FINfacts™ XXIV – No. 258 | March 10, 2021

MARKET RATES
Prime Rate 3.25%
1 Month LIBOR 0.11%
6 Month LIBOR 0.19%
5 Yr Swap 0.89%
10 Yr Swap 1.54%
5 Yr US Treasury 0.79%
10 Yr US Treasury 1.52%
30 Yr US Treasury 2.26%

INTRODUCTION


RECENT TRANSACTIONS
$13,800,000 Non-Recourse Bridge Financing for an Industrial Manufacturing Facility; California

Rate: 4.75%
Term: 5 Years
Amortization: Interest Only
Guaranty: Non-Recourse, Completion, Repayment, “Bad” Acts and Environmental
Lender Fee: 1.00%

Transaction Description:

George Smith Partners secured non-recourse bridge financing for a manufacturing facility in California. The Sponsor’s goal was to expand their manufacturing facility from 120,000 s.f. to 200,000 s.f. for their current tenant and provide them with clean manufacturing and dock high loading doors in the warehouse. GSP was able to secure a lender that found the location of the Property desirable due to the close proximity and access to major highways, the Tenant’s long-term investment in the building/equipment and most importantly, the Sponsor’s strong experience and track record.

Advisors

Gary E. Mozer
Principal/Co-Founder
Portrait Robert Horton
Portrait Dorian Aftalion
Vice President
Portrait Phillip Mozer
Analyst

$4,900,000 Single Tenant Tertiary Market Office Refinance; Illinois

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 rate and term refinance of a net-leased single tenant office building located in a tertiary Illinois market. Constructed in 1999, the 88,000 square foot asset is used as a training facility and call center leased to an investment grade tenant. Although this Tenant has been in occupancy for over 20 years, only four years remain on their current lease term. Despite the pending lease event risk, there are no holdbacks or cash flow sweeps. The tenant recently completed a $5,000,000 cosmetic upgrade and continued to operate in a reduced capacity throughout COVID. Value and DCR constraints were not a concern as our Sponsor was not seeking a return of equity and only sought to replace the pending loan maturity debt. The 10-year term is fixed at 3.625% and amortizes over 25 years. This generated a much lower mortgage constant that substantially improves net cash flow after debt service.

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

Quick Close, Cash-Out Financing for a 2-Property Portfolio, in Los Angeles, CA

Rate: 7.90%
Term: 12-month Bridge Loan plus 6-month extension option
LTV: 60%
Prepayment Penalty: None

Transaction Description:

George Smith Partners arranged $800,000 in cash-out financing for a two-property office and retail portfolio located in Los Angeles, CA. The Sponsor retained GSP to quickly pull equity out of debt-free properties and use the proceeds towards purchasing and renovating additional properties. GSP selected a debt fund that was able to move quickly to accommodate the Borrower’s timeline. This was a quick way to access funds without selling any stocks or other holdings. The Lender’s credit department approved the loan three days post submission and did not require an appraisal to close. The non-recourse facility was priced at an interest only fixed rate of 7.90% with a 12-month term, plus a 6-month extension option. With no prepayment, this facility provides additional flexibility to the Borrower, allowing for the Borrower to refinance into a permanent loan at a lower rate. Despite being on a strict closing deadline, GSP was able to close the loan within 7 days of signing the term sheet.

Advisors

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

SPEAKERS CORNER

IMN Build-To-Rent Forum

Ed Steffelin, Senior Vice President at George Smith Partners will be moderating the Financing Availability, Sources and Structures panel at the IMN Build-To-Rent Forum on Tuesday, March 16th.

Register here: https://lnkd.in/dX6VRD4

City of Hope Real Estate & Construction

Zack Streit will moderate a conversation with Wayne Ratkovich, founder and chairman of The Ratkovich Company, hosted by City of Hope. The Ratkovich Company is well known for leading the development of The Bloc (dramatic $250 million transformation of the former Macy’s Plaza in the heart of downtown LA), the Hercules Campus (11-building complex of former Hughes Aircraft Company Buildings that have historic status and is now fully leased to Google, YouTube and the advertising firm 72 and Sunny) and 5900 Wilshire (a 30-story office tower across from the Los Angeles County Museum of Art). They will discuss via Zoom the future of large-scale urban infill development in a Post-Covid world.
Date: Friday, March 12, 2021
Time: 10:00 am PST
Register: https://events.bizzabo.com/LAREfireside
($10 suggested donation benefiting City of Hope)


Picture
HOT MONEY
Non-Recourse Bridge Financing Offering Full term IO on 85% LTV

George Smith Partners is working with a capital provider funding bridge debt to 85% of value for interest only terms up to 10 years. Financing starts at $10,000,000 with rates starting in the low 3’s. The lender will finance all commercial property types across the United States with a national origination footprint and local presence in New York, Boca Raton, Charleston (SC) and San Francisco. They are also offering construction financing up to 80% of cost for multifamily properties. Debt Yield and DSCR restrictions are based on market location and analyzed on a deal by deal basis.

More Hot Money ›

Pascale's Portrait
PASCALE'S PERSPECTIVE
Tame CPI Data and Well Bid Treasury Auction Calm Inflation Worries, For Now

Today’s “routine” Treasury auction attracted a huge amount of attention as markets are focusing on potential inflation and rising rates. The recent increase in Treasury yields (0.90% to 1.50% since Jan 20) has unnerved markets in our highly levered economy. The specter of inflated assets being “marked to market” in a higher rate environment has fostered recent market volatility. Investors are hypersensitive to signs of inflation. Today’s passing of the $1.9 trillion stimulus package, recent gains in oil prices, and anticipated unleashing of pent up consumer demand are both harbingers of economic growth but also potential warning signs. Today’s CPI report indicated a 0.4% increase for February with an annual increase of 1.7%. These figures were in line with expectations (note that the February Personal Consumption Expenditures, the Fed’s preferred inflation index, will be announced on March 26). Todays closely watched 10 year Treasury auction went well. With more than adequate demand, the 10 year settled at 1.52% (this was significant as it helped alleviate market concerns that the increasing issuance of Treasuries is not sustainable). A poorly subscribed auction could have triggered a massive sell off, sending yields up towards 2.00%. Stock markets rallied with the Dow index up over 450 points or about 1.5%. (It’s interesting to note that an equity position in the Dow index would yield 1.5% in 8 hours of trading today and that yield would take 10 years to achieve in the bond market!) Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith

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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