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FINfacts™ XXIV – No.88 | October 4, 2017
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| Prime Rate |
 4.25 |
| 1 Month LIBOR |
 1.24 |
| 6 Month LIBOR |
1.52 |
| 5 Yr Swap |
2.00 |
| 10 Yr Swap |
2.28 |
| 5 Yr US Treasury |
1.92 |
| 10 Yr US Treasury |
2.32 |
| 30 Yr US Treasury |
2.87 |
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Rate: 4.15%
Term: 10 Years
Amortization: 30 years
LTV: 55%
Guarantee: Non-Recourse
Prepayment: Yield Maintenance
Origination Fee: Par
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George Smith Partners secured the $9,100,000 non-recourse cash out refinance for 256 multifamily units in a Western States secondary market. Our Sponsor refinanced his existing floating rate loan into new long-term fixed rate financing. Since initial acquisition, the Borrower commenced on a water conservation program but had yet to complete capital upgrades that would qualify him for green certification. An interest rate reduction was offered if a completion reserve was set-aside to complete upgrades and secure the green certificate. Initially estimated at over $100,000, the budget and subsequent reserve was confirmed at $38,000. A pre-commitment rate lock opportunity was structured for 45 days at no cost, allowing the Borrower to monitor secondary market activity and lock at their discretion. Fixed for 10 years at 4.15%, the non-recourse loan amortizes over 30 years. All lender fees and third party costs including legal were capped at $13,000. Future secondary financing will be permitted to 75% of value.
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Rate: 4.37%
Term: 10 Years
Amortization: 3 years IO, followed by 30-year amortization
LTC: 80% LTV
Guarantee: Non-Recourse
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George Smith Partners arranged $8,540,000 of non-recourse, acquisition and renovation debt for a 151-unit multifamily apartment in Orlando, Florida. The subject is composed of 11, two-story buildings and is centrally located to attractions such as Walt Disney World, Universal Orlando Resort, and Sea World Orlando. The business plan is to acquire the performing asset and renovate 100% of the units. Proforma operating expenses were underwritten and supported with the Sponsor’s comparable property expenses in this market. Fixed for 10 years at 4.37%, the non-recourse loan was sized to 80% of the total capitalization. Amortization commences on a 30-year schedule after an initial three years of interest only payments.
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Rate: 7.50% Fixed
Term: 9 months plus Two 3-Month Extensions
Amortization: Interest Only
LTC: 80%
Guarantee: Recourse
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George Smith Partners placed the 80% loan-to-cost financing for a $2,400,000 quick-close cash-out refinance for two adjacent Newport Beach duplexes. The sponsor approached GSP with an extremely tight closing time frame due to the need to redeploy refinance proceeds into a pending acquisition. GSP identified a non-bank lender who is familiar with the location and also has a long history of providing quick close bridge execution. Fixed at 7.5% for 9 months, the loan offers two extension periods.
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George Smith Partners is placing high leverage senior financing bridge loan requests with a non-recourse capital provider focusing on the Western United States. Funding from $5,000,000 to $50,000,000, pricing ranges from LIBOR + 400 to 650 for a one-year term up to 85% of capitalization. The lender will focus on real estate projects with renovation and business plan execution risk.
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The 10 year T has been sitting in the 2.30 – 2.35% range for a couple weeks, the market seems to be “waiting for direction” from a couple places: (1) The data: this Friday’s monthly jobs report will be closely scrutinized for the usual (general trends, wage inflation, etc) and the particular (fallout from recent hurricanes, will this cause a spike in hiring with labor shortages ?); (2) The next Fed Chair speculation: Washington’s favorite subject is often the next big appointment, who is the “favorite”? Is there a potential surprise “dark horse”? With Fed Chair Yellen’s term as Chair ending in January 2018, the rumor mill is in overdrive. The favorite is Fed Governor Jerome Powell, a “dove”, the other major contender is the hawkish former Fed governor Kevin Warsh. Powell is seen as a continuation of Yellen, while Warsh is a wild card that could accelerate the pace of rate hikes or the Fed balance sheet reduction. As one or the other is perceived to be the favorite, bond yields may spike or drop accordingly. (3) Congress and the Administration: Tax reform and/or Tax Cuts: On the agenda, the question is will something pass and if so, what will it look like? Higher deficits? How stimulative will it be? 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 (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 - 2024 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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