FINfacts™ XXIV – No. 253 | February 3, 2021

MARKET RATES
Prime Rate 3.25%
1 Month LIBOR 0.12%
6 Month LIBOR 0.22%
5 Yr Swap 0.58&
10 Yr Swap 1.19%
5 Yr US Treasury 0.46%
10 Yr US Treasury 1.13%
30 Yr US Treasury 1.92%

RECENT TRANSACTIONS
$83,000,000 Bridge Financing for Pre-Certificate of Occupancy 250-Unit Class-A Multifamily Development; San Fernando Valley region of Los Angeles, CA

Rate: L+500 until construction completion, reducing to L+450 thereafter
Term: 3-year with two 1-year extensions
Amortization: Interest only
LTV: 75.0%
LTC: 79.9%
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners secured an $83,000,000 senior bridge loan for the construction completion and lease up of a mixed-use community consisting of 250 multifamily units and 6,600 SF of ground-floor retail in the San Fernando Valley, just north of Los Angeles, CA. The non-recourse bridge financing carries a three-year term at LIBOR + 5.00%, reducing to LIBOR + 4.50% upon the Project’s receipt of Certificate of Occupancy.

The loan provides proceeds for construction completion – anticipated to complete in early 2021 – while allowing for an extended lease up period prior to stabilization. The strength and track record of the Sponsor, coupled with the centralized location within the San Fernando Valley, ensured that the Project would complete and stabilize as anticipated.

Advisors

Malcolm Davies
Principal/Managing Director
Zachary Streit
Senior Vice President
Alexander Rossinsky
Senior Vice President
Portrait Drew Sandler
Vice President
Aiden Moran
Vice President
Brandon Asherian
Assistant Vice President

$7,986,000 First Mortgage, 65% LTV, 2.9%, 10 Yr., Full Term I/O; West Los Angeles, CA

Rate: 2.9% Fixed
Term: 10 Years, Interest Only
LTV: 65%
Prepayment: Yield Maintenance
Lender Fee: .5%

Transaction Description:

George Smith Partners secured a $7,986,000 first mortgage at 65% LTV for a 23-unit multifamily property in West Los Angeles, CA. The loan is non-recourse and supplies significant cash-out proceeds, a low 2.9% 10-year fixed rate, and full-term interest-only payments. The financing replaced a bridge loan that was put in place to acquire the Property and complete significant upgrades including unit renovations, common area and exterior improvements, and conversion to solar power.

GSP started working on the refinancing in the Spring of 2020 at the height of the COVID-19 quarantine, while the property was still being renovated and released. GSP was able to persuade the Lender to underwrite income on a trailing one month basis rather than a trailing six month basis. This allowed the underwriter to include the higher income from the newly leased units. The loan application process began when the property was approximately 75% leased. The lender agreed to a forward rate lock at 85% occupancy and closed when the building reached 95% occupancy.

Advisors

Gary M. Tenzer
Principal/Co-Founder

90% LTV Acquisition Financing for 6-Unit Building; Beverly Grove Area of Los Angeles, CA

Blended Rate: 7.93%
Term: 12 Months
Amortization: Interest Only
LTV: 90%
Blended Loan Fee: 1.67%
Prepayment Penalty: None
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners secured $2,475,000 (90% Loan to Purchase Price) of senior and mezzanine financing for the acquisition of a 6-unit multifamily building in the Beverly Grove area of Los Angeles. The loans both have a 12-month term and are open to prepay at any time. The Sponsor plans to use the term to entitle the building for a potential future development. The non-recourse financing allowed for the Sponsor to contribute a minimal amount of equity into the purchase of the Property. The blended rate came out to 7.93% across the entire capital stack.

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


Pascale's Portrait
PASCALE'S PERSPECTIVE
2021 Lender Outlook “The Pendulum is Swinging”

Today, GSP kicked off our annual MBA meetings (via Zoom) with debt funds, banks, insurance companies, credit unions, CMBS originators, private equity funds and mortgage REITS. The message for 2021: lenders are flush with capital, 2021 real estate allocations are up, lots of capital chasing well underwritten transactions. After a year which included a near shutdown in capital markets for months and conservative underwriting, many lenders are taking an aggressive posture this year.

Vaccinations, a hope for the return to normal life, additional stimulus and continued Fed policy contribute to the optimism in the capital markets. Trends include: Life companies diversifying as they add debt fund originations to their core lending programs. Some are considering uncovered ground up construction loans in addition to the traditional construction perm combos.  Senior lenders allowing/encouraging sub debt to create high LTC capital stacks, banks ramping up construction programs shut down for much of 2020, more non traditional construction lenders, retail and hotel loans being considered (at the right leverage with a good story), floating rates dropping due to increased competition which is pushing originators to be more aggressive on LIBOR floors and tighter spreads. Bridge to bridge lending is available for properties needing more time/money to stabilize as Covid slowed down reposition timelines. Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith

More Perspectives ›

Are you interested in pursuing a career at George Smith Partners? Our open positions are listed below.

Please send your resume to careers@gspartners.com

  • Assistant Vice President – This position is accountable for financial analysis, underwriting initiatives, managing due diligence and various ad-hoc projects. The ideal candidate will possess 2-4 years of experience in commercial real estate, finance, investment banking, equity research, or banking with strong real estate financial modeling skills.

 

  • Marketing & Business Development Associate – The marketing and business development associate will join a fast growing team. Entrepreneurial self-starters with an interest for social media, digital marketing and a desire to solve our country’s housing needs will succeed in this position.

 

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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