FINfacts™ XXIV – No. 321 | June 8, 2022

MARKET RATES
Prime Rate 4.00%
1 Month LIBOR 1.19%
6 Month LIBOR 2.24%
5 Yr SOFR Swap 2.79%
10 Yr SOFR Swap 2.80%
5 Yr US Treasury 3.04%
10 Yr US Treasury 3.03%
30 Yr US Treasury 3.16%

RECENT TRANSACTIONS
Entitled Land Acquisition Financing for a Single Family Home Community; San Marcos, TX

Term: 1 Year + One, 12-Month Option
LTPP: 87.5%
As-Is LTV: 65%
Prepayment: None

Transaction Description:

George Smith Partners secured senior and mezzanine financing for the acquisition of 49.3 acres of land in San Marcos, TX. The City is located midway between Austin and San Antonio, the #1 and #7 fastest growing cities in the US. The Property is fully entitled for single-family residential development. The Sponsor, a Texas-based developer, recognized the Property’s underlying value and the unique opportunity to build much-needed housing for the area. GSP sourced a high leverage lender who not only recognized the booming submarket, but also the Sponsor’s ability to execute on the master-planned community. The transaction closed 17 days after signing the term sheet.

Advisors

Antonio Hachem
Managing Director & Principal
Evan Kinne
Managing Director & President, AXCS Capital
Ed Steffelin
Managing Director & Chief Investment Officer, AXCS Investments
Miles Musalman
Senior Vice President
John Choi
Director
Jordan Lipton
Vice President
Cornelius Baliukonis
Associate
Wendy Wang
Vice President

Acquisition Financing of a 50% Vacant Multifamily Property; 4.25% Rate, 35 Day Close; Los Angeles, CA

Rate: Prime + 0.25% w/ floor of 3.75%
Term: 5 Years
Amortization: First 2 Years Interest-Only
LTPP: 75%
DCR: 1.10x
Prepayment: None

Transaction Description:

George Smith Partners arranged bridge-to-perm financing for the acquisition of a multifamily property located in the Beverly Grove area of Los Angeles, California. The Property was 50% vacant and in need of renovation at the time of close. GSP matched the Sponsor with a lender who could provide the flexibility of a bridge-to-perm loan with a 5-year term, of which the first 24 months would be interest-only to account for the renovation and lease-up period.

Despite today’s high-interest rate market, GSP was able to secure a floating rate at PRIME + 0.25% (4.25% as of today). The market usually caps this kind of structure with a below-market rate at 65%-70% LTV, but GSP was able to leverage its relationships to secure 75% of the purchase price for the Sponsor. The loan has no prepayment penalty, allowing for additional flexibility for the Sponsor. The Borrower was in a 1031 exchange and only had 45 days to close from the time the deal was brought to GSP. GSP quickly identified a bank lender, entered into application, and closed the transaction in just 35 days.

Advisors

Bryan Shaffer
Managing Director & Principal
Ruben Bohbot
Director

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HOT MONEY
Multifamily and Mixed-Use Financing as low as 1.00x DSCR

George Smith Partners has identified a specialty lender providing fixed-rate permanent and bridge financing for multifamily and mixed-use properties nationwide. Transactions range from $2,000,000 to $25,000,000 with leverage up to 75%. For permanent financing, the Lender has non-recourse and interest-only options available along with aggressive underwriting down to a 1.15x DSCR. For bridge financing, the Lender can go as low as 1.00x DSCR.

More Hot Money ›

Pascale's Portrait
PASCALE'S PERSPECTIVE
10 Year Treasury Hovers Around 3% As Markets Await CPI Report

Today’s $33 billion auction of the 10-Year Treasury Bonds saw tepid demand.  Bids were submitted for 2.41x the amount offered – the last six auctions have been averaging 2.50 times.  Investors are in a wait-and-see mode as they are anticipating this Friday’s CPI release.  Recent data shows that inflation is peaking (good news), but the question is what is on the other side? A stubborn plateau or a downhill?   The core CPI report (excluding food and energy) is expected to drop to 5.9% – after April’s rate hit 6.2% (with a 0.6% month-over-month gain).  Wage growth will also be in the spotlight. Recent data indicates that more expensive “large goods,” such as autos, appliances, and furniture are experiencing slower price gains on softening demand. However, the services sector is still suffering from high demand and a shortage of workers. The European Central Bank is set to announce new projections for growth and inflation. This week’s meeting may see a commitment for their own 50 basis point hike.   France’s central bank is describing the potential move as “normalization but not tightening.”  The US Fed meets next week and has communicated their intent to raise the Fed Funds rate by 50 bps, followed by another 50 bps in July. The September meeting is the subject of speculation, hence the focus on Friday’s CPI and the accompanying commentary at next week’s meeting. 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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