Finfacts XXIV – No. 416
May 16, 2024Market Rates
Recent Financings
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Advisors
Jake Sachse
Director
Nicholas Drohan
Vice President
Rate: Fixed rate over the 4-year interpolated UST +4.5% , full-term interest only
Term: 48 months
LTC: 77%
Guaranty: Non-Recourse
$23,000,000 Bridge Loan for a 130,000 SF Self-Storage, Retail Facility in Orlando, Florida
Transaction Description:
George Smith Partners successfully arranged a non-recourse, bridge loan of $23,000,000 for the lease-up of a four-story self-storage facility with 969 units over 8,000 SF of ground floor retail located in the Lake Nona Submarket of Orlando, Florida. GSP, through their expertise in bridge financing and strong relationships with a wide range of lenders, was able to negotiate favorable terms for its clients within a condensed timeframe to pay off its construction loan before maturity. The 4-year bridge loan was priced at a fixed rate over the 4-year interpolated UST +4.5%.
Building upon the developer’s seasoned experience creating market driven apartment and mix-use communities, the GSP team efficiently packaged, marketed, and executed its client’s 77% LTC bridge financing request in under 2 months.
Pascale’s Perspective
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CPI Report Indicates Inflation is Cooling Down Again…Trend or Outlier?
Markets cheered this week’s CPI release as core CPI dropped to 3.6% annually, the lowest in 3 years. The report came on the heels of 4 months of hotter than expected CPI reports that significantly dampened any rate cut expectations. Some aspects of the report were particularly encouraging. Food costs (at home) showed no increase with a slight increase in food at restaurants (an indication that labor costs are still rising), shelter costs were high but moderated slightly.
Coming on the heels of Fed Chair Powell’s statement that the Fed is most likely finished with rate increases, treasuries rallied down to 4.33% (down from 4.70% in late April). The question that will drive rate expectations: Does this signal a return to disinflationary trends? Let’s watch the two big drivers, employment and consumer strength. Recent data shows that the long awaited “consumer pullback” is occurring. The San Francisco Fed reported that pandemic era excess savings are nearly depleted. Starbucks, McDonalds, Yum Foods and other retailers are reporting lower sales for 2024 Q1. Home Depot indicated consumers are delaying planned spring projects. Much of the pullback is due to inflation as many prices have increased 20% since spring 2021.
Let’s take a peek at next month’s predicted PCE and CPI numbers courtesy of the Cleveland Fed’s “Nowcasting” predictions (below). The April core PCE (released in 2 weeks) is predicted at 0.23% with May CPI and PCE predicted at 0.11% and 0.12% monthly. That’s within the Fed’s target. Stay tuned…
By David R. Pascale, Jr., Senior Vice President at George Smith Partners.
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