FINfacts™ XXIV – No. 201 | January 22, 2020

MARKET RATES
Prime Rate 4.75
1 Month LIBOR 1.66
6 Month LIBOR 1.83
5 Yr Swap 1.59
10 Yr Swap 1.72
5 Yr US Treasury 1.57
10 Yr US Treasury 1.77
30 Yr US Treasury 2.20

RECENT TRANSACTIONS
$16,000,000 Non-Recourse Bridge Financing for an Office Building; Brea, CA

Rate: 5.90%
Term: 12 Months + Two 6-month extensions
Amortization: Interest Only
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners arranged $16,000,000 in non-recourse financing to refinance and provide cash-out on a 119,000 SF Class-B office building located in Brea, CA, off one of the most densely trafficked business arteries in the area. The Property, built-in 1982, has been well maintained and has historically achieved above-market occupancy. The Sponsor’s goal was to refinance the existing loan with a facility that included a cash-out component to bolster the partnership’s returns. This facility allows the Sponsor to lease up the remaining vacant space and exit the investment through a sale to a third party in the next 6-8 months, all the while returning significant equity to the Sponsors today.

GSP focused on the extensive history of strong market demand in the Brea/Orange County market and was able to explain to capital sources the Property’s history of near full occupancy. GSP was able to identify a local lending source that not only understood the market and demand for office space in greater Orange County, but also understood the overall value of the Property and the subsequent loan that was procured.

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

$10,500,000 Acquisition Bridge Loan For 71-Unit, Multifamily Property; Floating at LIBOR + 2.75%; Seattle, WA

Rate: Floating at LIBOR + 2.75%
LIBOR Floor: 1.25%
Term: 3+1+1
Amortization: Interest Only
Debt Yield In/Out: 5.5%/7.5%
LTC: 75%
Fee In/Out: 1%/0%
Cash Management: Springing
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners secured a $10,500,000 acquisition bridge loan for a 71-unit multifamily property in the greater Seattle area. The loan provides 75% LTC and floats at a rate of LIBOR + 2.75% for a 3-year term. Proceeds are structured as $8,462,000 in initial funding plus holdbacks for interest reserve and capital expenditures.

When speaking with capital providers, GSP encountered several challenges. The Property is in a submarket about 10 miles south of Downtown Seattle that has yet to experience significant redevelopment. The Seller made limited investments in the Property upkeep in recent years resulting in a significant amount of deferred maintenance. Because of this, the Property showed poorly on-site tours with prospective lenders.

The selected lender was comfortable with the strength of the Sponsorship and was able to provide 75% LTC at a competitive interest rate. Although LIBOR was about 1.75% on the day of close, GSP negotiated a LIBOR floor of 1.25%. This could be very advantageous for the borrower since the forward LIBOR curve is downward sloping. In order to prove out the proforma market rents, GSP provided examples of several other properties the Sponsor had successfully completed in the area. The Sponsor also provided a very detailed exterior renovation budget that will enhance the appearance and amenities of the Property. The Lender also had true springing cash management. This means that the Borrower did not have to open an account at close and retains full control over the cash flow. The Lender allowed pre-negotiated loan docs that the Borrower had used for a similar transaction. The loan closed in about 45 days even with the end of year holidays.

Advisors

Shahin Yazdi
Principal/Managing Director
Jonathan Lee
Principal/Managing Director
Matthew Kirisits
Vice President
Kyle Redmond
Analyst
Paul Monsen
Vice President

$4,480,000 Non-Recourse, 80% LTV, Quick-Close Refinance of a 148-Unit Multifamily Asset; Cincinnati, OH

Rate: Floating One-Month LIBOR + 4.25% (6.00% all-in coupon) for 24 months
Term: Two years
Amortization: Interest only
Prepayment Penalty: Nine months minimum interest
LTV: 80%
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners secured a $4,480,000 non-recourse, 80% LTV, quick-close refinance of a 148-unit workforce multifamily property in suburban Cincinnati, Ohio for out of state borrowers. The loan was structured, approved, and funded within a three-week period. The financing resolved an impending loan maturity for the Sponsor while providing flexibility to roll into a permanent take-out loan after seasoning the Property’s cash flow with minimal friction cost. The balance sheet facility was underwritten to 80% of value at a floating rate of the 1-Month LIBOR plus a spread of 4.25% for an all-in coupon of 6.00%.

Advisors

Gary E. Mozer
Principal/Co-Founder
Michael Anderson-Mitterling
Senior Vice President
Kyle Howerton
Senior Vice President

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HOT MONEY
Permanent Construction Takeout Financing Prior to Lease-up

George Smith Partners is working with a national portfolio lender providing construction loan take-out permanent programs for all product types ranging up to $65,000,000 in primary and secondary markets prior to stabilization. With the ability to advance 75% of development cost, pricing starts at 3.50% for terms from five to ten years and the program offers a flexible stepdown prepayment. This lender offers true non-recourse and carve outs to an entity and not a warm body.

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


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