FINfacts™ XXIV – No. 327 | July 20, 2022

MARKET RATES
Prime Rate 4.75%
1 Month LIBOR 2.16%
6 Month LIBOR 3.29%
5 Yr SOFR Swap 2.86%
10 Yr SOFR Swap 2.81%
5 Yr US Treasury 3.16%
10 Yr US Treasury 3.03%
30 Yr US Treasury 3.16%

INTRODUCTION


RECENT TRANSACTIONS
$31,600,000 Bridge Financing for the Refinance of a Retail Center; Central Florida

Rate: 5.20% Fixed
Term: 3 Years
Amortization: Interest-Only
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners successfully advised on the placement of a $31,600,000 fixed-rate, non-recourse, bridge loan for the refinance of a 460,000 square-foot retail center located in central Florida. Although the Center is 93% occupied, lenders expressed concerns about JCPenney and the theater, given the ramifications of the pandemic.

Furthermore, the Sponsor required a cash-out refinance and a fixed-rate loan. With the Property’s dominant market position, strong institutional sponsorship, well-thought business plan, and low basis, GSP was able to successfully source a lender willing to provide non-recourse, fixed-rate bridge financing with significant cash-out.

Advisors

Gary E. Mozer
Managing Director & Principal
Lee Norman
Senior Vice President
Tommy Adelson
Vice President
Brody Flagg
Analyst

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HOT MONEY
Mezzanine Financing Starting at SOFR+10%

George Smith Partners has identified a debt fund providing mezzanine financing for ground-up construction. The capital provider will lend in the top 20 MSA with rates starting at SOFR+10%. The minimum capital allocation per deal is $10,000,000, with the ability to go $20,000,000, and leverage up to 80% LTC. Property types include multifamily, student housing, and industrial. The capital source has a strong appetite for institutional level opportunities.

More Hot Money ›

Pascale's Portrait
PASCALE'S PERSPECTIVE
Fed Signals a 75 Basis Point Increase, Treasuries Remain “Range Bound”

Last week’s market consensus that the Fed would increase rates by 100 basis points at next week’s meeting has ebbed. Multiple Fed officials spoke last Friday, just before the traditional pre-meeting “quiet period” where they refrain from public comment. Each one indicated a 75 basis point increase was appropriate, clearly telegraphing their intent. Some officials feel that a big increase could damage the strong labor market. I guess that means that a 75 basis hike next week is “dovish”? With little economic data this week, treasuries are trading in a tight range. The 10-Year Treasury has been fluctuating between 2.90% – 3.10%, closing today at 3.02%. The yield curve inversion is holding with the 2-Year closing 21 basis points above the 10-Year.

Next week will provide much more direction as it is “action-packed” with: Consumer Confidence on Tuesday, Fed meeting and statement on Wednesday, Q2 GDP on Thursday, and the all-important PCE report on Friday (the Fed’s preferred inflation gauge). The GDP report may show that we are in a recession now (defined as 2 consecutive quarters of negative GDP). 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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