thursday, January 17th, Bryan Shaffer is moderating the State of the CRE Finance Market Panel at 8:30 am, Jonathan Lee is moderating the Multifamily Panel at 2:30 pm and Gary Mozer will participate on the Industrial Panel at 3:15 pm. Use SP20 for 20% off the registration. Visit www.imn.org for more information.


Picture
HOT MONEY
Construction Financing 80% LTC

George Smith Partners identified a regional capital provider lending on transactions up to $16,500,000 on a recourse basis. With the ability to advance up to 80% of purchase price on ground-up construction and luxury SFR’s, Condos and Multifamily, pricing is 1.25-1.50 over Prime for a 24 month term. Other offerings include earn-outs and value-adds for commercial loans, SRO’s, and TIC’s, as well as cookie-cutter industrial, office and industrial.

Tenancy-in-Common (TIC) owners of a multi-unit property have exclusive usage rights to a particular area of the property. They own percentages in an undivided property, rather than particular units. The deeds reflect only their ownership percentages. Each owner has the right to use a particular dwelling, which is reflected in a written contract signed by all co-owners. This must not be confused with condominium ownership.

The ability to receive “Fractional Loans,” which enables co-owners to obtain individual loans, significantly reduces the risk of co-ownership. Fractional Loans enable each co-owner to have an individual loan. The loan is secured by the co-owners share of percentage in the property so if one co-owner should default it does not impact the other co-owners. This lender finances the acquisition and development/conversion of multifamily properties into TICs, and is one of the only lenders in California offering Fractional Loans to individual TIC owners.

More Hot Money ›

If you have an inquiry regarding George Smith Partners’ commercial real estate financing, please contact your GSP representative or Todd August, Chief Operating Officer (310) 867-2995 or TAugust@GSPartners.com


WWW.GSPARTNERS.COM

Constellation Place
10250 Constellation Blvd., Ste. 2700
Los Angeles, CA 90067
Office 310.557.8336
Fax 310.557.1276
Email finfacts@finfacts.net
© 1999 - 2019 George Smith Partners, Inc. DRE # 00822654 FINfacts™ is an ePublication of George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
Hi, just a reminder that you're receiving this email because you have expressed an interest in George Smith Partners. Don't forget to add finfacts@finfacts.net to your address book so we'll be sure to land in your inbox!

You may unsubscribe if you no longer wish to receive our emails.