| Transaction of the Week |  | |  | | Transaction Description: | | $1,740,000 Cash-Out Refinance for Unentitled Land GSP's Sponsor required a bridge loan for the cash-out refinance of a 12.5-acre unentitled parcel in Oceanside, California. Proceeds from the 18-month, Interest Only loan will be used for pre-development costs on a proposed 165-room Hilton flagged hotel near the Pacific Ocean. |
Challenge: Lenders' appetite for land financing is relatively low, and pinpointing a reliable Hard Money lender is difficult in today's market. The property was free & clear at funding and despite significant cash invested, is still considered a cash-out scenario by capital providers. The appraised valuation of the land was lower than expected. |
Solution: GSP identified a reliable private equity capital provider who is comfortable with the borrowers' business plan and exit strategy. The lender ultimately funded a greater loan-to-value ratio than originally forecasted, and was able to close in a timely manner. | | | Rate: 13.5% | | Term: 18 Months | | LTV: 45% | | Recourse | | Broker: Gilda Rivera | | | |  | | | | National Portfolio Lender Allocated $500,000,000 to Disperse Before Year-End, Pricing From 3.87% for 10 Year Term A major Life Insurance Company recently received a $500,000,000 allocation to be distributed by year-end. This portfolio lender is currently offering multifamily, industrial, retail, and office financing in the top 50 major metropolitan markets. Loans range from $10,000,000 to $50,000,000, with larger amounts considered on a selective basis. Loan terms of 5 to 10 years are available, along with 15, 20, and 25-year fully amortizing options. Interest Only payment structures can be obtained for sub-60% LTV requests. Pricing for 55% LTV loans starts at 3.11% and 3.87% for 5 and 10-year terms respectively. A maximum of 75% leverage is available at higher but equally competitive rates. | | | | Hot Money | Non-Recourse Land Loans are Back! An institutional capital provider is currently funding land acquisitions and refinances from $3,000,000 to $20,000,000 in "high growth corridors". Markets include Southern California, Arizona, Colorado, Texas and the eastern seaboard from Virginia to Florida. Interest Only payments are made on a quarterly basis with fixed rates varying from 13% to 15% based on risk and term. LTV from 50% to 70% of the current market value for up to 36 months with recourse limited to standard carve-outs. Use of proceeds may include horizontal construction (off-sites, utilities, grading, etc.) Land note purchases will also be considered. | | | If you have an inquiry regarding George Smith Partners' commercial real estate financing, please contact your GSP representative or Todd August, Chief Operating Officer, at (310) 867-2995 or TAugust@GSPartners.com. | | | Speakers Corner | Founding Partner, Gary M. Tenzer is Co-Chairman of the 40th Annual Crocker Symposium to be held on Tuesday October 4th at the JW Marriott Hotel/LA LIVE Los Angeles. Mr. Tenzer will also participate on the finance panel for this event. Registration and additional information on the Symposium may be found here. The Crocker Symposium is an annual conference on Real Estate and the Law, jointly sponsored by the UCLA Ziman Center and the Los Angeles County Bar Association. | | | Pascale's Perspective | Fed Announces "Twist" Program Today's 2-day Fed meeting closed with the expected "sell short, buy long" bond strategy. The Fed will sell $400 billion of maturing short term (6 month to 2 year maturities) bonds and use the proceeds to buy long term bonds (5, 10, 30 year maturities). JFK tried this in 1961, partly to discourage investors from selling dollars for gold and then selling the gold in Europe for a profit. Another reason was to provide stimulus by keeping long term rates lower. There is no clear consensus on the effectiveness. The program was originally thought to be a failure but some economists think that it was effective after isolating certain statistics. Today's announcement caused a massive sell-off in stocks and continued an unprecedented bond market rally, driving the 10 year Treasury yield down to 1.86%! How much real stimulus will occur? Rates have been at generational lows for an extended period and the economy has been slow or stagnant. Are consumers and businesses reluctant to spend on houses, cars, hiring, etc. because rates have been too high? Or is it fear of an uncertain future? ...stay tuned... David R. Pascale, Jr | |
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