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FINfacts™ XXIV – No. 329 | August 3, 2022
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| Prime Rate |
 5.50% |
| 1 Month LIBOR |
 2.36%
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| 6 Month LIBOR |
 3.31% |
| 5 Yr SOFR Swap |
2.58%
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| 10 Yr SOFR Swap |
2.48%
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| 5 Yr US Treasury |
2.83% |
| 10 Yr US Treasury |
2.71%
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| 30 Yr US Treasury |
2.99% |
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Rate: 1-Month SOFR + 270
Term: 7 Years
Amortization: Interest-Only for the First 3 Years, Followed by 30-Year Amortization
LTV: 60%
Guaranty: Non-Recourse
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Transaction Description:
George Smith Partners successfully advised on the placement of a $22,900,000 non-recourse bridge loan with cash out for the refinance of a 35,000 SF mixed use, office/retail building in the heart of Beverly Hills. Although boasting fully leased office spaces and an irreplaceable location in the famed Golden Triangle, the Property’s ground floor included some vacancy. Pandemic issues with return to office and street retail concerns were offset due to the Property’s incomparable location. At close, one lease was signed, another in negotiation, and numerous tenant tours were requested as the market recovered.
The Sponsor required a loan to not only pay off existing debt and return equity, given the long-term ownership, but also to fund leasing commissions and tenant improvements. With strong sponsorship and a jewel box asset, GSP was able to source a lender that was willing to structure financing to complete the Sponsor’s business plan, funding leasing costs as well as providing both cash out at closing and an income earn out once the street facing retail was leased.
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George Smith Partners is currently working with a capital provider funding permanent multifamily debt up to 65% LTV, with rates starting at 4.15% on both 5-year and 7-year loans. Financing in the western US, this lender’s sweet spot is between $5,000,000 – $20,000,000 with the ability to go higher on select deals. This capital provider has non-recourse and interest-only options available along with stepdown prepayment structures.
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Monday opened with yields plummeting on a “flight to quality” as geo-political tensions rose due to the “flight to Taipei” by a US Congressional delegation. Worries dissipated on Tuesday as the focus shifted back to economic data and remarks from Fed officials. Today’s ISM numbers indicate strong demand for services. Factory orders rose in June with surprising demand. Markets may have been expecting recessionary pressures to create demand slack and cool inflation, thereby avoiding predicted interest rate hikes.
Fed officials chimed in as Fed President Bullard said the central bank “has a long way to go” to get back to the 2% inflation target. Fed President Mary Daly then started the September speculation game by saying a 50 basis point hike next month would be “reasonable.” Fed Futures rates softened immediately to a 57% probability of a 50 basis point increase. The markets favored a 75 basis point increase the night before. The 10-Year Treasury dropped to 2.51% Monday, jumped to 2.85% today, and now is at 2.71%. The 38 basis point inversion between the 2-Year Treasury and the 10-Year Treasury went to 40 basis points. Stay tuned…
By David R. Pascale, Jr. , Senior Vice President at George Smith Partners
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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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Constellation Place
10250 Constellation Blvd., Ste. 2700
Los Angeles, CA 90067
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© 1999 - 2023 George Smith Partners, Inc. DRE # 00822654 FINfacts is an ePublication of George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
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