FINfacts™ XXIV – No. 246 | December 2, 2020

MARKET RATES
Prime Rate 3.25%
1 Month LIBOR 0.15%
6 Month LIBOR 0.26%
5 Yr Swap 0.49%
10 Yr Swap 0.95%
5 Yr US Treasury 0.42%
10 Yr US Treasury 0.95%
30 Yr US Treasury 1.70%

RECENT TRANSACTIONS
$18,880,000 Cash-Out Refinance at 3.03% Fixed, Interest-Only on a 192-Unit Multifamily; Western US
Building

Rate: 3.03% Fixed
Term: 15 Years
Amortization: Full Term Interest-Only
LTV: 55%
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners successfully arranged $18,880,000 in permanent financing for a 192-unit multifamily community. The loan is fixed for 15 years at 3.03% with interest-only payments for the entire term and significant cash-out proceeds. Despite the severe impacts of the COVID-19 pandemic throughout the spring and summer, the Property was able to remain above 95% occupancy with minimal declines in rent collections. GSP capitalized on the Property’s quality, market resiliency, strength of the Sponsor and low leverage to attract quality offers from several lenders.

Advisors

Antonio Hachem
Principal
John Choi
Vice President
Wendy Wang
Vice President
Cornelius Baliukonis
Analyst

$14,050,000 Acquisition and Reposition Financing, 89% LTC (4.90% blended coupon) on a 79-Unit, Mixed-Use Apartment and Retail Project; St. Louis City, Missouri
Building

Rate: 4.90%
Term: 36-months with one, 12-month extension option
Amortization: 24-months interest only, 25-year amortization thereafter
LTC: 89%
Prepayment: None
Guaranty: Full repayment guarantee (on senior loan only; does not apply to the non-recourse preferred equity investment)
Lender Fee: 50bps

Transaction Description:

George Smith Partners successfully placed $14,050,000 in construction financing, which funded 89% of total project cost, for the acquisition and reposition of a 79-unit, mixed-use property in a desirable and historic St. Louis City neighborhood. GSP was engaged by the Borrower when its original lender, a national REIT, was forced to re-trade the Borrower on loan terms due to the COVID-19 pandemic. Upon being engaged, GSP was able to source the replacement debt and equity in time to close the transaction without a material delay. The financing structure included a senior loan to 81% loan-to-cost and a preferred equity investment with last-dollar exposure to 89% of total project cost with a 4.90% blended cost of capital. GSP leveraged its expertise of the St. Louis market, long-standing lender relationships, and capital markets creativity to achieve the Borrower’s goals of minimizing cash equity invested into the Project so that it can keep a substantial cash reserve to pursue additional projects which are expected to present themselves during the COVID-19 pandemic.

Advisors

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

70% LTC Construction Loan for 11-Unit Apartment Building; Los Angeles, CA
Building

Rate: Prime +1%, with a floor of 5%
Construction Term: 18 months + 6-month option to extend
Mini-perm Option: 5-year treasury + 2.25% with a 3.50% floor
LTC: 70%
LTV: 58%

Transaction Description:

George Smith Partners arranged $2,580,000 in construction financing for a ground up development project in Los Angeles, California. The construction loan floats at a rate of Prime + 1%. The 70% loan-to-cost construction loan also comes with the option to convert to a 5-year mini-perm loan upon completion based on the 5-year treasury plus a margin of 2.25%, with a 3.50% floor, eliminating any future financial risks. GSP sourced a lender during the COVID-19 pandemic that was able to move efficiently and most importantly accommodate the Borrower’s development timeline and experience.

Advisors

Reuven Risch
Vice President

SPEAKERS CORNER

WEBINAR: Identifying Post-COVID Opportunities in CRE

Friday, December 11, 2020 | 12:30 PT

Panelists: Tucker Hughes | Peregren Capital Group & Eric Sussman | Clear Capital, LLC and Adjunct Professor at UCLA Anderson School of Management
Moderators: Evan Kinne | George Smith Partners & Ed Steffelin | George Smith Partners

REGISTER HERE: https://zoom.us/webinar/register/WN_FV7IeoALSqGEENxtq36CPA


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HOT MONEY
Non-Recourse Multifamily Financing Starting at 3.35%

George Smith Partners is working with a capital provider offering fixed rate financing for the purchase and refinance of industrial, office and retail properties in California, Nevada and Hawaii up to $20,000,000. With terms up to 10 years, this portfolio lender offers hybrid adjustable rate loans with fixed initial terms followed by an adjustable rate for the remaining life of the loan. Loan servicing is done in-house. A 60-Day rate lock is also available with a deposit and delivery of a fully executed rate lock agreement.

For multifamily properties, the lender offers rates starting at 3.35%, 4,3,2,1 prepayment, 1.20x DSCR and 65% LTV for the five-year term. Seven-year loan maturities are also an option. The Lender will utilize the COVID payment reserve to make the monthly mortgage payments for the first 12 months of the loan term until the reserve account is fully exhausted. Unlike agency debt, there is no duplication of debt service payments.

More Hot Money ›

Pascale's Portrait
PASCALE'S PERSPECTIVE
Vaccine Optimism, Covid Surge, Stimulus Endgame

Britain’s approval of the Pfizer vaccine means that shots will be given within days. The US is expected to approve vaccines by Pfizer by December 10 and Moderna by December 17, with shots being given by December 20. This optimism is tempered by record numbers of infections and hospitalizations nationwide going into winter. US officials indicate that 100 million Americans will be vaccinated by March 1, with over 70% of the population Congress is scheduled to adjourn for the year after December 11. The spikes in infections combined with the expiration of unemployment benefits and eviction moratoriums on December 31 is putting enormous pressure on Congress to finally pass another stimulus bill. Today, lots of optimism after months of failed attempts: a group of senators is circulating a $900 billion package that has bipartisan and bicameral support. Hopes are high but nothing is certain. The 10 year treasury hit 0.92% today. Stimulus and 2021 recovery hopes are contributing to the long term optimism. The Federal Reserve has indicated they will do everything in their toolbox to keep interest rates low. In order to assure low rates going into 2021, the Fed is expected to announce adjustments in their bond buying, which is now at $120 billion per month. The central bank is considering increasing their purchases of 10 year Treasuries, which will keep yields low going into 2021. Commercial real estate capital markets and borrowers will benefit from this policy. 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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