FINfacts™ XXIV – No. 221 | June 10, 2020

MARKET RATES
Prime Rate 3.25%
1 Month LIBOR 0.19%
6 Month LIBOR 0.48%
5 Yr Swap 0.44%
10 Yr Swap 0.78%
5 Yr US Treasury 0.32%
10 Yr US Treasury 0.73%
30 Yr US Treasury 1.51%

RECENT TRANSACTIONS
$28,500,000 Land Loan for a Mixed-Use Multifamily Development Site

All Terms Confidential

Transaction Description:

George Smith Partners arranged a $28,500,000 non-recourse bridge loan for the land acquisition and predevelopment of a large TOD site with the potential to accommodate more than 900 units. The financing facility was secured on behalf of best-in-class sponsor LaTerra Development, relating to its planned mixed-use multifamily development project. In the midst of unprecedented market uncertainty, GSP leveraged its network to identify land lenders who were still active in today’s environment and could provide certainty of execution. No appraisal was required for funding.

Advisors

Malcolm Davies
Principal/Managing Director
Zachary Streit
Senior Vice President
Annah Blanton
Vice President
Alexander Rossinsky
Senior Vice President
Aiden Moran
Assistant Vice President
Maxwell Shedlosky
Assistant Vice President
Brandon Asherian
Assistant Vice President

$6,790,000 Permanent Cash Out Financings for Walgreens and Jack in the Box; Murrieta, CA

Rate: 2.87% Fixed
Term: 5 Years
Amortization: 30 Years
Combined LTV: 65%
Prepayment: 3,2,2,1,0
Guaranty: Carve-outs to entity, no warm body

Transaction Description:

George Smith Partners arranged two loans totaling $6,790,000 in permanent financing with over $1,500,000 cash out for a freestanding Walgreens and Jack in the Box located in Antelope Square Shopping Center in Murrieta, California. Both loans are fixed for 5 years at 2.87%, which is one of the lowest fixed rate financings ever closed by GSP. Just as GSP went into application the impacts of Covid-19 resulted in Jack in the Box ceasing rent payments and many capital providers putting a pause on new deals. GSP was able to negotiate a high leverage, cash out refinance with no warm body for carve-outs. The Sponsor also agreed to hold back principal and interest reserves on the Jack in the Box.

Advisors

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

SPEAKERS CORNER

If you missed any of our webinars/podcasts/short videos, below are links to the recordings.


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HOT MONEY
Fixed Rate Non-Recourse SFR/Condo/Multifamily Portfolio Financing Starting at 5.15%

George Smith Partners identified a national capital provider funding non-recourse, LIBOR-based fixed rate financing for the acquisition and refinance of stabilized residential rental properties. The lender will consider SFR, Townhomes, 2-4 Family, Condominium units and Multifamily properties. With financing starting at $1,000,000, rates starting at 5.15% and term options at 5 or 10-years balloon, the lender can close 30-45 days from an executed term sheet.

More Hot Money ›

Pascale's Portrait
PASCALE'S PERSPECTIVE
We’re Not Even Thinking About Thinking About Raising Rates

These emphatic words from Fed Chair Powell today along with a “dot plot” showing no rate increases until after 2022 indicate the level of commitment from the central bank to stabilize the economy. This will create an unprecedented extended era of near zero rates that span from December 2008 and continue until 2023, with the exception of Dec 2015 to March 2020. Between the zero rates, trillion dollar annual deficit spending, and the explosion in the money supply, the fact that these measures aren’t spurring inflation or higher borrowing costs is astounding and goes against all 20th century economic theory. Last week’s blockbuster positive employment report was encouraging and briefly led to a spike in Treasury yields. Powell noted it as a single data point and reminded us that we have a long way to go. The Fed predicted an economic contraction this year of 5 to 10% and unemployment at year end of 9%. Last Friday’s Treasury yield increase was a product of the bullish jobs report and some uncertainty about the Fed’s rate of treasury purchases. Note that the Fed was purchasing over $300 billion per day (!) during the panic week of March 24-27, and then slowed to as low as $2-3 billion per day. Today they announced that bond buying will continue at the rate of $80 billion per month of Treasuries and $40 billion of MBS. Ex Fed President William Dudley predicts these measures will expand the Fed’s balance sheet to over $10 Trillion (remember that the “normal” balance sheet level for the Fed, pre-2008 was considered to be just under $1 Trillion). These assurances brought the 10 year T down to 0.74%. The calls within the Fed to institute “yield curve control” are growing stronger, but for the shorter maturities. The thought is that the longer end of the curve is more difficult to control and there is some hazard in trying to control the 10 and 30 year maturities. With risk spreads tightening and lenders picking and choosing “winners” among the product types and markets (no hotel, yes multifamily, etc.), borrowers can lock in historically low rates. 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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