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FINfacts™ XXIV – No. 278 | July 28, 2021
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| Prime Rate |
 3.25% |
| 1 Month LIBOR |
 0.09% |
| 6 Month LIBOR |
0.16% |
| 5 Yr Swap |
0.81% |
| 10 Yr Swap |
1.27% |
| 5 Yr US Treasury |
 0.71%
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| 10 Yr US Treasury |
1.23%
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| 30 Yr US Treasury |
1.88% |
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Rate: 3.30% Fixed
Term: 7 Years
Amortization: Full-Term Interest-Only
LTV: 60%
Prepayment: Yield Maintenance
Guaranty: Non-Recourse
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Transaction Description:
George Smith Partners secured $17,820,000 of permanent financing for the refinance of a 164-unit multifamily complex located in Mesa, AZ. The Property, which was originally built in 1979, recently completed a renovation project that included updating unit interiors and exterior amenities. The unit mix is comprised of 1-bedrooms (49%) and 2-bedrooms (51%). Amenities include a pool, an open pet area, and an on-site laundry facility. GSP was able to a secure a 7-year fixed rate of 3.30%. The financing is interest-only for the entire term and non-recourse to the Sponsor. Refinancing provided the Sponsor with a much lower rate and a significant return of equity. The loan is sized to 60% LTV and a 1.35x DCR.
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Rate: 3.85% (Prime +25bp – Floor 3.85)
Term: 5 Years
Amortization: 30 Years
LTV: 70%
DCR: 1.20
Prepayment: None
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Transaction Description:
George Smith Partners arranged $2,600,000 in permanent financing (70% LTV) for the refinance of a 16-unit multifamily property located in Los Angeles, CA. The Sponsor engaged GSP to assist them with the replacement of their existing, expensive, highly leveraged, quick close bridge lender that GSP had arranged in April for the acquisition of this Property. The Sponsor’s plan for this value-add Property was to raise the value through strategic property enhancements that will increase rental revenue. GSP was able to provide the Sponsor with a 5-year floating rate with a floor of 3.85%. The loan structure allows the Sponsor to refinance out of an expensive loan and start to recoup additional cash flow to use for interior and exterior renovations. There is no prepayment with this replacement capital allowing the Sponsor to recapitalize once his business plan is realized. The prepayment flexibility will allow the Sponsor to cash-out refinance once they have implemented their value-add strategy. The renovation plan will improve the Property appearance and support the overall business plan of increasing market rents and value. Due to GSP’ strong-standing relationship with this Lender, this transaction closed within 35 days from signing the term sheet and met the Sponsor’s deadline.
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Rate: 3.875% fixed for 5 years
Term: 7 years
Prepayment Penalty: 3,3,3,2,1
Guaranty: Recourse
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Transaction Description:
George Smith Partners successfully arranged $2,400,000 of cash-out on a free and clear neighborhood retail center with an automotive related tenancy in North Hollywood, CA. The subject Property was inherited by a family member and part of the cash out proceeds were used to pay estate taxes with the remaining funds going to the Sponsor and building up a reserve account. GSP went to a variety of lenders and identified a capital provider who was comfortable with the tenant mix, cash-out component, and Sponsor’s real estate experience.
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ULI Los Angeles Developer Shark Tank via Zoom
Wednesday, August 4, 2021 | 6:00pm – 8:00 pm PT
Register Here
Zack Streit, Senior Vice President at George Smith Partners will be one of the sharks!
Shark Tank brings together aspiring real estate developers and veterans in the real estate community to evaluate real investment opportunities. Join us and watch as a panel of expert “Sharks” analyze two developers’ projects using the same methodologies typical in a closed-door development pitch. Take a peek behind those doors as the “Sharks” employ their years of experience to critique proposals and give insight for aspiring investors. Two developers will pitch their live deals including a mixed-use, active adult community in La Cañada Flintridge, and a 120-unit Class A Multifamily project in San Pedro.
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GSP is actively placing permanent debt financing for office, industrial, multifamily, retail, and self-storage. With loan sizes up to $10,000,000, fixed rate pricing starts at 3%. They offer 75% of value subject to actual current debt service requirements and with terms up to 15 years (fixed period reset option 3,5,7-years) amortized over 30 years. There is never any prepayment penalty.
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The Fed announcement today was not surprising as to policy: no change in the overnight interest rate and monthly bond purchases will continue. As prices rise (whether transitory or not), inflation is becoming a political issue. Many lawmakers and influential economists are calling for a reduction in bond purchases. Today, Fed Chair Powell continued to stand firm. He emphasized that the ultra accommodative policies will stay in place until full employment: the bond purchases will be maintained until they have achieved “substantial further progress” in the job market. Today’s meeting and announcement basically push off any rate increases until late 2022 or early 2023. Powell again promised to warn markets in advance of any “tapering” of bond purchases. Assuming the warning comes in August/September, that would put the beginning of any tapering at year end. With $120 billion in monthly bond purchases, an orderly non-disruptive wind down would take 12 months, lowering purchases by $10 billion per month. The 10 year T yield ended the day at 1.23%, down 2 bps from this morning.
Congress in the mix: Today’s announcement of an agreement on a bipartisan infrastructure plan will increase stimulus over the next few years. More pressing is the Debt Ceiling deadline. The US ability to borrow above its present levels expires this weekend. The Treasury will use the now usual “extraordinary measures” to keep the government from defaulting for the next few months. This will affect the supply of treasuries and these technical factors may further keep yields low, until buyers feel that there is a real danger of default. 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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