FINfacts™ XXIV – No. 238 | October 7, 2020

MARKET RATES
Prime Rate 3.25%
1 Month LIBOR 0.14%
6 Month LIBOR 0.27%
5 Yr Swap 0.42%
10 Yr Swap 0.80%
5 Yr US Treasury 0.34%
10 Yr US Treasury 0.78%
30 Yr US Treasury 1.60%

RECENT TRANSACTIONS
$54,075,000 Perm at 3.01%, 15-Year Fixed with Cash Out, for a 173-Unit, Multifamily; Ventura, CA

Rate: 3.01% Fixed (T+ 2.49%)
Term: 15 Years
Amortization: 30 Years with 7 Years I/O
LTV: 70%
Guaranty: Non-Recourse

Transaction Description:
George Smith Partners has secured $54,075,000 in permanent financing for a newly completed and leased, 173-unit, luxury resort-style multifamily community in the city of Ventura, CA. The loan is fixed for 15 years at 3.01% with interest-only payments for the first 7 years and with cash out above the construction loan.

Challenges:
When GSP was initially engaged in January the Project’s final phase had yet to receive its certificate of occupancy. While overall leasing had been strong, its current occupancy was about 60%. The state-mandated COVID-19 stay-at-home orders slowed new leasing activity throughout the Spring. When initially taking the financing proposal to market, GSP faced both the occupancy issue as well as a new-found, COVID-19, lender conservatism which negatively impacted the potential loan terms.

Solution:
GSP continued to work throughout the Summer to make lenders comfortable with the resiliency of the Ventura market, the Property’s quality, as well as the Sponsor’s strength and long-term experience in the market. By late Spring the leasing program regained its pre-Coronavirus lockdown pace. With improving capital markets, GSP was able to narrow the field to the one lender that would provide the optimal combination of loan proceeds, term and rate. Upon reaching 85% leasing the Sponsor executed an early rate lock to hedge against potential swings in the Treasury prior to close. This occurred upon reaching 95% occupancy.

Advisors

Gary M. Tenzer
Principal/Co-Founder
Antonio Hachem
Principal
John Choi
Assistant Vice President
Cornelius Baliukonis
Analyst
Wendy Wang
Vice President

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HOT MONEY
Non-Recourse Bridge Lender – Closed 5 Deals During COVID

George Smith Partners is working with a non-recourse capital provider who is actively funding bridge loans from $15,000,000 to $250,000,000. The portfolio lender will fund up to 85% of value with a focus on Residential (Condo/MF/Student), Retail, Office, Vacant Land and Hospitality properties in primary, secondary and tertiary markets nationwide. Rates start at 6.5%+ and terms up to four years, the program highlights include no prepayment and interest only. Decision making is flat, and they can close as fast as one week depending on deal structure.

More Hot Money ›

Pascale's Portrait
PASCALE'S PERSPECTIVE
Stimulus Roller Coaster, Markets Ride Along

The “must pass” stimulus has been rocked by conflicting messages as markets plunged yesterday on “no deal until after the election” talk followed by some optimism today. The familiar pattern played out this week. Federal Reserve bankers pleading with Congress that their monetary policy only goes so far and that fiscal policy is desperately needed. The bankers indicated that the June-July bounce back in hiring was “low hanging fruit” and that the remaining job losses may be long term or permanent. Disney, Regal Cinema and the airlines announce major job cuts in the last few weeks. It seems that the private sector is not ready to create jobs without assistance. The next week or two should be interesting.

Treasuries & Rates: After sitting in a tight range of about 0.65% for weeks, the 10 year T is at 0.78% today, a 4-month high. Why? Disappointment over the Fed’s September meeting minutes. As record deficits create huge supplies of treasuries, there has been some hiccups in long bond purchase volume. The Fed was expected to announce “yield curve control” measures soon, promising to keep 10 and 30 year rates within a desired range by purchasing enough treasuries to push the yield low enough. The minutes today showed that as of now, this is not the policy. So some selling occurred on that announcement and on today’s muted optimism for a stimulus deal. 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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