FINfacts™ XXIV – No. 287 | September 29, 2021

MARKET RATES
Prime Rate 3.25%
1 Month LIBOR 0.08%
6 Month LIBOR 0.15%
5 Yr Swap 1.10%
10 Yr Swap 1.55%
5 Yr US Treasury 1.00
10 Yr US Treasury 1.53%
30 Yr US Treasury 2.07%

RECENT TRANSACTIONS
$105,000,000 Construction Loan and $17,120,000 Limited Partner Equity for the Development of a For-Sale Residential Project; Hayward, CA

Loan-To-Cost: 75%
Stabilized Loan-To-Value: 70%
Term: 36 Months
Amortization: Interest-Only
Guaranty: Non-recourse

Transaction Description:

George Smith Partners placed a $105,000,000 non-recourse construction loan and $17,120,000 of Limited Partner Equity for a for-sale residential project in Hayward, California. The Project will be built in phases and have 123 townhomes and 66 condominiums providing much needed workforce housing to the area. The Project will also have some affordable units for sale.

Two GSP teams were able to combine efforts and executed an effective and in-depth marketing campaign to help the capital markets understand the opportunity appropriately while finding solutions to various challenges that arose during the entire process. GSP marketed and highlighted the Project’s strength, the phasing nature of the build schedule, the projected sales prices and the forecasted upward trajectory in both sales price growth and sales pace growth. GSP was able to source capital providers on the Project that were comfortable with both the depth and experience of the Sponsor as well as their belief in the continued growth of the Bay Area.

Ultimately, the professionalism and expertise of the two GSP teams on the deal coupled with the proficiency and extensive experience of the Sponsor allowed for a successful close.

Advisors

Gary E. Mozer
Principal/Co-Founder
Portrait Robert Horton
Senior Vice President
Ed Steffelin
Senior Vice President
Evan Kinne
Senior Vice President
Miles Musalman
Senior Vice President

$4,030,000 Non-Recourse Bridge Acquisition Financing for 44% Occupied Retail Center; Tempe, AZ

Rate: L + 7.00% (0.25% LIBOR Floor)
Term: 2 Years with Two 6-Month Extensions
Loan-to-Cost: 68% LTC
Amortization: Interest Only During Initial Term
Guaranty: Non-Recourse with Standard Carveouts

Transaction Description:

George Smith Partners secured $4,030,000 of bridge financing for the acquisition of retail shop space in Tempe, AZ. The collateral encompassed approximately 30,000 sf of in-line retail space and an outparcel pad within a larger anchored retail center. At purchase, the collateral was only 44% occupied. The Sponsors believe that a new leasing strategy will be able to drive tenants to the Center. The Property is located on one of the corners of a major intersection that sees over 65,000 cars per day and is less than two miles from Arizona State University, one of the largest universities in the country. The capital provider structured the financing to have a holdback for future property improvements, leasing costs, and interest payments. Priced at 30-Day LIBOR + 7.00%, the non-recourse loan was sized to 68% of total cost and carries a two-year term with extensions. The Lender was also able to include partial releases if only a portion of the collateral is sold.

Advisors

Patrick O’Donnell
Vice President

Permanent Refinance of Sonic Drive-In; Rialto, CA

Rate: 4.125% Fixed for 10 Years
Term: 25 Years
LTV: 50%
Prepayment: Yield Maintenance
Guaranty: Full Recourse

Transaction Description:

George Smith Partners arranged $1,300,000 in take-out financing for a fast-food restaurant, Sonic Drive-In, located in Rialto, CA. The Property was built at the end of 2019, consisting of 2,727 SF with a total of 16 drive-in ordering stations on a 38,967 SF parcel. The Sponsor, a repeat client, acquired the raw unentitled land in mid-2019 and the take-out financing was used to pay off the existing lender. The Property is on a ground lease, which posed a challenge and limited the number of interested lenders. The vast pool of relationships GSP has access to helped overcome this and enabled us to execute on a long-term solution.

Advisors

Antonio Hachem
Principal
Wendy Wang
Vice President
John Choi
Vice President
Cornelius Baliukonis
Assistant Vice President

SPEAKERS CORNER

We are excited to announce our upcoming webinar, The Demand for Housing and The Future of the American Home featuring Ivy Zelman, CEO of Zelman Associates. Ivy is widely respected for her unbiased, in-depth research, insightful analysis, and actionable advice about the housing market and related sectors. Evan Kinne, SVP and Ed Steffelin, SVP at George Smith Partners will discuss the below topics with Ivy.

* Effects of the legislative agenda on housing
* Affordability and what that looks like in the years ahead
* Single family rentals – supply and demand dynamics

Register HereThe Demand for Housing and The Future of the American Home


Picture
HOT MONEY
High Leverage Non-Recourse Financing Solutions for Single Family Construction, Bridge and Term

George Smith Partners is working with a national capital provider funding high leverage, non-recourse Build-to-Rent developments, Single Asset/Portfolio construction, Bridge & Term loans and Multifamily Construction loans for merchant home builders on “For Sale” product. Pricing starts at 7% with leverage up to 90%. The maximum loan amount per deal is $40,000,000.

More Hot Money ›

Pascale's Portrait
PASCALE'S PERSPECTIVE
10 year Spikes above 1.50% As Powell Calls Inflation “Frustrating”

The 10 year T has jumped from 1.17% (August 3) to 1.56% this week. Two Fed officials came out today in favor of tapering bond purchases, adding to a growing chorus. Fed Chair Powell is having a rough few days: 2 resignation of Fed officials over conflict of interest allegations, Senator Warren announcing her opposition to his re-nomination for another term, and his statements to Congress that inflation is more than “transitory” Powell indicated that supply chain bottlenecks, once thought to be “worked out” by the end of 2021, will now persist well into next year and in some cases are worsening. As the Covid era accommodative policies are being removed, a benchmark for the 10 year T comes into focus: 1.85%. That was the 10 year T rate at year end 2019, before the Covid pandemic. Meanwhile, Treasury Secretary Yellen has indicated that the “x date” is estimated to be October 18. That is when the US Treasury will exhaust cash reserves and will be unable to meet it’s obligations without an increase in the debt ceiling. That increase is now fraught with political wrangling and no clear path is in sight. The countdown is already distorting the short term treasury market, as yields are spiking as buyers are unsure if the securities will be liquid at maturity. Rates will also be dependent on upcoming data releases: PCE this Friday, Employment next Friday. Capital markets may be affected if the debt ceiling remains unresolved into mid-October. Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

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!