FINfacts™ XXIV – No. 318 | May 18, 2022

MARKET RATES
Prime Rate 4.00%
1 Month LIBOR 0.93%
6 Month LIBOR 2.01
5 Yr SOFR Swap 2.74%
10 Yr SOFR Swap 2.78%
5 Yr US Treasury 2.90%
10 Yr US Treasury 2.89%
30 Yr US Treasury 3.07%

RECENT TRANSACTIONS
Cash-Out Refinance of a 16-Unit Multifamily Property; 3.1% Fixed; 70% LTV; Los Angeles, CA

Rate: 3.10%
Term: 10 Years, Fixed for first 5 Years
Amortization: 3 years Interest-Only
LTV: 70%
Prepayment: 3, 2, 1, 1, 1%

Transaction Description:

George Smith Partners arranged permanent financing for a 16-unit multifamily property located in Los Angeles, CA. The loan is fixed at a rate of 3.1% for 5 years and has 3 years of interest-only payments. The deal went into application several months ago when interest rates were 100 basis points lower. Because of GSP’s strong relationship with the Lender, the original terms were held in an increasing rate environment. The financing does not require any deposit relationship with the bank.

Advisors

Bryan Shaffer
Managing Director & Principal
Ruben Bohbot
Director

Acquisition Bridge Loan for a 12-Unit Multifamily Community; San Diego, CA

Rate: 7% Fixed
Term: 18 months + 6-month extension
Min DSCR: 1.15:1.0
Origination Fee: 1.5%
Amortization: Interest-Only
Guaranty: Recourse
Prepayment: None

Transaction Description:

George Smith Partners secured an acquisition bridge loan for the repositioning of a Class-C apartment community in San Diego. The financing includes a holdback that will be used to renovate both the interior and exterior of the Property over a 12-month period including the addition of a single ADU (garage conversion).

Given the Sponsors’ track record and their successful ability to substantially increase rents in this niche market, GSP was able to secure a Lender that could close quickly (within 25 days), without an appraisal, and allow a $1,000,000 2nd TD up to 98% of the total cost of the Project to accommodate an additional private party investment in the Property.

Advisors

Alina Mardesich
Senior Director

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HOT MONEY
JV Equity Financing

George Smith Partners identified a JV equity provider for existing income-producing assets and transitional institutional quality projects for industrial, multifamily, and specialty sectors such as data centers and cold storage. They will write equity checks starting at $25,000,000 per asset with 50% – 65% senior leverage for acquisitions, repositionings, workouts, recapitalizations, lease-ups, partnership by-outs and restructures. Investment terms are 3 to 5 years.

More Hot Money ›

Pascale's Portrait
PASCALE'S PERSPECTIVE
Markets Crash Hard After Powell’s “Softish Landing” Prediction

Today’s stock market tumble was the worst trading day since June 2020. Yesterday, Fed Chair Powell’s comments were straightforward, including “there could be some pain” as the Fed moves to tame inflation with rate hikes. The proverbial “soft landing” in times of fiscal tightening is very elusive. So Powell indicated that he is now hoping for a “softish landing” that will be “a little bumpy, but it’s still a good landing.”

Today’s stock drop stemmed from a capitulation by investors that inflation may seriously affect financial conditions. Earnings reports from Target and Walmart indicated that inflation is affecting corporate America’s “bottom line”. This realization after Powell’s comments yesterday contributed to the sell off.

More from Powell: “Financial conditions have tightened quickly”, he seemed pleased as it will slow down inflation. Stocks are being “marked to market” based on rising interest rates and inflation. The same process is happening in the CRE capital markets as debt costs, leverage levels, risk spreads and equity expectations are in flux. There’s plenty of capital but lenders are in the process of “pricing discovery” as conditions change rapidly. Many lenders indicate that today’s volatility will hopefully lead to conditions settling in a few months. Most certainly some adjusting of asset prices and cap rates will have to occur for transaction volume to increase to last year’s levels. 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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