| Transactions of the Week |  | |  | | Transaction Description: | | $18,500,000 Refinance of a Grocery-Anchored Nevada Retail Center GSP successfully placed the no-cash-out refinance of a 98% occupied grocery-anchored retail center in Henderson, Nevada. The seven year term loan is priced at 4.75% fixed, and underwritten to a 12% debt yield. |
Challenge: The Sponsor required a non-recourse loan in a market that many lenders still perceive to be vulnerable to further decline. The grocery anchor is not credit-rated or obligated by the lease to provide sales information. The Sponsor required certainty of execution as the existing loan was maturing in less than thirty days. |
Solution: GSP completed a significant amount of upfront due diligence and presented a thorough package to lenders, permitting them to fully vet the perceived transaction risks. GSP identified key lenders who are familiar with and are actively lending in the Las Vegas retail market and subsequently qualified all deal terms prior to execution of the term sheet. Once signed, GSP closely managed every step of the due diligence and closing process to ensure the loan closed on time and as applied for, allowing for a substantial reduction in monthly debt service. | | | | |  | | Transaction Description: | | $2,400,000 Ground-Up Construction Loan in La Jolla, California GSP successfully placed the $2,400,000 construction loan on a vacant parcel for the development of a luxury second home. The 30 year term loan is priced at 4.375% to 75% LTC. The loan allows for interest only payments for the first 10 years including the construction term, then amortizes over a 20 year period. |
Challenge: The Borrower was very rate sensitive and needed to maximize loan proceeds, requiring quick-close financing with favorable prepayment terms. To accommodate their escrow commitment and close the land on time, the Sponsor necessitated a pledge to fund prior to obtaining the final building permits. |
Solution: GSP drew on their extensive capital relationships to identify a reliable ground-up construction loan provider willing to offer an aggressive loan structure at favorable pricing. Funding occurred within 30 days of loan application. | | | Rate: 4.375% | | Term: 30 Years | | Amort: 10 Years IO, then amortizing over 20 Years | | LTC: 75% | | Prepayment: 1/2% Years 1-4; par thereafter | | Broker: Malcolm Davies | | | |  | | | | Mini-Perm/Long-Term Mezz Debt & Pref Equity to $50,000,000 A national capital provider with $1 Billion of capital and cash on hand is extending mezzanine-debt & preferred equity behind banks, Wall Street, insurance companies, and is pre-approved with Freddie Mac to 85% LTV. An inter-creditor agreement is not required. Terms must be co-terminus with the senior debt, and range from four years to ten years with pricing from 9% to 11%. All major asset classes are considered. Some pay/accrue structure is possible although existing cash flow must be in place at close. | | | | Hot Money | No Floor Money Center Bank at LIBOR + 250 A national Money Center Bank is looking to expand their on-book commercial real estate holdings by $500,000,000 and will price down to LIBOR + 250 without a floor on multifamily, office, retail and industrial properties. Initial transactions of $10,000,000 or more will be required for smaller transactions to be considered on a go-forward basis. The floating rate loan does not carry a pre-payment penalty and can be swapped for a fixed coupon. Ground-up construction will be considered with a repayment guarantee. Non-recourse debt is available for cash flowing assets below 65% LTV. Mezzanine debt to 85% of value is permitted from an approved partner. | | | 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 | Managing Director David Rifkind will moderate a financing panel on The Analysis and Trends in the New Cycle at the Crittenden Real Estate Conference September 18th through the 20th. The conference will be hosted at The Ritz Carlton South Beach. Registration and more program information may be found here. | | | In The Press | Managing Director David Rifkind was featured in the August 29th edition of the Los Angeles Business Journal as one of Los Angeles' Retail Groundbreakers. | | | Pascale's Perspective | German Court Decision Provides Some Relief... Europe worries are again front and center... Credit Markets "Fear Factor" has been raised over the past week. Why? (1) German court case could have resulted in an invalidation of the Greek rescue plan from Europe's healthiest economy; (2) Disarray among the Euro countries over the public/private risk sharing arrangements within the bailout structure; (3) Greece lowering future growth forecasts; (4) Unrest in Italy at the mere mention of austerity. As the G7 is set to meet in France next week, two scenarios are being discussed: "All-In" or "breakup". The markets prefer the "All-In" scenario, which may include: a) "Euro-bonds": A diversified risk instrument issued by the Euro members jointly and severally; b) "United States of Europe"; A powerful ECB much like the US Federal Reserve and a streamlined decision making system among the nations. This will avoid a repeat of Finland attempting to negotiate better collateral terms on the eve of the implementation of the Greek rescue plan. Obviously there are major political roadblocks to such a structure, but it may be the only way to avoid disarray and a credit crash. The "breakup" scenarios involve weak countries (Greece, etc.) or strong countries (Germany) exiting the Euro and/or controlled defaults/restructuring by weaker countries. Fed Chairman Bernanke indicated that US exposure to Europe was "manageable". Stay Tuned..... David R. Pascale, Jr. Post Script: Pascale's Perspective did not appear last week as I suffered a personal loss when my long-time friend Christian Weinman passed away. I dedicate this weeks' column to his memory. I would like to take this opportunity to ask each and every reader to reach out to those close to you, and more importantly those not as close to you to let them all know what you mean to them and how important their lives are to you. | |
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