FINfacts™ XXIV – No. 170 | June 5, 2019

MARKET RATES
Prime Rate 5.50
1 Month LIBOR 2.42
6 Month LIBOR 2.42
5 Yr Swap 1.88
10 Yr Swap 2.10
5 Yr US Treasury 1.86
10 Yr US Treasury 2.12
30 Yr US Treasury 2.60

RECENT TRANSACTIONS
$14,950,000 Non-Recourse Financing for the Acquisition of a 17-Property Single Tenant Dollar General Portfolio

Rate: 4.52%, Fixed
Term: 14 years
Amortization: 5 Years Interest Only; 30 Year Amortization thereafter
Loan to Value: 75%
Prepayment: Defeasance
Lender Fee: None

Transaction Description:

GSP successfully placed $14,950,000 of non-recourse, 14-year (with an anticipated repayment date ten years from the initial closing) fixed-rate debt for the acquisition of 17 newly-constructed freestanding retail buildings 100% leased to Dollar General. The individual assets have 15-year lease terms and are located primarily in tertiary Upper Midwest states. GSP executed the financing concurrent with construction completion and sourced a lender able to provide 75% leverage financing at a 4.52% blended fixed coupon with five years of Interest Only payments, despite an absence of sales history and concurrent tenant lease terms expiring one year after loan maturity. The loan structure also provides the Sponsor flexibility to release properties from the loan collateral in the event of sale after year three of the loan term and allows the Sponsor to release up to 30% of the individual assets from the mortgage collateral and substitute like kind properties through year nine of the term.

 

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

$4,050,000 (85% LTC) Financing for the Acquisition of 3 Contiguous Parcels in Los Angeles, CA

Rate: 9.50% Fixed
LTC: 85% of Acquisition Price
Term: 18 Months
Amortization: Interest Only
Prepayment Penalty: 9 Months of Minimum Interest
Recourse: Non-Recourse
Lender Fee: 1.5%

Transaction Description:

George Smith Partners secured a $4,050,000 acquisition loan for 3 contiguous multifamily buildings located in Toluca Lake (Los Angeles), CA. While there are currently 11 units on the 3 parcels, the Sponsor is in the process of designing a 57 unit multifamily project. This development is allowed “by right” but must go thru planning commission for final approvals and will utilize the density bonus regulations. The proposed building will feature a mix of 1 and 2-bedroom units and will provide more rental housing for the local community. The final project will have an affordable component, boosting the supply of units for designated for low income tenants. The Project is walking distance to the Universal City metro rail stop. Nearby employers include Universal Studios, CBS, and Warner Brothers.

The non-recourse financing was sized to 85% of purchase price at an interest rate of 9.50% for 18 months for a 1.5% lender fee. The high leverage loan allowed the Sponsor to minimize their initial equity investment into the deal. The Sponsor plans to replace this loan with construction financing once the Project is ready to break ground. This Lender has the ability to convert some or all of their acquisition loan to a mezzanine position up to 85% of total construction cost behind the future construction loan.

Advisors

Steve Bram
Principal/Co-Founder
Patrick O’Donnell
Vice President

Cash-Out Refinance at 4.35% Fixed for Seven Years, Non-Recourse; Downey, CA

Rate: 4.35% Fixed for 7 years; 6 Month LIBOR + 2.25% thereafter
Term: 30 years
Amortization: 3 years interest only, followed by 27 years amortization
Prepayment Penalty: 4,3,2,1
LTV: 55%
DCR: 1.15x
Guarantee: Non-Recourse
Origination Fees: Par

Transaction Description:

George Smith Partners secured the cash out refinance of a 15-unit stabilized multifamily property in Downey. Constructed in 1980 the Property is located in the heart of Downey, close to restaurants and retail centers. Fixed at 4.35% for seven years, the non-recourse loan floats at 6-month LIBOR + 2.25% for the remaining 23-year term. The non-recourse loan has 3 years of interest only payments and a 4,3,2,1 step down prepayment penalty.

Advisors

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

SPEAKERS CORNER

Antonio Hachem, Principal at GSP will be moderating the Capital Markets panel at Interface Denver Multifamily Conference on Thursday, June 13th. For more information please click here.  If you are interested in a complementary ticket, please contact Dana Light – dlight@gspartners.com


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HOT MONEY
LP Equity Provider

GSP identified a LP-Equity provider for retail, office, industrial and self-storage. Looking for opportunistic opportunities (mostly 80/20) in primary and secondary markets nationwide. Target equity investments between $1 – $5 million per deal with an investment period of two to five years.

More Hot Money ›

Pascale's Portrait
PASCALE'S PERSPECTIVE
Central Banks Bust Out the “Punchbowls”, Do They Have Enough?

Recent uncertainty and volatility surrounding tariffs and trade disputes is worrying central bankers tasked with maintaining growth and stability. With “trade talk” dominating the headlines (Are they talking? Not talking? Deal? No Deal?), its easy to overlook that the “regular” economic news has been tepid during the past few weeks (Manufacturing activity, factory orders, etc.) has been tepid. The fear is that the boost from the tax cuts is waning and economies are flagging and being hit by the major trade uncertainty. The major central banks are springing into action: Australia’s Central Bank cut rates to a record low on Tuesday, India may follow suit soon and the economies neighboring China are highly affected. The ECB is rolling out new ultra cheap loans to banks and may cut rates soon. And, yes, the US Fed is now ready to cut rates, the only question is how many rate cuts? Monday’s hint from Fed Official Bullard started the chatter, but Fed Chair Powell’s statement yesterday that the Fed was prepared to “sustain the expansion” immediately jolted markets to the upside. This week, the 10 year T dropped to 2.03% this week, touching the lows last seen in Sept 2018 during the North Korean aggressive missile test and market panic. Some key analysts are dropping their 10 year 2019 year end predictions to about 1.75%.Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

More Perspectives ›

David Pascale, Senior Vice President at George Smith Partners wrote a blog post published in Forbes, “Navigating the ‘New Normal’ Economy, The Rules Have Changed or Have They?

Click here for the full article.

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


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