George Smith Partners identified an institutional capital provider funding subordinate debt behind existing CMBS, Bank and Life Insurance Company debt. Financing is employed through methods including; transfer of interest, buying out an LP, investing in the LP, inserting a new LLC through an assumption. The sub-debt lender will fund fully stabilized assets up to 75% of cost/value with various pay structures. Terms are coterminous with the senior or may be pre-paid. Pricing starts at 8% for a current pay and requires accrual or equity participation. All structures are within full compliance of the existing senior debt.

The rise in bond yields post US Election has been international. Japan’s 10 year is actually in positive yield territory. Italy’s 50 year bond has lost 16% of its value in 3 weeks. The 10 year T went from 1.71% on election night to a high of 2.30% this morning, with daily yield increases. All of this was based on speculation of President-elect Trump’s fiscal policies (infrastructure and military spending combined with tax breaks). Today, investors looked at actual data (persistently low oil prices, new economic reports showing flat wholesale prices and tepid industrial production). Bonds may be “oversold” and yields are attracting buyers. Fiscal policies still have to be approved by a Republican Congress that includes its share of “deficit hawks”. Today’s 10 year T closed at 2.22%. The next few weeks should be interesting as investors digest data and clues to next year’s policies. stay tuned.     David R. Pascale, Jr.