FINfacts™ XXIV – No. 308 | March 9, 2022

MARKET RATES
Prime Rate 3.25%
1 Month LIBOR 0.32%
6 Month LIBOR 1.02%
5 Yr Swap 1.94%
10 Yr Swap 2.01%
5 Yr US Treasury 1.88%
10 Yr US Treasury 1.94%
30 Yr US Treasury 2.33%

RECENT TRANSACTIONS
$26,560,000 Permanent Financing for a 284-Unit Multifamily Asset; Rexburg, ID

Rate: 2.91% Fixed-Rate
Term: 35 Years
LTV: 80%

Transaction Description:

George Smith Partners secured $26,560,000 in permanent financing for a 284-unit multifamily project located less than a mile from Brigham Young University-Idaho (BYU-I), one of the country’s fastest growing universities and Idaho’s largest university, in Rexburg, Idaho. The apartment complex features novel, modern 2-bedroom apartment units with boutique amenities including a racquetball court, 24/7 state-of-the-art gym, outdoor grill and fire pit lounge area, dog park, and clubhouse with conference rooms. The community was developed in phases, so the refinance retired existing construction and bridge debt, provided significant cash-out to the Sponsor, and reduced their previous interest rates considerably.

The Rexburg multifamily submarket is undergoing a colossal renaissance, seeing over $1B of new investments and a population growth of over 62% over the last decade. The Sponsor, a local developer with significant knowledge and experience within the Rexburg market, recognized the need for high quality product in a supply constrained market. GSP was able to leverage market interest to secure the most competitive terms available by focusing on the desirable location as well as the Sponsor’s track record and familiarity with the high-growth market. The loan carried a 35-year term priced at a 2.91% fixed-rate and 80% LTV.


$9,425,000 Refinance Loan For 40-Unit Multifamily Property in Los Angeles, CA; 10 Years Fixed at 3.25%; Full Term Interest Only Payments

Rate: Fixed at 3.25% for 10 years
Term: 10 years
Amortization: Full Term Interest Only
Prepayment Penalty: 5,5,4,3,2,1,1,1,1%
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners arranged $9,425,000 in financing for the refinance of a stabilized 40-unit property located in Los Angeles, California. The loan is fixed at a rate of 3.25% for 10 years. The loan was a takeout of the acquisition loan that GSP closed five years earlier. Over the course of their ownership, the Sponsor performed a complete renovation of the property which included adding additional units. The loan provided a significant amount of cash out. It was closed with a regional bank and includes 10 years of Interest Only payments. Full term IO is rare for a bank loan and is more often found with CMBS loans, which have an expensive prepay structure. In this case, the bank’s declining prepay will allow the borrower flexibility to sell or refinance again depending on market conditions.

Advisors

Shahin Yazdi
Managing Director & Chief Operating Officer, AXCS Capital
Jonathan Lee
Managing Director & President, AXCS Advisors
Matthew Kirisits
Vice President
Kyle Redmond
Vice President
Miles Musalman
Senior Vice President
Jessica Mania
Marketing and Business Development Associate

$6,800,000 Non-Recourse Land Financing for a 5-Acre Site to be Developed into 42 Single Family Detached Homes, 75% LTC; Los Angeles, CA

Term: 12 Months
LTV: 75% Loan to Cost
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners successfully placed $6,800,000 in land financing for a 5-acre site to be developed into 42 single family detached homes in Los Angeles, CA. The Project had already received most entitlements for the infill, hilltop site located in an up-and-coming neighborhood. Furthermore, the Sponsor needed to pay off multiple loan balances and receive additional funding to complete engineering to receive a final map.
Backed by experienced Sponsorship with extremely well-located collateral, GSP sourced financing that funded at approval of tentative map with highly favorable leverage and a closing timeline of less than three weeks.

Advisors

Gary E. Mozer
Managing Director & Principal
Portrait Robert Horton
Senior Vice President
Tommy Adelson
Vice President

SPEAKERS CORNER

Please join us for The Jewish Federation Real Estate & Construction Network in-person REC Cabinet breakfast on Tuesday, March 15, 2022. Shahin Yazdi, Principal at GSP will moderate the discussion with Lindsay Dunn, Executive President and Head of Real Estate Banking at City National Bank, and Stephen H. Gordon, Founding Chairman and Chief Executive Officer at Genesis Bank.
Time: 7:15 – 9:00 am
Location: Brentwood Country Club | 590 S. Burlingame Avenue, Los Angeles, CA 90049
Cost: Free for Cabinet Members; $50 for first-time guests; $100 for non-Members

Register Here: Cabinet Breakfast – Tuesday, March 15, 2022


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HOT MONEY
Non-Recourse Small Balance Bridge Financing up to $30,000,000 – 75% LTV/90% LTC

George Smith Partners is placing high leverage non-recourse bridge debt up to 75% of value and 90% of cost. Funding transactions up to $30,000,000, the capital provider offers flexible loan structures with terms up to 5 years. Floating rate pricing starts at L+200+. The Lender has a particularly strong appetite for multifamily (75+ units), industrial (20’+ clear heights, office build out <=30%, concrete wall construct), suburban office (multi-story in an established office park), self-storage and anchored retail in the top 50 MSAs.

More Hot Money ›

KIRISITS’ CORNER

Rate Hike Cycle Expected To Continue In March

Last week, Fed Chairman Jerome Powell reiterated that the bank expects to raise its benchmark interest rate this month. This was widely expected, but the big news was that Powell will propose only a 25 basis point increase instead of 50. The question now becomes whether the Fed will stick to its previously announced rate hike cycle, or back off due to the current market volatility. During any tightening cycle, the Fed’s goal is to have the economy come to a “soft landing” in which inflation is tamed while job gains and GDP growth are maintained. The Fed already had a difficult job, but now faces a hot war, a huge spike in commodity prices, and a correction in the stock market. Forecasts for a steep rise in oil prices are being thrown around with some analysts predicting $150, $200, and even $300 per barrel.

The ongoing volatility has caused credit spreads to widen out 25-50 basis points. This has had the greatest effect on lenders that securitize, i.e. the CLO and CMBS markets. Multifamily bridge loans at 70% LTC that were pricing at an all-in rate of 3.0% are now at 3.5% or higher, and a major CMBS securitization was withdrawn from the market. On the other hand, balance sheet loans for stabilized multifamily are priced only slightly higher, with quotes in the low 3s still very common. By Matt Kirisits, Vice President at George Smith Partners

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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