GSP Insights

  • Permanent Construction Takeout Financing Prior to Lease-up

    Hot Money

    January 21, 2020

    George Smith Partners is working with a national portfolio lender providing construction loan take-out permanent programs for all product types ranging up to $65,000,000 in primary and secondary markets prior to stabilization. With the ability to advance 75% of development cost, pricing starts at 3.50% for terms from five to ten years and the program offers a flexible stepdown prepayment. This lender offers true non-recourse and carve outs to an entity and not a warm body.

  • Non-Recourse & Recourse Permanent Financing up to 90% LTV

    Hot Money

    January 15, 2020

    George Smith Partners is currently placing non-recourse small balance financing for owner occupied and investment properties. For owner occupied properties, this lender offers 80% LTV on conventional financing up to $5,000,000 and up to 90% LTV with an SBA 504 loan up to $10,000,000. For investment properties including industrial and office buildings, retail properties, warehouses and multifamily/apartment buildings, their commercial loan programs can provide up to $3,000,000 in financing with 75% LTV. The Lender waives loan fees on new deals.

  • China Trade Deal Signed, But Uncertainty Remains

    Pascale’s Perspective

    January 15, 2020

    After two years of uncertainty that roiled stock and bond markets, the Phase 1 trade deal has been signed. Now the details are being parsed. Market reaction is basically a “relief rally” as the week to week uncertainty and tensions between U.S. and China have lessened. However, tariffs will remain in place subject to a Phase 2 agreement after the November election. The initial agreement mostly requires China to buy U.S. goods and services (some uncertainty remains whether China can perform on those purchases). This should remove a source of market volatility in 2020 and should be favorable for credit spreads. Treasuries and equity markets rallied with the 10 year Treasury closing at 1.78%. The first CPI and PPI reports of 2020 indicate (surprise) extremely low inflation pressures. Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

  • New Year’s Then and Now, Steeper is Better?

    Pascale’s Perspective

    January 8, 2020

    Today’s yield curve is striking for it’s “normality”, ie. it is uninverted and fairly steep. One year ago today, the 2, 5 and 10 year treasury yields were bunched together, all within about 10 bps (2.55%, 2.58% 2.67%). The yield curve then inverted in August as the 10 year dipped below the 2 year yield. Today’s yield curve (1.57%, 1.65%, 1.87%) indicates confidence in the economy (high 10 year yield) and in the Fed’s promise to stand pat with no rate increase this year (lower 2 year yield). So 2020 begins with lower rates and a healthier curve. With low delinquency rates, an active secondary market, large allocations from portfolio lenders, and overall solid fundamentals, 2020 looks like another big year for commercial mortgage loan volume. For example, the Mortgage Bankers Association predicts an all time high in multifamily lending in 2020. Commercial activity is also predicted to be strong, with the notable exception that lenders are cautious on retail. As the economic recovery goes into year 11, it’s noteworthy that markets basically shrugged off potential escalation of conflict in the mid-East and uncertainty about U.S. China trade resolution.  Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

  • Non-Recourse & Recourse Permanent Financing up to 90% LTV

    Hot Money

    January 8, 2020

    George Smith Partners is currently placing non-recourse small balance financing for owner occupied and investment properties. For owner occupied properties, this lender offers 80% LTV on conventional financing up to $5,000,000 and up to 90% LTV with an SBA 504 loan up to $10,000,000. For investment properties including industrial and office buildings, retail properties, warehouses and multifamily/apartment buildings, their commercial loan programs can provide up to $3,000,000 in financing with 75% LTV. The Lender waives loan fees on new deals.

  • Domestic and Global Developments Fuel “Melt Up” In Treasury Yields

    Pascale’s Perspective

    December 18, 2019

    Behind the impeachment drama, our divided government has been getting things done: new trade agreement with Mexico and Canada, major spending bills (with major deficit spending), an outline of a trade deal with China (some are calling it more of a “trade truce” with the heavy lifting set for next year). The Fed is doing their part by injecting liquidity into the short term markets almost daily, but don’t call it QE. All of these factors along with some positive economic news from Europe and hopes that next year’s Brexit will be orderly have buoyed the 2020 global growth outlook. Treasuries are selling on the sentiment with the 10 year hitting 1.92% today, the highest since July. Maybe those prognosticators that picked a 2.00% 10 year T at year end are pretty close. The rising treasury and relatively stable LIBOR index could return us to a more “normal” index relationship: a steeper yield curve and a 10 year T getting separation from 30 day LIBOR (as the Fed has indicated no rate increases in 2020). So floating loan rates should again be “cheaper” than perm rates. The good economic fundamentals should keep loan spreads tight. In a few weeks, the securitized lenders (CMBS, CLO, etc) will be ready to issue new paper to bond buyers flush with new allocations for the new year. Portfolio lenders will have to compete as the securitized markets often set the bar on spreads.

    Signing off for 2019. It’s been a pleasure writing this column for you and I look forward to an exiting new decade.

    By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

  • Floating Rate Bridge Financing with Earnout

    Hot Money

    December 18, 2019

    George Smith Partners is working with a national capital provider that will provide non-recourse fixed rate financing with an earnout up to 80% of cost. With terms up to 5 years, loan sizes range from up to $40,000,000 (larger in certain circumstances) and pricing starting in the high 200 bps over LIBOR for core asset types as well as co-living, self-storage, student housing, hospitality, commercial condo and specialty use. Program highlights include no negative arb, flexible prepayment and non-cash flowing assets.

  • Fed Accepting “New Normal”, Takes Rate Increases Off the Table for 2020

    Pascale’s Perspective

    December 11, 2019

    Today’s Fed statement and remarks by Fed Chair Powell reflected a continuing change in the relationship between interest rates, economic stimulus, employment and inflation. 2019 resulted in three rate cuts (“mid-cycle adjustments”) which helped spur record stock market highs and low employment. Last week’s Jobs Report was a blockbuster even after accounting for the end of the GM strike. As those increases were implemented, many of the Fed participants indicated expectations of increased inflation this year as employment rose. The theory that full employment will result in inflation has been a bedrock of economic theory for decades. With unemployment at 3.5% and the PCE index at 1.6%, the theory is being tested and failing. By signaling no rate increases for 2020, the central bank is basically daring inflation to return. Many are concerned by polling indicating that public expectations of inflation are at historic lows. Which means that market participants are expecting low inflation and that may create a “self-fulfilling prophecy”. This week’s sad passing of legendary Fed Chair Paul Volcker brought back memories of the Fed’s most significant inflation battle. With inflation running at 12%, Volcker increased the prime rate to 22%, stopping inflation and causing significant pain as unemployment rose. Long memories of the early 1980s move markets to this day as treasuries sell off if inflationary news is in the headlines. The Fed feels that they have reached the “neutral rate” and it’s time to watch the effects. Stay tuned.

  • Non-Recourse Multifamily Bridge Financing to 80% LTC

    Hot Money

    December 11, 2019

    George Smith Partners is working with a national capital provider funding non-recourse bridge debt to 80% of total cost. True proforma based underwriting with a strong appetite for Multifamily and Mixed- Use properties (up to 100+units) with no in-place cash flow requirements. The Lender offers flexible loan structures with interest only terms up to 3 years for transactions up to $15,000,000. Risk adjusted, fixed rate pricing starts at 6.75%, fixed for the life of the loan with no extension fees. Closing costs including lender legal are less than $2000.

  • Data, Headlines and Rumors Move Markets in Volatile Holiday Month

    Pascale’s Perspective

    December 4, 2019

    Treasuries will react to the following factors: (1) Economic reports this week: Factory orders on Thursday (manufacturing has been shaky in recent months as the economy is being carried by the ever spending consumer); The unemployment report this Friday, December 6 (watch the wage trends) and December 15 (China/US tariffs are set to go into effect unless the parties reach some type of agreement or an agreement to possibly agree later). Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners

  • High Leverage Non-Recourse Bridge Financing

    Hot Money

    December 4, 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.

  • Bryan Shaffer Explains Capital Market Trends on the CRE Pro Network Podcast

    Podcast

    December 2, 2019

    Bryan Shaffer, Principal/Managing Director of George Smith Partners was a guest on the Commercial Real Estate Pro Network podcast with Darrin Gross.

    Click here to listen to the podcast or watch the YouTube video here.

    The discussion covers capital market trends where the commercial real estate market is headed.

    “Large commercial real estate projects come with tremendous risk. The borrower sees opportunity, while the lender sees the risk. If the lender does not feel comfortable with the borrower or the project, they will not finance the deal. An experienced finance professional has the needed relations with the various lending products. They can help the borrower explain their project to a prospective lender that will assure the lender of the projects upside, and set them at ease with the potential downside.”

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