FINfacts™ XXIV – No. 279 | August 4, 2021

MARKET RATES
Prime Rate 3.25%
1 Month LIBOR 0.09%
6 Month LIBOR 0.16%
5 Yr Swap 0.77%
10 Yr Swap 1.21%
5 Yr US Treasury 0.68%
10 Yr US Treasury 1.17%
30 Yr US Treasury 1.83%

RECENT TRANSACTIONS
$25,500,000 Bridge Financing for a 42k SF Landmark Retail Asset; Koreatown, Los Angeles

All Terms Confidential

Transaction Description:

George Smith Partners successfully secured $25,500,000 in non-recourse bridge financing for a destination dining and retail center nestled in the heart of Los Angeles’ Koreatown. The 42,000 square foot property is one of Koreatown’s most trafficked retail centers and maintained stable collections throughout 2020. The recapitalization retired the existing debt and provided future funding for capital expenditures, tenant improvements and leasing expenses with no new equity required from the Sponsor.

The Los Angeles-based sponsorship team acquired the Property in 2016, identifying the asset as a generational heirloom and a unique opportunity to create substantial value. Despite market volatility and COVID-19 related challenges in the retail sector, GSP was able to identify a lender with local knowledge and expertise that understood the importance of this asset within the context of the neighborhood, and the long-term viability of the business model.

 

Advisors

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

Cash-Out 2.94%, $12,025,000 Non-Recourse Permanent Refinance on a 100% Leased Discount-Grocer Anchored Shopping Center; Western States

Rate: 2.94%, Fixed
Term: 10 years
Amortization: Full-Term Interest Only
LTV: 65%
Lender Fee: Par
Prepayment: Defeasance
Guaranty: Non-recourse

Transaction Description:

George Smith Partners successfully placed $12,025,000 in non-recourse, cash-out permanent refinancing for a 101,096 square foot discount-grocer anchored retail shopping center in a transitory Pacific Southwest MSA. The tenant mix includes several national credit tenants along with local and regional stores, all of which remained in-place during COVID-19. GSP was able to identify a lender who understood the complexities of retail in a post COVID environment. The non-recourse permanent loan was sized to 65% of value, included 10-years of interest only payments at a fixed rate of 2.94% for 10 years. Lender fee is at par.

Advisors

Portrait Michael Anderson-Mitterling
Senior Vice President
Kyle Howerton
Senior Vice President
David Stepanchak
Senior Vice President
Portrait Robert Gallagher
Analyst
Portrait Saman Yazdi
Analyst
Heather Gonzalez
Closing Specialist/Executive Assistant

$3,000,000 Bridge to Permanent 5-year Loan for a Vacant Single Story 50,000 SF Warehouse; Western States

Rate: 4.25% During Construction, Five-year Treasury + 3.25% During Term
Term: 5 Years
Amortization: 25 Year
Prepayment: Term Period: 3%,2%,1%,0%

Transaction Description:

George Smith Partners successfully placed a $3,000,000 bridge to permanent loan to fund the purchase, tenant improvements, leasing commissions and carry (real estate taxes, insurance, and debt service) for a vacant 50,000 SF single-story warehouse. The deal presented a couple challenges; the Sponsor had credit issues and the building was 100% vacant. The strong sponsorship experience, low vacancy in the market and the building’s high-level of quality ameliorated these issues. Lastly, the transaction had to be completed within the tight time constraints of a 1031 exchange.

Advisors

Gary E. Mozer
Principal/Co-Founder
Portrait Robert Horton
Senior Vice President
Portrait Dorian Aftalion
Vice President
Tommy Adelson
Vice President
Benjamin Shofet
Analyst

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HOT MONEY
Non-Recourse Bridge Financing, Rates in the Low 3’s

George Smith Partners is working with a nationwide direct balance sheet lender offering non-recourse, interest only bridge financing that focusses primarily on multifamily, office, industrial, retail, mixed-use, parking, self-storage, manufactured housing, hospitality and SFR portfolios. Rates start at 3% for loans up to $50,000,000. Typical loan structures include two- or three-year initial terms with extensions up to 2 years, 80% LTV for multifamily and industrial and 70% LTV for other product types. Lender will consider requests for acquisition, refinances, equity recapture, renovations and DPO’s for loans up to $40,000,000.

More Hot Money ›

KIRISITS’ CORNER by Matt Kirisits

10 Year Treasury Drops But Rates Remain Steady

Since the beginning of May, the 10 Year Treasury yield has been on a steady decline from 1.69% down to 1.17% as of  today. Normally this would be good news for borrowers as it would result in lower rates. However, it is important to examine the drivers behind the lower bond yields: 1) concerns about the rapid spread of the Delta variant and 2) economic data coming in softer than expected. These factors have caused some lenders to increase their spreads because they perceive a higher level of risk.

Source: Bureau of Labor Statistics

For 5 and 7-year bank loans, lenders are quoting the same 3.25%-3.35% rates as they were earlier in the year. Freddie Mac has actually raised rates by about 30 bps over the past few weeks, although in this case, it is a strategy to slow down production. Freddie has been winning significant business from the banks this year and has a very full pipeline. Fannie rates have not increased yet, but since the Agencies compete with each other, a 30 basis point rate gap will not persist for long. On the inflation front, the year-over-year increase in CPI remains high but has begun to decrease. Concerns about persistently high inflation are fading as the market starts to believe the Fed’s thesis that 3.5% inflation is transitory.

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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