FINfacts™ XXIV – No. 288 | October 6, 2021

MARKET RATES
Prime Rate 3.25%
1 Month LIBOR 0.09%
6 Month LIBOR 0.29%
5 Yr Swap 1.07%
10 Yr Swap 1.53%
5 Yr US Treasury 0.98%
10 Yr US Treasury 1.52%
30 Yr US Treasury 2.07%

RECENT TRANSACTIONS
$35,000,000 Bridge Financing Secured for Hotel-to-Micro Apartment Conversion; Salt Lake City, UT

All Terms Confidential

Transaction Description:

George Smith Partners successfully arranged a $35,200,000 construction financing for the first phase of a hotel-to-multifamily repositioning and transformation in downtown Salt Lake City’s trendy Granary District. The financing capitalized renovation costs related to the adaptive reuse of the iconic property’s south tower with plans to transform it into a 184-micro unit multifamily asset with boutique-quality amenities. The Project’s north tower is planned to be renovated as part of a future phase.

Located on a coveted 5-acre site, the Project offers approximately 2.7 acres of excess development land, allowing for the future mixed-use infill opportunities onsite.

The Sponsorship team acquired the former hotel with visions of redevelopment in December 2019, creating a unique opportunity for a transformative mixed-use asset in Salt Lake City’s employment and social epicenter. GSP was able to identify a top-tier lender who not only understood the current demand for multifamily housing in Salt Lake City’s urban core, but also understood the significant value and future opportunity afforded by the excess developable land.

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

$18,450,000 Permanent Financing for a 122,000 SF Grocery Anchored Shopping Center; Northern California

Rate: SWAP + 193
Term: 10 Years
Amortization: 10 Years Interest Only
LTV: 65%
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners successfully placed $18,450,000 in permanent financing on a 122,000 SF grocery anchored shopping center located in Northern California amidst the COVID-19 pandemic. The Center is anchored by a 32,000 SF Smart & Final, a 26,000 SF Ross Dress for Less and a 22,000 SF Planet Fitness. Despite tenants demonstrating commitment to the space—with an average lease term of 15 years and consistent renewals—capital markets were cautious of financing retail and were specifically concerned with COVID-19 rent deferrals and closures due to the California directives and mandates. Furthermore, capital providers expressed uncertainty as to how retail centers would be impacted in the long run and the ramifications of the future post-pandemic retail environment. GSP was able to ensure competitive pricing and proceeds based on having a best-in-class sponsor and strong and diverse anchors, despite being in a cautious financial environment hesitant towards retail.

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

$9,345,500 Acquisition Financing for 3 Single Tenant Drug Stores (2 CVS and 1 Walgreens)

Transaction Description:

George Smith Partners arranged 3 separate loans with a single portfolio lender for our Sponsor’s acquisition of 3 drug stores from 3 different sellers. Timing was critical as 2 of the Property acquisitions were part of a 1031 exchange nearing the deadline. The fixed rate financing with no prepayment gives the Sponsor maximum optionality with no rate risk. The Sun City Seller had to delay closing due to a defeasance issue. This resulted in a mid-process strategy shift. That property was removed from the exchange and the Omaha property was added to the exchange. GSP worked with the Lender and all counsels to have those 2 loans re-documented with new ownership structures to accommodate the exchange.

CVS – Sun City, AZ
20-year lease term
Loan Amount: $2,372,500
Rate: 3.29%
Term: 10 years, rate adjusts after year 5
Amort: 30 years
LTV: 67%
Prepayment: Prepayable anytime at par
Guaranty: Recourse
Lender Fee: 0.25%

Walgreens – Omaha, NB
15-year lease term
Loan Amount: $4,410,000
Rate: 3.74%
Term: 10 years fixed
Amort: 30 years
LTV: 67%
Prepayment: Prepayable anytime at par
Guaranty: Recourse
Lender Fee: 0.25%

CVS – Davenport, IA
12-year lease term
Loan Amount: $2,563,000
Rate: 3.29%
Term: 10 years, rate adjusts after year 5
Amort: 30 years
LTV: 67%
Prepayment: Prepayable anytime at par
Lender Fee: 0.25%

Advisors

Steve Bram
Principal/Co-Founder
David R. Pascale, Jr.
Senior Vice President
Allison Higgins
Senior Vice President
Patrick O’Donnell
Vice President
Nick Rogers
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


KIRISITS’ CORNER by Matt Kirisits

Ten Year Treasury Rate Jumps Back to June Levels

The past week has been a lesson in how dynamic the markets are. The 10-year T rate, which had been fluctuating between 1.20%-1.30% for several months, jumped by 20 bps (to 1.50%) within two days. This level was last seen in June, after which the rate declined as concerns about the Delta variant pervaded the economy. However, markets are different now due to the following factors:

  • COVID cases are dropping nationally, and data about a highly effective new treatment was just reported;
  • Supply chain bottlenecks are lasting longer than expected and, in some cases, may persist into next year;
  • The Fed has confirmed they will begin tapering bond purchases, and some Fed governors are in favor of a rate increase at the end of 2022; and
  • Data is showing that inflation in some sectors may be stickier than anticipated.

Combined, all of these factors are suggesting that the near-term market environment will put upward pressure on rates. This sentiment is clearly reflected in the stock market, which has retraced from its all-time high and seen increased volatility over the past few weeks. Further uncertainty is coming from the pending showdown over the debt limit increase, although a short term extension agreement may be reached today.

 

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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