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FINfacts™ XXIV – No. 247 | December 9, 2020
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| Prime Rate |
 3.25% |
| 1 Month LIBOR |
 0.15% |
| 6 Month LIBOR |
0.25% |
| 5 Yr Swap |
0.48% |
| 10 Yr Swap |
0.96% |
| 5 Yr US Treasury |
0.41% |
| 10 Yr US Treasury |
0.94% |
| 30 Yr US Treasury |
1.69% |
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$29MM – Senior Construction Loan
Rate: L + 4.50% (4.95% floor)
Term: 36 months
Guaranty: Non-recourse
Fee: 1.00%
$11.7MM – Mezzanine Loan
Rate: 11.25%, fully accrued (this is huge in bringing down the effective cost of capital down)
Term: 36-month (with 18 months min. interest)
Fee: 1.00%
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Transaction Description:
George Smith Partners successfully placed the $40,700,000 construction financing, which funded up to 85% loan to project costs for the construction of a 170-unit apartment community located in a southern San Diego submarket. The financing structure included a senior construction loan up to 55% loan to cost and a mezzanine tranche up to 85% of total project costs. The non-recourse mezzanine tranche is structured on an accrual basis, further reducing the total economic impact of the mezzanine financing on the project. The full capital stack is non-recourse. Additionally, the capital partners gave credit for a lift in land value above the actual cost due to the Sponsors prior entitlement work and achieving approvals. While navigating these unprecedent times in the capital markets brought upon us by the COVID-19 Pandemic, GSP utilized our extensive experience, long-standing lender relationships, and capital markets creativity to achieve the Sponsors goals in order to break ground and deliver a much-needed product type in the market.
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Rate: 5.90% fixed
Term: 12 months
Amortization: Interest Only
Prepayment: Open
Guaranty: Non-Recourse
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Transaction Description:
George Smith Partners arranged $8,000,000 in non-recourse financing for the refinance of a vacant office building in Culver City which had just completed an extensive renovation into creative office. The Sponsor purchased the two-story building over 15 years ago as an owner-user. He invested significant capital to improve the building and create a modern creative office property that would appeal to creative office users in the technology and media industries attracted to Culver City. Prior to the pandemic, the Sponsor was negotiating with multiple tenants to occupy the building. These potential tenants paused on negotiations and the Sponsor had to quickly refinance his construction loan with a new bridge loan to allow him more time to lease-up.
GSP accomplished the Sponsor’s goal to refinance the existing loan with a facility that is pre-payable at any time. This facility allows the Sponsor to lease up the remaining vacant space and refinance with a long-term loan in the next 6-12 months and it also provides additional funds for tenant improvements. GSP was able to identify a local lending source that not only understood the market and demand for office space in Culver City but also understood the overall value of the Property.
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Rate: 3.75% for 7 Years
Amortization: 25 Years
DCR: 1.15 on Gross Income
LTV: 70%
Guaranty: Non-Recourse
Prepayment: Locked for three years then 4-3-2-1
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Transaction Description:
George Smith Partners placed the non-recourse cash-out refinance of a stand-alone CVS in a Dallas suburb. Our Capital Provider underwrote to a 1.15 DCR without any deductions (vacancy, capex) for the net-leased asset to an investment grade tenant. There were no impounds or tenant improvement reserves taken as the tenant pays all expenses directly on their 20-year lease. Amortized over 25 years, the seven-year term was locked at 3.75% without the requirement of a repayment guaranty.
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George Smith Partners is working with a nationwide bridge lender providing financing on cash-flowing including affordable housing, seniors housing, self-storage and all other major asset classes. Loans range from $10,000,000 to $100,000,000 and typical closing is 30 days. With the ability to advance up to 75% of value, the lender offers terms from 6-48 months, with extension options available and rates starting at 9%.
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Treasury yields dropped slightly and stock market rallies took a pause. Why? Critical negotiations on U.S. Covid relief in Washington and the UK/EU Brexit talks are both hitting stumbling blocks with deadlines for both looming this weekend. The 10 year T is at 0.93%. Last Friday’s November’s weaker than expected jobs report indicated a sputtering recovery with slowing job growth. The data combined with rising Covid caseloads/hospitalizations have added further urgency to Congressional and administration stimulus negotiations. It looks like they are kicking the can into next week with a 1 week government funding extension, creating a must pass date for next Friday, December 18. Congress will then recess for the year and a “no deal” would allow jobless benefits, student loan forgiveness, eviction moratoriums, Fed assistance programs and more to expire. The failure to act would also deprive the economy of badly needed stimulus.
“V-Day” in the UK this week: vaccinations have begun! The world saw the Pfizer vaccine being administered to elderly citizens of the UK this week. The U.S. FDA is expected to approve the Pfizer vaccine this week and shots could begin in the U.S. next week. The UCLA Anderson School Economic Forecast, “A Gloomy Winter Followed by An Exuberant Spring” was released today. It predicts a robust “service recovery” led by healthcare, restaurants, recreation, travel and accommodation in 2021. Analysts have estimated that U.S. consumers have about $1.3 trillion in excess savings built up during the 2020 pandemic. As most consumer goods have been available for purchase with the boom in e-commerce, the thinking is that there is big pent up demand for travel, entertainment, live events, etc. This can’t come soon enough for the beleaguered hotel and retail sectors. A look at hotel loan maturities shows over $20 billion of hotel loans maturing in 2021 (as opposed to about $8 billion this year and an average of $7 billion for 2022-2029. Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners
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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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Constellation Place
10250 Constellation Blvd., Ste. 2700
Los Angeles, CA 90067
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© 1999 - 2024 George Smith Partners, Inc. DRE # 00822654 FINfacts is an ePublication of George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
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