GSP Insights

  • Treasury Yields Rise as “Fear Trade” Subsides

    Pascale’s Perspective

    September 11, 2019

    Today’s announcement that the U.S. is delaying the next round of trade tariffs continues a trend of positive global news in September (Brexit, Hong Kong, etc).  Yields are up from their recent lows, the 10 year T is at 1.70%. Tomorrow’s ECB meeting and announcement is highly watched as Draghi nears the end of his term and is expected to announce his final round of Quantitative Easing.  There is some “drama” as mixed messages are being received from different ECB factions.  But with Germany tipping towards recession, some accommodative measures are expected. The markets will react based on how the reality matches the predictions already priced in.  Stay tuned.  By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

  • Non-Recourse Bridge Financing in Secondary and Tertiary Markets

    Hot Money

    September 11, 2019

    George Smith Partners is placing non-recourse bridge debt through a national portfolio lender funding transactions from $5,000,000 to $75,000,000. The Capital Provider offers flexible loan structures with interest only terms between 1 to 5 years and extension options. Floating rate pricing starts from LIBOR + 300. Lender has a strong appetite for manufactured housing, self-storage and hospitality along with four main asset types located in secondary and tertiary markets in addition to primary markets. Opportunities should be cash flowing day one (above 1.0x DSCR) and value-add in nature. Loans can be structured with no lockout and minimum interest of +18 months. Initial loan to cost can go up to 85%, as long as stabilized value and cash flow support 70% takeout level. Future fundings can be structured for capex and TILC costs.
    Lender also offers CMBS style loans on all asset types, primarily focused on Manufactured Housing, Self-Storage and Hospitality, loan sizes ranging from $2,000,000 to $25,000,000 with 5-10 year terms and 25-30 year amortization schedules. Typically capping max LTV at 70% for refinances, Lender has ability to structure mezzanine components (as small as $1,000,000) to get up to 80%-85% LTV. Senior Loans currently price in the 4.75% (10-yr loan) area with the Mezzanine components pricing in the 10% – 12% range depending on asset type and LTV of last dollar.

  • David Pascale gives a Real Estate Market Update on the RealCrowd Podcast

    Podcast

    September 10, 2019

    Click here to listen to David Pascale, Senior Vice President at George Smith Partners, as he gives a Real Estate Market Update on the RealCrowd Podcast.

    The discussion will cover: how the Fed Rate cut will effect LIBOR, Macro trends, Global impacts in the Capital Markets, why this is a favorable lending environment and what economists you should follow.

  • Global Fears Recede but the Data is Turning

    Pascale’s Perspective

    September 4, 2019

    This week is the opposite of last week, headlines are better but economic reports are troubling.  This week has seen the British Parliament take a major step towards averting a chaotic “no-deal” Brexit and a Hong Kong withdraw of the controversial extradition proposal that caused massive protests.  This should have caused a “relief” selling of treasuries and higher yields.  The ISM Manufacturing index fell below 50% (contraction) for the first time in years.  Is this an aberration or are manufacturers pulling back in today’s volatile trade environment?  The next few manufacturing reports and anecdotal information will be closely watched.  The 10 year T is at 1.46%, just 10 bps above its all time low.  Inflation (or the lack thereof): last week’s PCE was 1.6%, well under the Fed’s 2.0% target; oil prices are dropping and may test the $50/per barrel key technical level.  This week’s employment report (Friday) will be closely watched on the heels of the poor ISM. Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

  • Ground-Up Construction & Multi-Family Renovation Financing up to 85% LTC

    Hot Money

    September 3, 2019

    George Smith Partners is working with a national capital provider funding ground-up construction and Multifamily renovation debt to 85% of cost. They offer flexible loan structures and terms up to 24 months for transactions from $500,000 to $10,000,000. The Lender has a strong appetite for Multifamily, Mixed-Use, Condos and Infill Subdivisions located in primary and secondary markets and they will fund foreign nationals. Pricing starts at 7.99% for Multifamily renovation loans and 8.49% for Ground-up construction loans.

  • Treasury Yields Near All Time Lows, Sentiment is Diverging From the Data

    Pascale’s Perspective

    August 28, 2019

    The 10 year Treasury is now at 1.46%, just 10 bps above the all-time low (summer 2016). The bond market continues to ignore U.S. economic reports and concentrate on global fears. Remember when positive Consumer Confidence and Durable Goods reports would drive yields up? Those days are in the rear view mirror as the markets are “obsessed” with gloom on the horizon. US/China trade: the consensus is that China is preparing for a long dispute. Brexit: The suspension of Parliament (suggested by Boris, approved by the Queen) could result in a messy and disorderly split between the UK and the EU, with unforeseen consequences that are hard to quantify. Hong Kong: another potentially volatile situation in a major trading hub. We are seeing many lenders trying to figure out spreads and floors on fixed rate loans. Many are flooring rates near 4.00%, while others are quoting and closing under 3.50% on 10 year money (!), Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

  • Bridge-to-Perm Financing to a Ten-Year Term

    Hot Money

    August 28, 2019

    George Smith Partners has placed several heavy bridge/reposition transactions to 83% of total capitalization with sub-5% coupons. With the ability to extend the loan term up to ten years upon stabilization, debt service will be interest-only throughout the entire term. This national capital provider will fund all commercial property types across the United States. Debt Yield and DSCR restrictions are based on market location and analyzed on a deal by deal basis.

  • Fed Minutes Set Up “Big Friday” in Jackson Hole

    Pascale’s Perspective

    August 21, 2019

    Today’s Fed phrases of the day is a tie between “midcycle adjustment” and “part of a recalibration” which were descriptions of the recent rate cut contained in today’s release of the Fed minutes. Another sentence indicating the rate cut was not part of a “pre-set course” piled on to the realization that the Fed is still watching the data and has not planned a series of rate cuts. The bond market “spoke” by re-inverting the yield curve (the 2 year and 10 year inverted again), indicating fear that the Fed may not act fast enough to ward off a potential recession. Every word and mannerism of Fed Chair Powell’s speech Friday at the annual Jackson Hole symposium will be parsed and analyzed. The bond and stock markets have priced in a September rate cut. However, the bar may be low: if he doesn’t rule out further rate cuts that may be dovish enough to keep markets “off the edge”. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

  • 5.90% Fixed Rate Non-Recourse Bridge Financing

    Hot Money

    August 21, 2019

    George Smith Partners is working with a non-recourse capital provider funding bridge loans from $10,000,000 to $50,000,000. With a focus in California, the portfolio lender will fund up to 60% of value with terms up to one year before extension options. Program highlights include no prepayment and interest only. Decision making is flat and seven-business day close is their normal execution.

  • Yield Curve Inverts and “Un-Inverts”, Inflation is Ignored (For Now)

    Pascale’s Perspective

    August 14, 2019

    The classic and most watched measure of yield curve inversion (the 2 year T higher than the 10 year T) occurred this week for the first time since 2005. The 10 year was at 1.623%, the 2 year at 1.634%. Worldwide stock markets plummeted and investors rushed into bonds, sending yields lower and actually bringing the 10 year slightly above the 2 year as of tonight. The 10 year T dropped to 1.58% as of today (note this is only 22 bps above it’s all time low). Markets seem to be painting central banks into a corner – forcing further rate cuts.  The expectation that the Fed will cut 0.25% at its September meeting is now being superseded by thoughts of a 0.50% cut or a “surprise” cut before the next meeting. Interestingly, no one seems to be concerned that CPI posted its strongest 2 month gain since early 2006. This inflationary news should have sent bond bulls running for the exits and dampening Fed rate cut expectations. But scenes of social unrest in Hong Kong (a critical bond trading city) and Argentina are fueling bond rallies in a very “risk off” market. Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

  • Non-Recourse Bridge Financing at 4.99% Pay Rate

    Hot Money

    August 14, 2019

    George Smith Partners is working with a private bridge lender providing non-recourse short-term loans secured by first trust deeds on commercial and non-owner-occupied residential real estate in prime California markets. The loan product offers “Pay Rate Protection,” which reduces borrowers’ monthly payment to 4.99% per annum for the entire loan term and defers the remaining interest until loan pay-off without compounding interest. Leverage for Multifamily, Office, Retail, Industrial, Mixed-Use, Covered Land, and Non-Owner Occupied Residential up to 65% of As-Is value for transactions up to $10,000,000 with fixed interest rates between 7.99% and 8.99%. Transactions can be completed within two weeks and there are no prepayment penalties.

  • The New Normal has Devolved Into A “Race to the Bottom” For Rates and Currencies

    Pascale’s Perspective

    August 7, 2019

    Worldwide bond yields are plummeting as fear grips the market.  The 10 year T is at 1.71%, after dropping to a 3 year low of 1.60% today.  Last Tuesday it was at 2.08%, the day before the confusing and market disappointing Fed announcement.  That seems like ages ago after a tumultuous week featuring one of the market’s worst fears: trade disputes both actual and threatened.  A pillar of the post Cold War world economic order has been free trade and unmanipulated.  Interestingly, the last time the 10 year was below today’s yield was in the aftermath of the Brexit vote.  The specter of major economies manipulating currencies was triggered this week as China allowed the yuan to drift beyond a key level in relation to the US dollar.  Today, 3 significant central banks (Thailand, India, New Zealand) cut rates significantly ranging from 0.25% to 0.50%.  This will devalue those currencies as smaller countries feel they need to keep up with China and the US.  Will a worldwide devaluation of currency finally trigger inflation? Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

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