| Transactions of the Week |  | |  | | Transaction Description: | | $5,200,000 Acquisition Loan for Auto Dealership Conversion GSP successfully placed the $5,200,000 acquisition/reposition loan for the conversion of a former auto dealership into a retail center. The future multi-tenant retail property loan provided 67% of the purchase price with an additional commitment of $500,000 for "Good News" dollars upon the execution of leases. |
Challenge: The site had environmental issues from the repair shop at the former dealership. The Sponsor required non-recourse for a quick-close loan as the purchase option contract had expired. |
Solution: GSP identified a lender that understood the location's potential, becoming comfortable providing capital with no leases in hand from retailers, only letters of intent. The lenders' environmental engineer quickly analyzed the Phase I & Phase II reports and concluded the remediation plan and costs were well founded. The loan was funded without a valid purchase and sale agreement and was able to close in less than two weeks. Tenant improvements will be lender funded up to $500,000 with signed leases. | | | | |  | | | | Multifamily 4.55% Fixed for 7 Years A Southern California multifamily originator will lock rate for stabilized apartments at 4.55% fixed for 7 years. Units located from Santa Barbara to the Mexican border will be considered up to 75% of value and a 1.15 dcr. Loan requests under 55% LTV will net a 15 basis point savings during the initial term. Non-recourse is available by exception. All loans self-liquidate over 30 years. Mixed use will be considered when the commercial components do not exceed 50% of the net rentable. | | Transaction Size: $1,000,000 - $7,000,000 | | Rate: 4.55% fixed | | Loan Term: 30 years | | Amort: 30 years | | Max LTV: 75% | | Min DCR: 1.15 | | Property Types: Multifamily | | Geography: Southern California | | | | | Hot Money | National Bank Funding Condo Inventory Loans from $20,000,000 A national investment bank is actively funding condo inventory loans from $20,000,000 to $100,000,000. The financings carry a 9% rate up to 65% loan to sell out and will be held on-book. This capital provider will also consider other portfolio bridge loans in the 6% range. | | | Better Records for Life Company Execution | | As transaction volume returns, strategy and preparation have become increasingly important. Employing a more disciplined approach may offer you access to life insurance company pricing, a 50 to 80 basis point saving over the more aggressive CMBS execution. If historical NOI as a percentage of revenue is inconsistent, lenders question why profitability is less than stable. Non-linear expenses - expenses that may be capitalized that were in fact expensed - should be identified and moved below the operational expense line. Documented capitalized expenses may demonstrate to underwriters and appraisers that there has been a reinvestment of operating capital back into the asset. If the re-investment of operating capital is supported by evidence of improving market fundamentals, you will show management expertise by proactively mitigating lease rollover risk or repositioning the asset to charge premium rents. Taking advantage of market dynamics; compressing capitalization rates and rent growth, to propel your property's value is advantageous. However, maintaining diligent expense reports is a more proactive approach to qualifying your asset for the most aggressive options in the market. It is not a matter of "if" financing is available for stabilized assets; it is now a function of "how" we carve out the best solution for your long term business plan. Ameet Chagan | | | | In The Press | Founding Partner, Gary E. Mozer was quoted in the August 17th issue of Retail Traffic Magazine on the pricing of cmbs product respective to the recent volatility in this segment. | | | Pascale's Perspective | Spotlight on CMBS.... Recent market turmoil, double dip fears, Europe contagion, etc. - have left investors very risk averse. CMBS spreads have blown out to SWAPs plus 350-375, up from SWAPs plus 180 in early June. Rating agency uncertainty derailed a large securitization. Typical pricing on a new 10 year loan is 6.0% to 6.25%. Post Labor Day stabilization theorem? August is typically a slow time with fewer investors and market makers actively trading. There are several large pools coming to market in September and volatility is expected to lessen as spreads tighten. ....stay tuned.... David R. Pascale, Jr. | |
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