FINfacts™ XXIV – No. 195 | November 27, 2019

MARKET RATES
Prime Rate 4.75
1 Month LIBOR 1.70
6 Month LIBOR 1.91
5 Yr Swap 1.57
10 Yr Swap 1.68
5 Yr US Treasury 1.62
10 Yr US Treasury 1.76
30 Yr US Treasury 2.18

INTRODUCTION

HAPPY THANKSGIVING!

May your holiday be joyful and filled with happiness.


RECENT TRANSACTIONS
$12,000,000 in Joint Venture Equity and $23,900,000 in Non-Recourse Construction Financing for a 185 –Single Family Build-To-Rent Community; Western U.S. Secondary Market

Rate: LIBOR+5.00%
Term: 3+1+1
Leverage: 64% LTC
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners successfully advised on $12,000,000 in joint venture equity financing and $23,900,000 in non-recourse senior construction financing for the ground-up development of a 185- home build-to-rent community. Single-family-for-rent communities are a newer asset class and this project was among the first in the market. These communities offer the experience of living in a single-family home with the ease and cost of living in an apartment building. The Sponsor expects the project to be well received as there are distinct competitive advantages over the existing apartment product in the market place for several reasons including the new construction, low density and both interior and exterior privacy.

Advisors

Malcolm Davies
Principal/Managing Director
Evan Kinne
Senior Vice President
Ed Steffelin
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

$7,167,000 Non-Recourse Cash-Out Refinance For Mixed Use Property; Los Angeles, CA

Rate: Fixed at 3.5% for 5 years then floats at 6 Month LIBOR + 3.25%
Term: 20 years
Amortization: 30 years
Prepay: 5,4,3,2,1
LTV: 65%
DCR: 1.2
Interest Only: 3 Years
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners secured $7,167,000 in non-recourse financing for a mixed use property with 46 residential units and 5,350 sf of ground floor retail space. The financing provides 65% leverage and is fixed at a rate of 3.50% for five years with three years of interest-only payments. Several challenges were encountered when discussing the transaction with capital providers. Since the Property is mixed use, extensive market comparable data was required to prove out the value of both the residential and retail portions. A different cap rate was applied to each component of the Property before summing the individual values. This process demonstrated that the Lender’s underwritten value was well supported. One of the retail spaces is occupied by a nightclub and several lenders declined the deal because of the high turnover rate with this type of tenant. GSP showed that the nightclub was in place for over 10 years and remains very popular to this day. Despite rates rising during the diligence process, the Lender held the rate even without a formal rate lock.

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
Kyle Redmond
Analyst

$2,800,000 Owner User Business Real Estate Loan and Line of Credit for Industrial Property; Los Angeles, CA

SENIOR
Rate: 3.9% Fixed for 15 Years
Amortization: 15 years self-liquidating
Fee: 1/4% /25bp
Prepayment: 3-3-2-2-1 open
LTV: 75%
DCR: 1.20

REVOLVER
Rate: Prime -1% or 3.75%
Amortization: Interest Only
LTV: 80%

Transaction Description:

George Smith Partners placed a structured senior and collateralized line of credit revolver in a cash-out execution for a business in Los Angeles. The first loan was structured to be self-liquidating over 15 years with a fixed rate of 3.90%. The $1,000,000 second trust deed is a true revolver that can be used as a check-book and has no limitations on uses. The second loan is priced at 3.75% (Prime minus 1%). Funds may be drawn down, re-paid and re-drawn without additional bank approval. There is no non-utilization fee. As the credit line is collateralized, there is no mandatory “clean-up” for funds outstanding over 12 months.

Advisors

Bryan Shaffer
Principal/Managing Director
Max Lehrman
Vice President
Ruben Bohbot
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
Seven-Year Fixed Rate Construction Financing w/Mini-Perm

George Smith Partners is working with a regional portfolio lender providing construction financing with a mini-perm for all product types ranging up to $55,000,000. With the ability to advance 65% of development cost, pricing starts at 3.0% for three, five-or seven-year terms with a step-down prepayment. Loans will float after the initial fixed rate term rather than face a loan maturity.

More Hot Money ›

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


WWW.GSPARTNERS.COM

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10250 Constellation Blvd., Ste. 2700
Los Angeles, CA 90067
Office 310.557.8336
Fax 310.557.1276
Email finfacts@finfacts.net
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