FINfacts™ XXIV – No. 244 | November 18, 2020

MARKET RATES
Prime Rate 3.25%
1 Month LIBOR 0.15%
6 Month LIBOR 0.24%
5 Yr Swap 0.48%
10 Yr Swap 0.89%
5 Yr US Treasury 0.39%
10 Yr US Treasury 0.87%
30 Yr US Treasury 1.60%

RECENT TRANSACTIONS
$13,340,000 Acquisition/Bridge Loan for Six-Property Multifamily Portfolio; Long Beach, CA

Rate: LIBOR + 5.00%
Term: 3 Years
Amortization: Interest Only
Loan-to-Cost: 76%
Prepayment: 12 months
Loan Fee: 0.75% in / 0.75% exit

Transaction Description:

George Smith Partners identified a national balance sheet lender with an intimate knowledge of the submarket and arranged $13,340,000 in acquisition/bridge financing for the purchase and reposition of a six-property multifamily portfolio located in Long Beach, CA. The Sponsor placed the portfolio under contract during the COVID-19 pandemic.

The loan includes a future funding component in which interest is not charged on the holdback until funds are drawn. This Capital Provider also structured and capitalized an interest reserve to cover the shortfall of cash flow during repositions. The three-year bridge loan is interest only for 36 months and carries a floating rate of LIBOR + 5.00% and includes two extension options for up to a term of five years. Our Sponsor’s business plan included a strategy to sell specific assets during the hold period as allowed for by the favorably structured release provisions.

Advisors

Michael Anderson-Mitterling
Senior Vice President
Kyle Howerton
Senior Vice President
David Stepanchak
Senior Vice President
Olga Brandeis
Senior Vice President

$6,275,000 Bridge Financing for a 132-Unit Apartment Community; San Antonio, TX

Rate: 6.45% Fixed
Term: 3 Years
Amortization: Full Term Interest-Only
Loan-to-Value: 65%
Prepayment: 15 Months Minimum Interest Period
Loan Fee: 1% Origination Fee, 0.75% Exit Fee
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners placed a $6,275,000 bridge loan for the refinance of a Class-B 132-unit apartment community in San Antonio, TX. The loan is fixed at 6.45% for three years with full term interest-only payments. The term sheet was signed after the COVID-19 crisis and ensuing economic volatility. GSP identified a balance sheet lender with in-house loan servicing to work with the Sponsor throughout the reposition of the asset. The Property underwent a change in property management in the past few years and required some property maintenance in the reposition. GSP worked with the Client on the original acquisition bridge loan and had to re-evaluate the business plan once the market changed and occupancy dipped due to COVID-19.

 

Advisors

Steve Bram
Principal/Co-Founder
David R. Pascale, Jr.
Senior Vice President
Allison Higgins
Senior Vice President
Patrick O’Donnell
Vice President
Nick Rogers
Vice President

$4,700,000 Non-Recourse, Bridge Financing for Mid-Construction Apartment Project; Pico-Robertson Area of Los Angeles, CA

Rate: 5.90% Interest Only
Term: 1 + 1
LTC: 80%
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners arranged $4,700,000 in non-recourse, bridge financing for an 85% complete, 13-unit apartment project in the Pico-Robertson area of Los Angeles, CA. Despite marketing this deal as a construction take-out loan for an 85% complete project during the global pandemic, GSP successfully engaged a debt fund to take out the existing construction loan with additional funds to complete construction. The non-recourse bridge facility was priced at an interest-only rate of 5.90% with a 12-month term plus a 12-month extension option. Thanks to GSP’s long-standing relationship with this debt fund, we were able to close this transaction in just 8 business days.

Advisors

Bryan Shaffer
Principal/Managing Director
Ruben Bohbot
Vice President
Michael Smilove
Assistant Vice President

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HOT MONEY
Non-Recourse Financing with Rates Starting at 4%

George Smith Partners is working with a national private equity firm focused on debt and equity investment strategies. The capital provider will provide non-recourse, fixed rate financing starting at 4% with up to 80% of cost and terms up to 5 years for ground-up construction and construction completion on all asset types. Loan sizes go up to $500,000,000.

More Hot Money ›

Pascale's Portrait
PASCALE'S PERSPECTIVE
Treasury Yields and Markets React to Long and Short Term Covid News

Last week it was Pfizer and this week its Moderna: more positive news about the availability for a Covid vaccine. Pfizer is expected to apply for approval for emergency use of their vaccine as soon as this Friday, vaccinations will start this year. This hugely positive news is in contrast to the situation today: spikes in infections, hospitalizations and possible restrictions going into the holidays. Today’s announcement that the NY school system is closing and switching to remote learning rattled markets. The 10 year Treasury yield that nearly hit 1.00% last week dropped to as low as 0.84% today. Yesterday’s weaker than expected retail sales numbers also contributed to the drop in yield. The urgency of a “final” stimulus bill that can act as a bridge to the wide distribution of a vaccine is becoming apparent. Several cliffs loom at year end: federal unemployment insurance, student loan payment freeze, mortgage forbearance and eviction moratoriums. The hope now is for the lame duck congress to pass stimulus as part of the efforts to continue funding the government beyond December 11. 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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