FINfacts™ XXIV – No. 296 | November 29, 2021

MARKET RATES
Prime Rate 3.25%
1 Month LIBOR 0.09%
6 Month LIBOR 0.24%
5 Yr Swap 1.32%
10 Yr Swap 1.59%
5 Yr US Treasury 1.18%
10 Yr US Treasury 1.51%
30 Yr US Treasury 1.87%

RECENT TRANSACTIONS
$19,570,000 Non-Recourse Acquisition Bridge Financing for a 163k SF Office Campus; Ventura, Los Angeles, CA

Rate: L+500 (5.15% floor)
Term: 3 Years (Two 12-Month extensions)
Interest-Only: Full Term
LTC: 70%
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners successfully secured $19,570,000 in senior acquisition debt financing for a 4-building, garden style office campus located in Ventura. Situated on a rare 7.72-acre infill site, the Property consists of 162,717 net rentable square feet across the 4 buildings and is within walking distance to the high-traffic retail hubs, Mills Street, and the Pacific View Regional Mall. The financing capitalized the Property acquisition as well as a focused capital expenditure program aimed at increasing operational efficiencies and targeted deferred maintenance.

Despite COVID-19 related challenges in the office sector, the Property maintained 70% occupancy through its granular tenant base. While some lenders expressed concern with the going-in debt yield and market leasing dynamics, GSP broadly marketed the Project and was able to identify a lender who understood the underlying value of the asset, the Sponsor’s business plan, and Ventura’s fast-growing market. The interest-only financing was sized to 70% loan to cost, including 100% of future funding for capital expenditures, tenant improvements and leasing commissions. The loan carried a 3-year term and was priced at 1 Month Libor + 500 basis points with a 5.15% floor. Due to an excellent purchase price, the financing had a very tight closing timeframe, and the selected Lender was able to close in 30 days from term sheet execution.

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

$16,100,000 Cash-Out Permanent Financing for a Theater Anchored Shopping Center; Dardenne Prairie, MO

Rate: 3.95%
Term: 5 year fixed rate
Amortization: 20 Years
Loan to Value: 62%
Prepayment: 2,1,0
Guaranty: Full Recourse

Transaction Description:

George Smith Partners arranged the cash-out permanent refinance of a 153,726 SF grocery-anchored retail community center in Dardenne Prairie, MO, about 30 miles west of St. Louis. The Subject Property is anchored by Schnucks and Marcus Theater and is also shadow anchored by Target, which is under separate ownership. The loan is sized to 62% LTV, fixed for 5 years with 20 years amortization.

The Sponsor approached GSP to arrange a non-CMBS loan resulting in $4,000,000 cash-out. The proceeds were used to buy-out his partners and lower the debt service from their previous loan. The theater component, along with a decreased appetite for retail lending due to market conditions made it difficult for capital providers to get comfortable with the asset type and cash-out. GSP identified a lender who was willing to provide a higher loan to value and competitive terms that maximize the Sponsor’s cash-out.

Advisors

Gilda Rivera
Senior Vice President
Brian Hamada
Assistant Vice President

$4,200,000 Refinance of Luxury Condominium; Beverly Hills Adjacent, CA

Rate: 6.4% Fixed, Interest-Only
Term: 1 Year
LTV: 63%
Prepayment: None
Guaranty: Non-Recourse
Lender Fee: 1%

Transaction Description:

George Smith Partners arranged a $4,200,000 loan collateralized by a three-story, luxury condominium located adjacent to Beverly Hills, CA. The Property had three recorded notes with the 2nd trust deed already in maturity default. GSP used its strong lender relationships to source a quick close solution to refinance two of the three notes with a new short-term loan that required the 3rd trust deed to subordinate to the new lender.

Advisors

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

SPEAKERS CORNER

We are excited to be in-person at the IMN Single Family Rental Forum (West) Tuesday, November 30 – Thursday, December 2nd in Scottsdale, Arizona.

Zack Streit will be participating on the panel, “Financing The BFR Lifecycle, Land, Pre-Development & Construction Financing at 9:10 am on Wednesday, December 1st. Malcolm Davies will be participating on the panel, “Evaluating The Private Equity Single Family Rental Niche: What Is In Your Buy Box for the BTR, Fix & Flip” on Thursday, December 2nd at 8:30 am.

More information about the conference can be found here: https://www.imn.org/real-estate/conference/Single-Family-Rental-West/


Pascale's Portrait
PASCALE'S PERSPECTIVE
Continuing Inflation Data, Political Considerations May Quicken Tapering

Last week’s release of the October PCE numbers continued the steady drumbeat of inflationary data. Some perspective: the PCE is the Fed’s preferred inflation gauge, the target rate is 2.0%. Since the Great Recession, the PCE has lingered below 2.00%, popping up to barely above 2.00% on a few occasions (2011, 2016, 2017). The July 2021 to October 2021 annual rates: 4.03%, 4.14%, 4.21%, 4.42%, 5.05%. “Transitory” inflation talk is in the rear view mirror. Not only that, inflation has “support”. Real consumer spending rose 0.7% last month alone. This indicates that higher prices are not dissuading consumers to purchase goods. Powell has been nominated for another term, markets seem to be happy with that as it means no major policy changes. However, Powell will need Senate confirmation. The release of Fed minutes last week showed some support for earlier than anticipated rate increases to reign in inflation. Powell may want to speed up the decline in monthly bond purchases ahead of his February hearing. Next month’s Fed meeting may feature a more hawkish Fed. 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


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