FINfacts™ XXIV – No. 194 | November 20, 2019

MARKET RATES
Prime Rate 4.75
1 Month LIBOR 1.72
6 Month LIBOR 1.91
5 Yr Swap 1.53
10 Yr Swap 1.65
5 Yr US Treasury 1.58
10 Yr US Treasury 1.71
30 Yr US Treasury 2.26

RECENT TRANSACTIONS
$8,350,000 in Non-Recourse Permanent Bank (non CMBS) Financing for a Medical Office with 86% Occupancy, 3.88% Fixed Rate; Tampa, FL

Rate: 3.88% Fixed as a result of a SWAP
Term: 7 Years
Amortization: 2 Years of Interest Only; Followed by 30 Years
LTV: 65%
Prepayment: None except for SWAP Breakage
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners secured $8,350,000 in non-recourse permanent bank financing for a 44,000 square foot medical office property in Tampa, Florida. Although the Property was only 86% leased at closing, the Sponsor required non-recourse, permanent financing from a portfolio lender and was not open to a CMBS execution. For tax purposes, the Sponsor also required a lender that would not require a new single purpose borrowing entity. After an extensive marketing effort, GSP sourced a bank lender that specializes in financing healthcare related properties. Sized to 65% of value, the 7-year execution carries a fixed rate of 3.88% as a result of a SWAP executed by the bank at application at no additional cost to the Sponsor. In addition to being non-recourse, the loan structure offers two years of interest only followed by a 30 year amortization (as opposed to a 25 year amortization, which is more common for a commercial, non-multifamily property). The loan carries no prepayment penalty apart from SWAP breakage.

Advisors

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

$8,250,000 Cash-Out Unentitled Land Loan Recap; Van Nuys, CA

Rate: P+4.0% w/10% Floor
Term: 12 months
Recourse: Carve-Outs Only
Fees: 1.0%
Prepayment: Six-month minimum yield; no exit fee: P+4.0% w/10% Floor

Transaction Description:

George Smith Partners placed a cash-out $8,250,000 non-recourse loan for the partnership recapitalization of an entitled parcel in Van Nuys which is located in the San Fernando Valley of Los Angeles, CA. The Sponsor has been working through the permitting process for residential development. GSP identified a non-institutional lender who underwrote the business plan assuming a sale to a related entity upon ready-to-issue (RTI) permits. Their exit will come in the form of the pre-arraigned Joint Venture funding and a to-be-identified construction lender. Excess proceeds were utilized to buy-out an LP investor and recapitalize the Borrower and carry costs through to RTI. The non-recourse loan will float for the 12-month term at Prime + 4.0%. There was no appraisal, or Phase I report required for funding.

Advisors

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

Cash-Out Refinance for 7-Unit Multifamily Property; North Hollywood, CA

Rate: 4.30%
Term: 7 Years Fixed, 30 Year Term
LTV: 65%
Amortization: 30 Years
Prepayment Penalty: 3, 2, 2, 1, 1 with nothing after the 5th year
Lender Fee: None

Transaction Description:

George Smith Partners successfully arranged a cash-out permanent refinance of a 7-unit multifamily property in North Hollywood, California. Loan proceeds were used to pay off the existing variable, higher interest rate loan and allow the Sponsor to obtain a lower interest, fixed rate loan. The equity also allowed the Sponsor to complete upgrades to the Property including roofing, flooring and various other deferred maintenance. GSP targeted a capital provider who is active in the multifamily segment and could maximize loan proceeds for the Sponsor in order to finish the Property upgrades.

Advisors

Reuven Risch
Vice President

SPEAKERS CORNER

Please join Gary Tenzer, Principal/Co-Founder of George Smith Partners at Connect Westside LA on Wednesday, December 4th.  Gary will moderate the discussion, Late-Cycle Financing: Navigating Capital, Interest Rates and Inflation In an Era of Uncertainty.
For more information, register here: connectconferences.com
Enter code: GEORGESMITH20 for 20% off registration


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HOT MONEY
Fixed Rate Capital for Land Loans

GSP is working with a capital provider that will provide recourse fixed rate financing to 65% of value for land financing, 75% of value for construction and 90% of value on build to suits and preleased properties. Loan sizes range from $5,000,000 to $20,000,000 for transactions located in California, Arizona, Nevada, and Washington. Fixed rate pricing starts at 9% for terms up to 3 years for all CRE types including residential construction and entitled land.

More Hot Money ›

SPECIAL ANNOUNCEMENT

GSP is proud to support Julie and Steve Bram as they are being honored by the American Jewish Committee of Los Angeles with the 2019 Ira E. Yellin Community Leadership Award on Sunday, November 24th at 11:30 am.

The AJC is the leading global Jewish advocacy organization, impacting opinion and policy on combating rising anti-Semitism and extremism, defending Israel’s place in the world, countering terrorism and extremism, and safeguarding the rights and freedoms of all people. Guest speakers are Rabbi Sarah Bassin of Temple Emanuel and Aziza Hasan of NewGround LA Muslim Jewish Partnership for Change.

For more information: http://links.ajcglobal.org/servlet/MailView?ms=NDI4MDUxNAS2&r=MTQ5NjkxOTA2NjMS1&j=ODgxMDQzODY3S0&mt=1&rt=0


Pascale's Portrait
PASCALE'S PERSPECTIVE
“Stay Positive” and Other Clues in the Fed Notes

Lot’s of talk (and tweets) lately about “going negative”, that the U.S. should consider negative interest rates just like Japan and Germany.  Today’s notes from last month’s Fed meeting indicated that the “benefits of negative rates abroad are mixed” and would create “significant complexity or distortions to the financial system”.  However, other esoteric tools for stimulus may be considered, such as a form of quantitative easing called “yield curve control” whereby the Fed sets an upper limit for short term treasury securities by purchasing enough of them to “cap” the yield.  This would be another large commitment to expanding the balance sheet as these purchases could be massive.  Speaking of the yield curve, the 10 year T is again dropping, today at 1.71% after hitting 1.95 11 days ago.  Negative news on the possible US China trade deal, now complicated by Hong Kong unrest.  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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