Finfacts XXIV – No. 443
January 10, 2025Market Rates
Recent Financings
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Advisors
Jake Sachse
Director
Matthew Kirisits
Director
Grant Pugatch
Senior Associate
Term: 18 months
LTC: 75%
Guaranty: Non-Recourse
$6,300,000 Construction Financing for a Build-For-Sale Development in Colorado
Transaction Description:
George Smith Partners closed a loan in the amount of $6,300,000 for the construction of a 14-unit, build-for-sale community located in Colorado. This is the second closing in a programmatic partnership between the lender and the developer. The initial interest rate on this loan is lower due to a lower LTC. For this loan, the lender had already completed the due diligence work to understand the modular build project and the Sponsor. As a result, the loan closed in just 45 days, which is very fast for a construction loan.
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Advisors
Jake Sachse
Director
Matthew Kirisits
Director
Grant Pugatch
Senior Associate
Term: 18 months
LTC: 75%
Guaranty: Non-Recourse
$10,550,000 Construction Financing for a Build-For-Sale Development in Northern California
Transaction Description:
George Smith Partners closed a $10,550,000 loan for the construction of a master planned community located in Northern California. The build-for-sale project consists of 25 units and has shared amenities and common space. The request presented a unique challenge in that the individual units are prefabricated offsite and transported to the property.
GSP was able to source a lender that specializes in phased developments and is comfortable with prefabricated construction. The loan is non-recourse, with the carve out guarantees signed by a corporate entity rather than an individual. The overall funding is 75% of the project costs. The floating rate will allow the borrower to benefit if interest rates decline.
Pascale’s Perspective
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“Very Hot” Jobs Report Upends Rate Cut Expectations, 10-Year Treasury Spikes to 4.78%
Today’s release of the December jobs report indicated broad-based job gains (travel and leisure, health care, government, and retail all up significantly). Recent CPI and PCE reports have shown that the Fed’s 2% inflation target is still a ways off. So, a softening jobs market has been the anticipated trigger for upcoming Fed rate cuts. Futures markets are now anticipating one (or possibly two) rate cuts in 2025, and the Fed on pause until June.
Washington watch: Markets are awaiting clarity on fiscal and trade policies set to be implemented by the incoming administration: tariffs (real or negotiating tactic?), border policy (will it affect labor costs?), debt ceiling (will a long negotiation process bond issuance), and budgets (tax cuts and spending cuts are on the table—what will the net effect be on future deficits?). Stay tuned…
By David R. Pascale, Jr., Senior Vice President at George Smith Partners.
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