FINfacts™ XXIV – No. 200 | January 15, 2020

MARKET RATES
Prime Rate 4.75
1 Month LIBOR 1.67
6 Month LIBOR 1.86
5 Yr Swap 1.62
10 Yr Swap 1.76
5 Yr US Treasury 1.60
10 Yr US Treasury 1.79
30 Yr US Treasury 2.23

RECENT TRANSACTIONS
$51,750,000 Senior Construction Financing & $16,200,000 Mezzanine Debt Placement for the Development of a Grocery Anchored Shopping Center; Kona, Hawaii

All Terms Confidential

Transaction Description:

George Smith Partners advised on the placement of $51,750,000 and $16,200,000 Senior Debt and Mezzanine debt respectively for the ground-up development of an institutional quality 204,275 SF outdoor shopping center that will be located along Kuakini Highway, one of the island’s most trafficked thoroughfares. The Property, which sits on a rare fee-simple 20-acre site, will provide patrons with easy access to both Henry Street and Palani Road and over 700 parking spaces (representing a parking ratio of 4:1,000 SF).

Challenges:

Although the Sponsors who partnered with a major life company, had extensive prior career experience in the field of commercial real estate development, the Project represented the Sponsor’s largest development to date. The development of the Project had already commenced adding another layer of complexity to the transaction.

Solutions:

GSP focused on the lack of new retail development on Kona and specifically the anchor tenant’s commitment to relocate their store from an adjacent shopping center (less than 0.50 miles). In addition, GSP was able to convey to capital sources the immense value of the fee simple ownership of the site – a rare occurrence in Hawaii where most land is leased from the State. Ultimately GSP was able to identify two lenders who not only understood the value of the fee simple ownership of the site but also understood the lack of new retail space and the subsequent demand.

Advisors

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

$5,000,000 Refinance of a Multi-Tenant Automotive Service Retail Center; Valencia, CA

Rate: 3.80% Fixed; Adjusts every 5th year
Term: 30 Years
Amortization: 30 Years
LTV: 56%
Recourse: Partial

Transaction Description:

George Smith Partners successfully secured a $5,000,000 permanent refinance of a three-building, 8-unit, 20,000 square foot automotive service retail center on a 2-acre parcel in Valencia, CA. The Sponsor had purchased the Property in an all cash transaction in 2019 via 1031 Exchange and wished to recapitalize with a long-term fixed rate loan. GSP leveraged its expertise and strong relationship with a capital provider to execute a low fixed-rate, 30-year fully amortized, partial-recourse, permanent loan. Most importantly, there were no-post closing covenants, including occupancy, which was especially attractive to the Sponsor due to the shorter terms and automotive/specialty related tenancy. GSP was able to get the Capital Provider comfortable with the asset due to its strategic location in the heart of the auto-dealerships corridor, which makes this location quite attractive to businesses in the auto service space.

Advisors

Antonio Hachem
Principal
Wendy Wang
Vice President
John Choi
Assistant Vice President

$3,500,000 in Permanent Financing at 3.28% for Southern California Shopping Center: Oxnard, CA

Rate: 3.28% Fixed
Term: 8 years
Amortization: 30 Years
Loan-to-Value: 32%
Guarantee: Non-Recourse
Prepayment: Stepdown Prepayment (5%, 5%, 4%, 4%, 3%, 2%, 1%, 1%)

Transaction Description:

George Smith Partners secured a $3,500,000 of non-recourse bank loan to refinance a 21,000 SF shopping center shadow-anchored by a Lowe’s (NAP). The 100% occupied center consists of 4 buildings, 7 tenants, and is located in Oxnard. Tenants are a strong mix of national and regional tenants and includes one longtime local business. GSP worked with a lender that structured the loan term to be coterminous with the loan term of the Lowe’s. This allows the sponsor to have maximum optionality at loan maturity. The new financing lowered the interest rate from 5.10% to 3.28%. The fixed-rate loan was rate locked shortly after application, allowing plenty of time to collect SNDAs and Estoppels. The loan allows sponsor to pay down the balance by 5% in any given year without penalty and features a step-down prepayment.

Advisors

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

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HOT MONEY
Non-Recourse & Recourse Permanent Financing up to 90% LTV

George Smith Partners is currently placing non-recourse small balance financing for owner occupied and investment properties. For owner occupied properties, this lender offers 80% LTV on conventional financing up to $5,000,000 and up to 90% LTV with an SBA 504 loan up to $10,000,000. For investment properties including industrial and office buildings, retail properties, warehouses and multifamily/apartment buildings, their commercial loan programs can provide up to $3,000,000 in financing with 75% LTV. The Lender waives loan fees on new deals.

More Hot Money ›

Pascale's Portrait
PASCALE'S PERSPECTIVE
China Trade Deal Signed, But Uncertainty Remains

After two years of uncertainty that roiled stock and bond markets, the Phase 1 trade deal has been signed. Now the details are being parsed. Market reaction is basically a “relief rally” as the week to week uncertainty and tensions between U.S. and China have lessened. However, tariffs will remain in place subject to a Phase 2 agreement after the November election. The initial agreement mostly requires China to buy U.S. goods and services (some uncertainty remains whether China can perform on those purchases). This should remove a source of market volatility in 2020 and should be favorable for credit spreads. Treasuries and equity markets rallied with the 10 year Treasury closing at 1.78%. The first CPI and PPI reports of 2020 indicate (surprise) extremely low inflation pressures. 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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