FINfacts™ XXIV – No. 323 | June 22, 2022
|
|
|
Prime Rate |
4.75% |
1 Month LIBOR |
1.64% |
3 Month LIBOR |
2.15% |
5 Yr SOFR Swap |
2.99%
|
10 Yr SOFR Swap |
2.96%
|
5 Yr US Treasury |
3.22%
|
10 Yr US Treasury |
3.16%
|
30 Yr US Treasury |
3.25% |
|
|
Rate: SOFR + 5.50%
Term: 3 Years
LTC: 70%
Fee: 1.25%
Guaranty: Non-Recourse
|
Transaction Description:
George Smith Partners successfully advised on $23,000,000 in construction financing and $9,800,000 in JV Equity for the development of a 108-unit built-to-rent community in Charlotte, NC. The Project features 108 attached single-family homes situated atop a 13.5-acre site. The Site is located just seven miles outside of downtown Charlotte and less than 2 miles from UNC Charlotte. The houses have private entrances, individual backyards and feature shared amenities including a pool, jacuzzi, clubhouse, fitness facility, grilling area, pet park, and game room.
GSP worked through several strategies with the Sponsor to source the non-recourse financing terms and joint-venture equity partner for the ground-up built-to-rent community. The Sponsor chose a joint-venture partner that GSP had introduced to the sponsors on a previous deal. GSP sourced several highly reliable lender options, and the Sponsor ultimately went with a lender headquartered in Charlotte that provided strong terms and would keep the loan on their balance sheet.
The Sponsor projects vertical development to be completed by late 2023 and lease-up to be finalized by Q2 2024.
|
|
|
Rate: 4.13%
Term: 7 years
LTV: 70%
Amortization: 1 Year IO, then 25 Year Amortization
Prepayment: None
Fee: None
Guaranty: Full Recourse
|
Transaction Description:
George Smith Partners successfully closed a loan at 60% loan-to-value for an 84% occupied, newly built, and stabilized retail center in Bakersfield, CA. GSP located a lender that was able to lock the rate of 4.125% at application to avoid the rate volatility in the market. Many lenders were not comfortable quoting the deal because of the lack of operating history. GSP was able to locate a lender that was comfortable with the lack of history, with a 6-month debt service reserve held back at closing, to ensure that the tenants continue to pay rent. The reserve is released after 6 months of full rent collection.
|
|
|
George Smith Partners is in application with a capital provider funding take-out loans for new multifamily buildings, in lease-up, and prior to stabilization. Transactions range from $5,000,000 – $40,000,000 and can be sized up to 65% of “as stabilized” value. The rate is locked at application and prices in the mid-4.00% range for a seven-year execution. This on-book portfolio lender will close on a pro-forma and C of O, with only a 25% occupancy threshold. Coupons are fixed without the use of SWAPs allowing for prepayments that do not include a loss of yield formula.
|
|
Markets are whipsawing back and forth between worrying about stubborn inflation, recession, or both- stagflation. The conundrum is partially a result of Fed policy. Remember, the Fed’s toolbox consists of “hammers not scalpels.” The central bank is not able to fine-tune or tweak sections of the economy. Instead, it’s interest rate increases are macro-monetary policy moves that affect capital markets, personal finance, consumer behavior, etc., on a large scale. Much of today’s inflation is due to a massive supply shock, as manufacturing and logistics underwent disruption due to COVID. So, the Fed’s “hammer” is to create a demand shock by raising interest rates. Example: Existing home sales volume is plummeting as mortgage rates spike (the 30-year fixed mortgage rate has spiked to over 6.00%, up from about 3.10% last year). Also, there are signs that gas prices have actually dropped slightly in recent days. Markets are looking at this as “good news and bad news” as high prices and increased interest rates are causing consumers to curb purchases. The 10-year Treasury hit 3.50 on June 14 on the narrative that inflation was possibly out of control. Today, it is at 3.16% on slowdown fears. No matter what, the focus will be on the data over the next couple of weeks. This week will include jobless claims and consumer sentiment. Next week will include durable goods and Thursday’s big PCE release. Stay tuned… By David R. Pascale, Jr. , Senior 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
|
|
Constellation Place 10250 Constellation Blvd., Ste. 2700 Los Angeles, CA 90067
|
|
|
© 1999 - 2024 George Smith Partners, Inc. DRE # 00822654 FINfacts is an ePublication of George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
|
|
|
Hi, just a reminder that you're receiving this email because you have expressed an interest in George Smith Partners. Don't forget to add finfacts@gspartners.com to your address book so we'll be sure to land in your inbox!
|
|