FINfacts™ XXIV – No. 183 | September 4, 2019

MARKET RATES
Prime Rate 5.25
1 Month LIBOR 2.07
6 Month LIBOR 2.01
5 Yr Swap 1.26
10 Yr Swap 1.35
5 Yr US Treasury 1.32
10 Yr US Treasury 1.47
30 Yr US Treasury 1.97

RECENT TRANSACTIONS
$42,700,000 Construction Financing for 286-Unit Garden-Style Multifamily Project; Portland, OR

Rate: Floating at 30 Day LIBOR + 3.55%
Term: 3 Years with Two (12) Month Extensions
Amortization: Interest Only
LTC: 65%
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners secured $42,700,000 in non-recourse construction financing for the development of a ten-building residential community in the Clackamas County submarket of Portland, OR. The nearly 13-acre site, which is a 20-minute drive from the city, offers an affordable alternative to Portland’s ever-increasing rental rates, as well as an exemption for inclusionary zoning, requiring no affordable units.

By leveraging the strength of the Sponsor’s local experience, coupled with the city’s need for housing alternatives to the urban infill product, GSP was able to find a non-recourse lender who was comfortable with the fact that the area had seen little development in recent years and offered no comparable product. The loan was priced at 30-Day LIBOR + 3.55% and was sized to 65% LTC, which is aggressive leverage considering the pricing and the non-recourse structure. As costs rose approaching the final budget, the Lender ratably increased the proceeds of their loan to minimize additional Sponsor dollars in, which ultimately showed a commitment to a long-term relationship; this was their second time working together, the first being another Portland development GSP sourced in 2017.

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
Maxwell Shedlosky
Assistant Vice President

$11,450,000 in Permanent Financing for a 56 Hangar Private Airport; Torrance, CA

Rate: 4.75% Fixed
Term: 18 years (fixed for the first 5 years, then rate adjusts)
Amortization: 18 Years
Loan-to-Value: 75%
Guaranty: Recourse
Prepayment: Yield Maintenance

Transaction Description:

George Smith Partners secured $11,450,000 of life-company debt to refinance an existing senior loan for a regional private airport facility in Southern California. The Property is a 133,490 square foot, 10 building, 56 hangar private airport facility on a ground lease to the City of Torrance. The remaining term of the ground lease is only 23 years, which created limitations for the amortization of the senior loan. GSP worked with a lender that allowed for an amortization that equaled 80% of the remaining years of the ground lease. Loan proceeds repaid the existing senior loan, covered closing costs, and provided a return of equity to the Sponsor. The financing is an 18 year term loan that maximizes cash flow for the Sponsor. The recourse fixed-rate loan is priced at 4.75%.

Advisors

Steve Bram
Principal/Co-Founder
David R. Pascale, Jr.
Senior Vice President
Nick Rogers
Vice President

5 Day Close on 84% Loan to Purchase Price for Multifamily Asset; West Hollywood, CA

Rate: 8.5%
Term: 12 Months
Amortization: Interest only
LTV: 84%
Prepayment: None
Guaranty: Non-Recourse
Lender Fee: 1%

Transaction Description:

George Smith Partners arranged a quick close acquisition bridge loan for an 8-unit property in West Hollywood. The Sponsor approached GSP with a need for 80%+ leverage, which can be tricky with low cap rates and rent control. GSP utilized their experience to arrange a first and second capital provider on the loan. We ensured that the Sponsor would receive his required leverage and guaranteed that he could close on the Property quickly. With this structure the owner can increase rents and stabilize the cashflow. This will allow him in the future to place a much larger permanent loan on the Property at a lower interest rate. Sized to 84% of purchase with no hold back requirement for interest reserve or capital expenditures, the loan carries a 12-month term, interest only payments at 8.5% and no prepayment penalty.

Advisors

Bryan Shaffer
Principal/Managing Director
Max Lehrman
Vice President
Ruben Bohbot
Assistant Vice President

SPEAKERS CORNER

Gary Tenzer, Principal/Co-Founder of George Smith Partners will be speaking at the Crocker Commercial Real Estate Symposium on Thursday, September 26th at the Jonathan Club in Downtown Los Angeles from 1:00 pm – 5:00 pm. For more information about the event and to register online, please visit CALAWYERS.ORG/REAL-PROPERTY-LAW


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HOT MONEY
Ground-Up Construction & Multi-Family Renovation Financing up to 85% LTC

George Smith Partners is working with a national capital provider funding ground-up construction and Multifamily renovation debt to 85% of cost. They offer flexible loan structures and terms up to 24 months for transactions from $500,000 to $10,000,000. The Lender has a strong appetite for Multifamily, Mixed-Use, Condos and Infill Subdivisions located in primary and secondary markets and they will fund foreign nationals. Pricing starts at 7.99% for Multifamily renovation loans and 8.49% for Ground-up construction loans.

More Hot Money ›

Pascale's Portrait
PASCALE'S PERSPECTIVE
Global Fears Recede but the Data is Turning

This week is the opposite of last week, headlines are better but economic reports are troubling.  This week has seen the British Parliament take a major step towards averting a chaotic “no-deal” Brexit and a Hong Kong withdraw of the controversial extradition proposal that caused massive protests.  This should have caused a “relief” selling of treasuries and higher yields.  The ISM Manufacturing index fell below 50% (contraction) for the first time in years.  Is this an aberration or are manufacturers pulling back in today’s volatile trade environment?  The next few manufacturing reports and anecdotal information will be closely watched.  The 10 year T is at 1.46%, just 10 bps above its all time low.  Inflation (or the lack thereof): last week’s PCE was 1.6%, well under the Fed’s 2.0% target; oil prices are dropping and may test the $50/per barrel key technical level.  This week’s employment report (Friday) will be closely watched on the heels of the poor ISM. 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 at (310) 867-2995 or taugust@gspartners.com


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