FINfacts™ XXIV – No. 186 | September 25, 2019

MARKET RATES
Prime Rate 5.00
1 Month LIBOR 2.05
6 Month LIBOR 2.06
5 Yr Swap 1.53
10 Yr Swap 1.59
5 Yr US Treasury 1.61
10 Yr US Treasury 1.73
30 Yr US Treasury 2.09

RECENT TRANSACTIONS
$14,000,000 in JV Opportunity Zone Equity Financing and $23,000,000 in Non-Recourse Construction Financing for the Development of a 127 Unit Multifamily Property; Vancouver, WA

Rate: Floating at 1 Month LIBOR + 3.65%
Term: 3 Years with Two (1) Year Extensions
Construction Loan LTC: 60%
Amortization: Interest Only
Guaranty: Non Recourse

Transaction Description:

George Smith Partners advised on $14,000,000 in Joint Venture QOZ (Qualified Opportunity Zone) Equity Financing and $23,000,000 in non-recourse senior construction financing for the ground-up development of a 127 unit multifamily property in Vancouver, Washington, a suburb of Portland, Oregon. The Property sits across the street from the Vancouver Waterfront, which is undergoing a $1.5B dollar public/private master plan redevelopment. The 6-story, 173,000 square foot property will feature a landscaped third floor courtyard, a community room, balconies, two levels of parking, bike storage and excellent views of the Columbia River and Mount Hood.

Challenges:

Due to of the Project’s location in a QOZ, the Sponsor sought a QOZ financing partner who had the ability to place capital for the required 10-year horizon as per the QOZ guidelines. Moreover, many capital sources also expressed reservations related to supply concerns in the greater Portland market.

Solutions:

GSP focused on the Vancouver submarket’s strengths, including very limited new supply in contrast to downtown Portland, no state income tax, the more relaxed lifestyle, the proximity to PDX airport, and the Project’s location in very close proximity to the waterfront. Additionally, GSP highlighted the Sponsor’s ability to execute by showcasing its recent Class A multifamily delivery in Vancouver that fielded a large number of offers and traded at a record low cap rate. Ultimately, an opportunity zone JV Equity financing partner was selected who recognized the strength of the location and Sponsor’s best-in-class development history. These attributes also resulted in GSP securing non-recourse construction financing at 60% loan to cost with an interest rate of 1 Month Libor + 3.65%.

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

Low Debt Yield, 3.77% Coupon Permanent Financing for the Acquisition of a Recently Developed Grocery-Anchored Retail Center; FL

Rate: 3.77%, Fixed
Term: 10 years
Amortization: Full Term Interest-Only
Loan to Value: 65%
Prepayment: Defeasance
Lender Fee: None

George Smith Partners successfully placed $14,690,000 in non-recourse, ten-year fixed rate first mortgage debt for the acquisition of an approximately 54,000 square foot, 96% occupied, recently developed retail center in Western Florida. An investment-grade grocery anchor on a newly signed long-term lease comprises approximately 75% of the collateral. The anchor has no sales history at the Property and is not required to report sales going forward. GSP sourced a lender to provide full term non-recourse Interest-Only financing subject to a low 7.35% debt yield. The 65% leverage loan has a 3.77% fixed coupon over the ten-year 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

$6,086,000 Non-Recourse Refinance Loan for Multifamily Property; Seattle Area, WA

Rate: Fixed at 4.04% for 10 years then floats at LIBOR + 3.25%
Term: 20 years
Amortization: 5 yrs Interest Only, then 30 years
Prepay: Stepdown
LTV: 70%
DCR: 1.2
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners secured a $6,086,000 non-recourse refinance loan for a 43-unit multifamily property in the greater Seattle area. The loan provided 70% leverage and is fixed at 4.04% for ten years. The collateral for the new loan excluded a free-standing building that was part of the original purchase, which gives the Owners an option to redevelop that parcel. Over the past several years, the Borrower has completely renovated the exterior of the Property and turned about one quarter of the units. The Lender gave the Borrower maximum credit for the higher rents on the newly refurbished units without requiring any seasoning. Additionally, the Lender did not apply a loan-to-cost constraint, which allowed the Borrower to receive a significant amount of cash-out from the refinance. The Lender also provided 5 years of Interest Only payments. Net operating income was underwritten at the actual note rate, resulting in higher proceeds than what other lenders were offering. The loan closed on the same day that the prepay on the existing loan dropped to 0%.

Advisors

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

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HOT MONEY
Non-Recourse Multifamily Bridge Financing to 80% LTC

George Smith Partners is working with a national capital provider funding non-recourse bridge debt to 80% of total cost. True proforma based underwriting with a strong appetite for Multifamily and Mixed- Use properties (up to 100+units) with no in-place cash flow requirements. The Lender offers flexible loan structures with interest only terms up to 3 years for transactions up to $15,000,000. Risk adjusted, fixed rate pricing starts at 6.75%, fixed for the life of the loan with no extension fees. Closing costs including lender legal are less than $2000.

More Hot Money ›

Pascale's Portrait
PASCALE'S PERSPECTIVE
Markets Shrug off Politics, Concentrates on Trade

What a difference a day makes. Yesterday, the combination of a weak consumer confidence report, the potential opening of impeachment hearings and US/China trade uncertainty (the cancelling of the Chinese delegation’s farm tour) caused investors to run into safe assets. The 10 year T dropped to 1.63%. The consumer weakness is especially significant: in recent months manufacturing and corporate investment has been lagging due to trade uncertainty while US consumer activity has been the critical bright spot. With holiday shopping season almost upon us (doesn’t it get earlier every year?), consumer behavior will be critical and closely watched. Today, all that was in the rear view mirror. This morning the markets were seemingly unconcerned about developments in Washington. Instead investors were concentrating on indications that a trade deal is (again) close at hand with news of imminent agricultural purchases of US farm products by China.  The 10 year T jumped to 1.74% as stocks rallied. At GSP we are seeing a glut of fixed rate loan requests as borrowers are rushing to lock in historically low rates. 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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