GSP Insights

  • Promises Kept? Markets Hope So

    Pascale’s Perspective

    July 17, 2019

    The Fed has spent the last six weeks telegraphing a rate cut to occur at the July 30-31 meeting. The markets have priced in the expected cut; the “Powell put” is in effect. The rationale is the usual: prevent slowing growth and stimulate inflation closer to the 2.0% target. The 10 year treasury has traded in the 2.00% range since Powell and other Fed officials described the cut as “insurance” against further slowdowns and trade uncertainty. The problem with the Fed’s timing is that the latest economic data indicates strong growth (manufacturing output, retail sales, employment) and signs of inflation (CPI, PPI). It’s part of the contrarian news cycle: A vote of confidence by the Fed (no rate cut) will create market volatility. Debt Ceiling Update: The news last week that the Treasury will reach its debt limit in early September without an increase has created the usual Washington drama with very little time to spare (the House of Representatives recesses on July 26). This has started to disrupt the treasury market with a selloff in short term treasury notes (3-6 months), spiking those yields and creating some inversion. Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

  • Preferred Equity & Mezzanine Financing Up to 90% LTV

    Hot Money

    July 17, 2019

    George Smith Partners is working with a national lender offering preferred equity programs for office, urban retail and multifamily properties ranging from $5,000,000 to $50,000,000 in primary and secondary markets. With the ability to advance 90% of purchase price for new acquisitions, refinancings, recapitalizations, restructurings, DPOs, workouts and partner buy-outs pricing starts at 8% for terms up to seven years. The lender offers a flexible prepayment structure and future funding.

  • Gloomy Fed Outlook Rallies Markets

    Pascale’s Perspective

    July 10, 2019

    Today the world’s most influential banker (Fed Chair Powell) testified to Congress about global economic uncertainties including trade tensions, tariffs, and overall weakness in the global economy. Market reaction? The S&P index rallied to 3,000, it’s all time high. Why? We are back to the contrarian new cycle as bad news equals the return of the punchbowl (rate cuts). Powell’s testimony along with St Louis Fed President Bullard’s recent comments regarding a half point “insurance” move against global growth slowing means markets have priced in at least a half point decrease in the 2nd half of 2019. As oil prices spiked on global tensions (US/Iran) and weather (storms off the coast of Mexico), Powell expressed concern over “persistent weak inflation”. He also waved off last week’s positive US jobs report. For our borrowers, the news is good for now: indices (Treasuries and LIBOR) continue to drop, spreads are steady and lots of liquidity.

  • High Leverage Non-Recourse Bridge Financing

    Hot Money

    July 10, 2019

    George Smith Partners is placing high leverage non-recourse bridge debt up to 80% + of cost through a national portfolio lender. Funding value add transactions from $4,000,000 to $50,000,000 the Capital Provider offers flexible loan structures with terms up to 5 years. Floating rate pricing starts from LIBOR + 290. Lender has a particularly strong appetite for Multifamily product in secondary markets nationwide. Other property types they will finance are: Office, Retail, Industrial and Hospitality.

  • Non-Recourse Bridge & Mezzanine Financing up to 85% LTV

    Hot Money

    July 2, 2019

    George Smith Partners is working with a national capital provider funding non-recourse bridge and mezzanine debt to 85% of value. The Lender offers flexible loan structures with interest only terms up to 6 years (inclusive of extension options) for transactions from $10,000,000 to $75,000,000. Floating rate pricing starts at LIBOR + 275. The Lender has a strong appetite for Multifamily, Office, Industrial, Retail and Hospitality properties located in primary, secondary and tertiary markets.

  • Shahin Yazdi Takes A Deep Dive Into the Art of the Capital Stack on the RealCrowd Podcast

    Podcast

    June 26, 2019

    Shahin Yazdi, Principal and Managing Director of George Smith Partners explains the capital stack and the various components: debt, equity, mezzanine, preferred, different pricing, different rates, different loan to values. He talks about what the goals are for the different parts of the capital stack, how to arrange each source of capital in a transaction, where the art comes into structuring a transaction, and what makes the right capital stack for a deal.

    Click here to listen to the podcast.
    Click here to read the transcript.

  • Floating and Fixed Rate Bridge Financing with Future Funding

    Hot Money

    June 26, 2019

    George Smith Partners is working with a national capital provider that will provide non-recourse floating and fixed rate bridge financing up to 80% of cost for commercial real estate value add opportunities, with future funding for leasing, capital work, interest/carry and earnouts. With terms up to 5 years, the loan sizes range from $3,500,000 to $35,000,000 (and larger for portfolios) and floating pricing from +/-300 bsp over LIBOR and fixed pricing from 4.75%. Program highlights include no interest on unfunded future dollars, no minimum initial cash flow requirement at closing and flexible prepayment.

  • Rates: US Fed, ECB Lead A “Race to the Bottom”

    Pascale’s Perspective

    June 19, 2019

    Today’s Fed statement and press conference by Fed Chair Powell combined with the recent comments by ECB’s Mario Draghi can only be described as a “dove-fest” as another round of easing is upon us. First off, both central banks see little evidence of inflation now or in their forecasts. Both see trade disputes as harmful to long term growth prospects. Yesterday, the ECB announced potential moves including rate cuts and/or quantitative easing. This caused global bond yields to fall, the German 10 year hit an all-time low of negative 0.32%. Other banks are following suit: India’s central bank (the RBI) has cut rates 3 times this year with another rate cut expected in August. These moves have global trade consequences (which seems to be a hot topic these days) as the rate cuts devalue the currencies of those countries. If the US dollar is “too strong” in comparison, our products become too expensive overseas. This ratchets up pressure on Powell to “fall in line” and keep the dollar “affordable”. The Fed today: “the case for somewhat more accommodative policy has strengthened” and seven of the committee members (of the 17) expect a 0.50% rate cut by the end of 2019. If the Fed doesn’t lower rates at next month’s meeting, it will roil markets as a cut is now “priced in” to treasuries and equities. Stay tuned By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

  • 5.0% Fixed Rate Prepayable at Any Time

    Hot Money

    June 19, 2019

    George Smith Partners is working with a non-recourse capital provider that is funding fixed & floating bridge loans. rate commercial, mezzanine, preferred and direct equity. With a focus on the top 150 MSA’s, the lender will fund up to 75% of value with initial terms up to 3 years. Program highlights include open prepayment and no minimum interest.

  • Fed Rate Cuts? Yes…Only Question is “How Many?”

    Pascale’s Perspective

    June 12, 2019

    Recent statements by Fed Chair Powell and other Fed officials have telegraphed rate cuts “sooner rather than later”. Markets have priced in the cuts: stocks rallied, treasury yields dropped and gold prices are rising. The futures market is predicting two rate cuts, most likely in July and September. Next week’s June meeting should “set the stage” for the cuts, as Powell has a press conference scheduled. In fact, if he signals no cuts, look for some market volatility. This means that LIBOR should be down to around 2.00% by mid-September. Spreads: CMBS spreads have widened about 10 bps in recent weeks, mostly due to the drop in Treasuries. Fannie and Freddie have also widened slightly. All-in loan rates are still in the 4.00% range as the “perfect storm” scenario continues: low treasuries due to dampened inflation expectations and tight spreads. Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

  • Non-Recourse Permanent Loan Program

    Hot Money

    June 12, 2019

    George Smith Partners is currently placing non-recourse permanent financing from $1,000,000 to $25,000,000+ for industrial, office, retail or mixed-use stabilized properties located in top MSAs. Lender has the ability to advance up to 50 – 55% of purchase price. The pricing is based on Treasury rates + 200 points and terms are 3, 5, 7 and 10 years with step down prepayment that is waived after 2nd year if refinanced again with Lender. There is no cost to the borrower for appraisal, legal, title, escrow or recording. An additional $500 credit at escrow if Borrower provides all due diligence within 7 days from signing LOI.

  • Central Banks Bust Out the “Punchbowls”, Do They Have Enough?

    Recent uncertainty and volatility surrounding tariffs and trade disputes is worrying central bankers tasked with maintaining growth and stability. With “trade talk” dominating the headlines (Are they talking? Not talking? Deal? No Deal?), its easy to overlook that the “regular” economic news has been tepid during the past few weeks (Manufacturing activity, factory orders, etc.) has been tepid. The fear is that the boost from the tax cuts is waning and economies are flagging and being hit by the major trade uncertainty. The major central banks are springing into action: Australia’s Central Bank cut rates to a record low on Tuesday, India may follow suit soon and the economies neighboring China are highly affected. The ECB is rolling out new ultra cheap loans to banks and may cut rates soon. And, yes, the US Fed is now ready to cut rates, the only question is how many rate cuts? Monday’s hint from Fed Official Bullard started the chatter, but Fed Chair Powell’s statement yesterday that the Fed was prepared to “sustain the expansion” immediately jolted markets to the upside. This week, the 10 year T dropped to 2.03% this week, touching the lows last seen in Sept 2018 during the North Korean aggressive missile test and market panic. Some key analysts are dropping their 10 year 2019 year end predictions to about 1.75%.Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

Don't Miss a Fact,
Sign Up for FINfacts!

FINfacts is a weekly newsletter highlighting recent financings and economic insights.

Subscribe Here