FINfacts™ XXIV – No. 171 | June 12, 2019

MARKET RATES
Prime Rate 5.50
1 Month LIBOR 2.41
6 Month LIBOR 2.42
5 Yr Swap 1.88
10 Yr Swap 2.08
5 Yr US Treasury 1.87
10 Yr US Treasury 2.12
30 Yr US Treasury 2.62

RECENT TRANSACTIONS
$23,600,000 Non-Recourse Construction Loan for a 118-Key Hotel Project in Downtown Davis, CA

Rate: L + 825
Term: 3 + 1 + 1
LTC: 82.5%
Amortization: Interest Only

Transaction Description:

George Smith Partners arranged $23,600,000 in non-recourse construction financing for the ground-up development of a 118-key select-service, extended-stay hotel in downtown Davis, California. Sized to 82.5% of total project cost, the interest only loan will float at a spread of 825 basis points over one-month LIBOR for three years and carries two 12-month extension options. With immediate access to the highway, the Project is five minutes from UC Davis and 20 minutes from downtown Sacramento. This financing allowed the Sponsor to begin construction on their third hotel project near the University.

GSP sourced a lender who shared the Sponsor’s vision and negotiated a unique and capitally efficient funding structure on the behalf of the Client. GSP demonstrated the submarket’s resilient occupancy rates and the Project’s appealing design relative to the submarket’s dated competitive set.

Advisors

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

$13,944,000 ($1,180/SF) Non-Recourse Construction Financing for the Redevelopment of a Former Single-Tenant Office Property in Santa Monica, CA

Rate: One-Month LIBOR + 4.25% (6.75%) at closing burning down to One-Month LIBOR + 3.75% (6.25%) upon stabilization
Term: Three-year initial term plus two one-year extension options
Amortization: Interest only
Debt Yield: 8.5% stable debt yield
LTV: 70% as-complete value, 60% as-stable value
Prepayment: Open prepayment with 24-month spread maintenance
Guaranty: Non-Recourse
Lender Fee: 1%

Transaction Description:

George Smith Partners placed $13,944,000 in non-recourse construction debt for the conversion of a former single-tenant office property into an 11,800 square foot, luxury, multi-tenant retail property in a prime submarket of Santa Monica, California. GSP diligently worked to source a lender comfortable with funding a loan at a high basis of $1,180/SF for a “first-mover” redevelopment that was 64% pre-leased (on an economic basis) at record-setting rents to a mix of local and regional food and fitness users. Further complicating the loan request was the need to allocate separate components of the “bad boy” non-recourse carve-outs among two unrelated guarantor entities. Approximately 55% of the loan proceeds were future funded with no interest paid on unfunded loan proceeds until drawn.

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

Acquisition Bridge Loan, 73% Loan to Cost for a 13 Unit Multifamily Property in South Los Angeles, CA

Rate: Prime + 0.5%
LTC: 70% / 65%, including 100% of future funding
Term: 2 Years
Amortization: Interest Only
Prepayment Penalty: None
Recourse: Full Recourse
Lender Fee: 0.5%

Transaction Description:

George Smith Partners arranged acquisition bridge financing for a value-add multifamily property in the Westmont Neighborhood of South Los Angeles, California. The 13 unit, 1950’s vintage Property had significant deferred maintenance and below market rents. The Sponsor’s business plan was to reposition the Property and release the units at market rents. Sized to 73% of total project cost, the financing includes 100% of future funding for a full gut renovation of unit interiors and an exterior upgrade.

The two year bridge loan is interest only and floats at Prime plus 0.5% (6.00% today) with no prepayment penalty. Interest is not charged on the holdback until funds are drawn. The Lender only required a recourse obligation from the general partner who represented 10% of the equity, even though there were limited partners representing over 25% of the equity. The lender fee was negotiated down to 0.5%.

Advisors

Zachary Streit
Senior Vice President

SPEAKERS CORNER

Please join Gary Tenzer, Principal/Co-Founder of George Smith Partners and other top industry professionals at Connect Apartments on June 20th at the JW Marriott Los Angeles, LA Live.  Gary will be moderating the discussion “Financing and Investing in Today’s Market” at 2:15 pm.  For more information about the conference, please visit https://connectconferences.com/apartments2019/.

For 20% off the registration, enter code TENZER20.


Picture
HOT MONEY
Non-Recourse Permanent Loan Program

George Smith Partners is currently placing non-recourse permanent financing from $1,000,000 to $25,000,000+ for industrial, office, retail or mixed-use stabilized properties located in top MSAs. Lender has the ability to advance up to 50 – 55% of purchase price. The pricing is based on Treasury rates + 200 points and terms are 3, 5, 7 and 10 years with step down prepayment that is waived after 2nd year if refinanced again with Lender. There is no cost to the borrower for appraisal, legal, title, escrow or recording. An additional $500 credit at escrow if Borrower provides all due diligence within 7 days from signing LOI.

More Hot Money ›

Pascale's Portrait
PASCALE'S PERSPECTIVE
Fed Rate Cuts? Yes…Only Question is “How Many?”

Recent statements by Fed Chair Powell and other Fed officials have telegraphed rate cuts “sooner rather than later”. Markets have priced in the cuts: stocks rallied, treasury yields dropped and gold prices are rising. The futures market is predicting two rate cuts, most likely in July and September. Next week’s June meeting should “set the stage” for the cuts, as Powell has a press conference scheduled. In fact, if he signals no cuts, look for some market volatility. This means that LIBOR should be down to around 2.00% by mid-September. Spreads: CMBS spreads have widened about 10 bps in recent weeks, mostly due to the drop in Treasuries. Fannie and Freddie have also widened slightly. All-in loan rates are still in the 4.00% range as the “perfect storm” scenario continues: low treasuries due to dampened inflation expectations and tight spreads. Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

More Perspectives ›

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.