Finfacts XXIV – No. 429
August 30, 2024Market Rates
Recent Financings
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Advisors
Steve Bram
Senior Managing Director & Principal / GSP Co-Founder
David R. Pascale, Jr.
Senior Director
Nick Rogers
Vice President
Rate: SOFR+ 5.45%
LTC: 70% of purchase, plus 100% CapEx
Term: 3 Years
Origination Fee: 1.50%
Exit Fee: 1.50%
Guaranty: Non-Recourse
Bridge Financing for the Acquisition and Reposition of a 75% Occupied, Multi-Tenant Shopping Center in a Southwestern State
Transaction Description:
George Smith Partners successfully arranged a 3-year, non-recourse, interest only bridge financing for the acquisition and reposition of a 75% occupied, multi-tenant shopping center in a Southwestern State. The property is a neighborhood center with 20 tenants and is anchored by a local swap meet and antique mall. The property is shadow-anchored by a large, independent fitness center. The property suffered from mismanagement and needs renovations and a new lease-up plan. GSP identified a lender that was familiar in the market, and worked with the Sponsor throughout the closing process, increasing leverage to 70% Loan-to-Purchase midway through closing. The lender also provides 100% of capital expenditures, tenant improvements, and leasing commissions to stabilize the center.
Pascale’s Perspective
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Rate Cut Still on Tap for September…Employment Report Looms Large
It was 3 weeks ago that leading economists were calling for a 50 bp emergency non-meeting rate cut after the June employment report triggered a stock market meltdown. Year-end expectations jumped to as much as 1.50% of cuts by year end. This week’s data had two narratives: (1) 2ND quarter GDP was revised up to 3% (Q1 was 1.4%). Businesses ramped up spending on fixed investment (plants and equipment) spurred by government infrastructure spending and AI investments. Durable goods orders were robust and jobless claims leveled off. The soft landing is coming back into view; and (2) today’s benign PCE report keeps the “green light” on for a September rate cut. PCE core increased 0.2% for the month and 2.6% annually. The real core number was 0.16% for the month which translates to a 3-month annualized rate of 1.72% (“Are we there yet?”). Next Friday’s employment report will be closely watched. Recent weekly jobless claims numbers have stabilized. Will a downturn be welcomed as “bad news is good news” or will it trigger another panic? Stay tuned…
By David R. Pascale, Jr., Senior Vice President at George Smith Partners.
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