FINfacts™ XXIV – No. 256 | February 24, 2021

MARKET RATES
Prime Rate 3.25%
1 Month LIBOR 0.12%
6 Month LIBOR 0.20%
5 Yr Swap 0.74%
10 Yr Swap 1.45%
5 Yr US Treasury 0.60%
10 Yr US Treasury 1.38%
30 Yr US Treasury 2.23%

RECENT TRANSACTIONS
$15,800,000 Cash-Out Permanent Financing for a 47-Unit Multifamily Property, Fixed at 3.01% for 10 Years; Torrance, CA

Rate: 3.01%
Term: 10 Years
LTV: 65%
Amortization: Seven Years Interest Only; 30-Year Amort Thereafter
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners arranged $15,800,000 in permanent financing secured by a 47-unit garden-style, multifamily property located in Torrance, CA. The non-recourse loan carries a 3.01% fixed rate for 10 years with 7-years of interest only payments. The recapitalization provided significant cash-out to the Sponsor and reduced their previous interest rate considerably.

The Property had recently undergone an extensive renovation program and had limited seasoning on the new, higher rental rates achieved on the repositioned units. The Property did however, maintain stable occupancy and collections throughout 2020 despite COVID-19 regulations in California allowing tenants to defer rent payments.

Amidst a time of market volatility and economic uncertainty, GSP was able to leverage market interest to secure the most competitive terms available by focusing on the desirable location as well as the Sponsor’s track record and familiarity with the asset.

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

$5,800,000 Single Tenant Office with Early Termination Option; Milwaukee, WI

Rate: 3.625% fixed
Term: 10 Years
Amortization: 25 Years
LTV: 70%
DCR: 1.20
Loan Fee: 1 Point
Reserves: None
Impounds: None
Prepayment Penalty: None
Recourse: Repayment Guarantee

Transaction Description:

George Smith Partners placed the cash-in refinance of a net-leased single tenant office building located in a secondary Milwaukee metro-market. Although currently leased to one user, the asset is easily divisible should the tenant choose to exercise their early termination clause in 18 months. Our Portfolio Capital Provider mitigated this event risk in two ways. First, by underwriting the need of the current tenant to operate from this specific single tenant building and second, our Sponsors’ 15% additional capital contribution at close. A personal repayment guarantee was used in place of all escrows, reserves, cash flow sweeps and hold-backs. The tenant continued to operate from this location in a reduced capacity throughout Covid. The 10-year term is fixed at 3.625% and amortizes over 25 years. The net-lease was underwritten to preclude any tax or insurance impounds while this tenant is in occupancy.

Advisors

David Stepanchak
Senior Vice President
Olga Brandeis
Senior Vice President
Kyle Howerton
Senior Vice President
Portrait Michael Anderson-Mitterling
Senior Vice President
Portrait Saman Yazdi
Analyst
Portrait Robert Gallagher
Analyst

Refinance Loan for Multi-Tenant Office Property; Fixed at 3.80%; Non-Recourse; West Hollywood, CA

Rate: 3.80% fixed
Term: 5 yrs
Reserve: No payment reserve
Amortization: 30 years
Prepayment Penalty: 3,2,1
LTV: 40%
Guarantee: Non-Recourse
DCR: 1.30x

Transaction Description:

George Smith Partners secured a refinance loan for a three-story office building located on the Sunset Strip in West Hollywood. The loan is fixed at 3.8% and has a stepdown prepay that becomes 0% after 3 years.

The Sponsor is holding the Property for redevelopment and required a flexible loan with a low interest rate. The Property receives more than half of its income from a cell tower site and a rooftop billboard. Most lenders would not include this income because the leases have cancellation clauses, but the selected Lender agreed to include it. They also provided a prepayment structure that aligns with the timing of the Sponsor’s business plan. As a result, the loan can be paid off with no prepayment penalty once entitlements are secured for the redevelopment project.

Advisors

Jonathan Lee
Principal/Managing Director
Shahin Yazdi
Principal/Managing Director
Jarod King
Senior Vice President
Matthew Kirisits
Vice President
Paul Monsen
Vice President
Kyle Redmond
Assistant Vice President

SPEAKERS CORNER

Please join us for the GSP Virtual Symposium

Featuring MICHAEL LEWIS, Best-selling author of Liar’s Poker, Moneyball, The Big Short and many more

Interviewed by: Denise Pellegrini, Bloomberg, Radio Host & Real Estate Reporter

Friday, April 9, 2021
10:00am PST | 1:00pm EST

REGISTER TODAY


Pascale's Portrait
PASCALE'S PERSPECTIVE
Treasuries and Libor Futures Rise on Inflation Expectations

The 10 year Treasury hit a pandemic era high of 1.41% yesterday before settling today 1.38%. Fed Chair Powell’s congresional testimony yesterday and today assured the market that highly accomadative policy will contine. Any changes will be gradual and telegraphed well in advance. He made it clear that the Fed’s main concern is unemployment and not rising prices. The current Fed policy regarding monthly asset purchases and zero rates will not be affected until full employment (defined as a 4% unemployment rate) is achieved. The Fed is willing to tolerate inflation above 2% for a whille in order to acomplish their employment goals. As of now, despite warning signs the Fed’s preferred inflation idicator, the PCE (Personal Consumption Expenditures) has yet to hit 2%. The PCE release next week will be closely watched. Stay tuned.

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


WWW.GSPARTNERS.COM

Constellation Place
10250 Constellation Blvd., Ste. 2700
Los Angeles, CA 90067
Office 310.557.8336
Fax 310.557.1276
Email finfacts@finfacts.net
© 1999 - 2021 George Smith Partners, Inc. DRE # 00822654 FINfacts is an ePublication of George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
Hi, just a reminder that you're receiving this email because you have expressed an interest in George Smith Partners. Don't forget to add finfacts@finfacts.net to your address book so we'll be sure to land in your inbox!

You may unsubscribe if you no longer wish to receive our emails.