FINfacts™ XXIV – No. 192 | November 6, 2019

MARKET RATES
Prime Rate 4.75
1 Month LIBOR 1.77
6 Month LIBOR 1.92
5 Yr Swap 1.61
10 Yr Swap 1.74
5 Yr US Treasury 1.63
10 Yr US Treasury 1.82
30 Yr US Treasury 2.32

RECENT TRANSACTIONS
$9,050,000 Non-Recourse Cash-Out Refinance for Two Retail Centers; Columbus, OH

Rate: 4.25% Fixed for 10 years
Term: 10 years
Amortization: 30 years
Prepayment Penalty: Defeasance
DCR: 1.30x
Interest Only: 12-months
Guarantee: Non-Recourse
Origination Fees: Par

Transaction Description:
George Smith Partners secured $9,050,000 for the non-recourse, cash-out refinance of two unanchored, multi-tenant retail centers in Columbus, Ohio. The two properties were cross-collateralized allowing the Borrower to benefit from securing a higher leverage loan. The permanent loan is fixed at 4.25% for ten years with 12 months of interest only and a defeasance prepayment penalty structure.

Challenges:
One of the retail centers had a tenant whose parent company was in bankruptcy proceedings and vacated their space during our loan process. The other retail center, which is newly developed, was in the process of lease up and had a few tenants not yet in occupancy prior to loan closing. The market had very few comparables to support our underwritten value of the Subject Property.

Solution:
GSP identified a capital source that understood the strength of the asset, location and the experience of the Sponsor. Based on these strengths and additional market support provided, the Lender was able to offer a cross-collateralized structure, which maximized proceeds at 73% LTV with 12 months of interest only payments. The Capital Provider was also able to fund the loan with a few tenants not in occupancy. This allowed the Sponsor to take advantage of today’s low interest rate environment and eliminate interest rate risk.

Advisors

Jonathan Lee
Principal/Managing Director
Shahin Yazdi
Principal/Managing Director
Olga Brandeis
Senior Vice President
David Stepanchak
Senior Vice President
Matthew Kirisits
Vice President
Paul Monsen
Vice President
Kyle Redmond
Analyst

High Leverage Custom Program for Quick Close Bridge Financing of Multi-Family Buildings; Los Angeles, CA

Blended Rate: 8.00%
Loan to Purchase Price: Up to 85% (83% on this transaction)
Term: 12 Months
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners arranged acquisition bridge financing for a value-add, multi-family property in Los Angeles, California. One of our more experienced multi-family owner/operators has become experienced in sourcing opportunities to quickly close on troubled multi-family properties. His ability to act quickly often allows him to become the chosen Buyer, purchasing these Properties at a large discount.

GSP worked with a local REIT to develop a program that includes a first and second mortgage of up to 85% of acquisition price. The loan is designed to provide the same surety of close as an all-cash buyer, with no appraisal needed and the ability to close as fast as 5 business days. The loan is non-recourse and has no prepayment penalty.

These loans are cheaper and easier than equity partners and allow the Sponsor to take advantage of smaller opportunities using very little cash. With less than $400,000 of equity, the Sponsor was able to purchase a $2,015,000 building. At close the Subject Property was worth close to $2,500,000, allowing the Sponsor to quickly flip the Property. This is the third time GSP has used this custom created loan program to procure financing for our client.

Advisors

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

Non-Recourse Acquisition & Predevelopment Land Loan; Coastal Orange County, California

Rate: 7.90% Fixed
Term: 12 Months
Amortization: Interest Only
Loan to Value: 60%
Lender Fee: 1.00%
Prepayment: Open Full Term
Guarantee: Non-Recourse

Transaction Description:

GSP arranged the $1,350,000 non-recourse first mortgage from a REIT to acquire two separate Target shadow-anchored outparcels totaling just over one acre. The Lender was comfortable with providing the acquisition financing due to the Borrower having previously entitled the land for a multi-tenant retail pad during the Borrower’s option period to purchase the land. The loan provides 12 months of bridge term while the Borrower pre-leases the project and finalizes construction drawings. Although the loan is non-recourse, the Lender did not require an appraisal or other third-party reports, nor did it require an interest or carry reserve although there is no in-place cash flow on either parcel. Sized to 60% of purchase price, the loan priced at 7.90% fixed for the 12-month loan duration.

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

SPEAKERS CORNER

Zack Streit, Senior Vice President at GSP will be moderating the panel discussion, “Financing Today’s Deals” on Tuesday, November 12th at the Salt Lake City Multifamily Interface Conference.

Click here for more information.


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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
“Meet The New Yield Curve, Same as the Old Yield Curve”

Remember all of the recent doom and gloom predictions and market volatility when the yield curve inverted back in August? The 2 year bond yield drifted above the 10 year yield. This traditional “recession predictor” caused large selloffs in equity markets and ironically drove long term bond yields down, further aggravating the inversion. After last week’s Fed cut and other stimulus, the effect has been to push short term bond rates below the 10 year. Note that, the Fed’s recent repo market liquidity injections involve buying short term T bills, driving those yields lower. On the long end, the 10 year yield has been rising due to, wait for it, stop me if you’ve heard this before, anticipation of a trade deal between China and the US (if only they could decide where to meet and whether to call it “Phase 1”). Today’s 2 year T closed at 1.61% and the 10 year T closed at 1.82%. 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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