| Transaction of the Week |  | |  | | Transaction Description: | | $1,325,000 Los Angeles Multifamily Refinance GSP arranged the refinance for a 16 unit apartment building in the Echo Park/Silver Lake area of Los Angeles. The Borrower approached GSP for a cash-out re-finance on an existing loan for a property they owned and managed since 2008. Their goal was to access available equity in the property while locking in today's low coupons. Any return of equity is not a favorable request in today's lending environment. GSP was able to negotiate terms with a lender who agreed to a maximize loan proceeds while allowing for a small return of equity to the Borrower. The resulting 4.75% rate is fixed for 5 years with a 30-year amortization schedule. | | | Rate: 4.75% fixed | | Term: 5 Years | | Amort: 30 Years | | LTV: 75% | | DCR: 1.44 | | Prepayment: 4,3,2,1 | | Recourse | | Lender Fee: Par | | Brokers: Jonathan Lee, Shine Cheng | | | |  | | Transaction Description: | | Refinance of a Church-Owned Property George Smith Partners successfully placed the refinance of a church-owned property in West Los Angeles. The self-liquidating loan is fixed for 15 years, amortized over 15 years. |
Challenge: Title was held in the name of the church after it had been gifted to the church via a grant deed. Banks were not comfortable funding a loan without a warm body repayment guarantor. Religious institutions are not required to file in the same manner as a commercial enterprise, thus church operational records were limited in scope and detail. |
Solution: GSP quickly identified and structured a loan with a local commercial bank that had recently provided debt to other churches and was familiar with their reporting requirements. This capital provider acknowledged the non-profit Borrower and did not require a warm body guarantor. The Borrower received a competitively priced long-term fixed rate loan without any refinance exposure. | | | Rate: 5.0% | | Term: 15 Years | | Amort: 15 Years | | LTV: 55% | | Prepayment: 0.5% for 5 Years | | Lender Fee: 0.5% | | Recourse: Entity Level Only Brokers: Marc Shillinger, Andrew Hornblower | | | |  | | | | CMBS 2.1 Several New York Managing Directors have graced the halls of GSP over the last two weeks, supporting their need for stabilized product. One Investment Bank has signaled us within two hours of going-to-press that they are seeking to fund $100,000,000 by year-end. Spreads remain stable as SWAPs have compressed, netting all-in coupons from 5.60% to 5.90% for 10-year fixed rate non-recourse debt. Acknowledging that they can not compete with the insurance company rates, CMBS originators are willing to offer loans down to $5,000,000, fund in tertiary markets and address non-traditional loan requests including hospitality and single tenant leases. Loan to Values as high as 75% are obtainable prior to layering on mezzanine debt. Mezz-debt is available on larger loan requests. | | | | Hot Money | Non-Recourse Hospitality Reposition Debt to 80% of Cost. George Smith Partners is working with a new fund seeking to finance reposition loans for office and hospitality assets from $5,000,000 to $20,000,000. The 1st trust deed will advance up to 80% of total cost. The lender can build in an interest reserve for a pay & accrue structure on assets that are below break-even coverage. Reposition construction will be considered although no ground-up financing is available at this time. Terms of four to seven years will be priced from 8.5%. Loan fees will vary depending upon asset quality. | | | 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. | | | Come Grow With Us | George Smith Partners is expanding its team of top-notch mortgage brokers/originators. We offer highly competitive compensation and an excellent environment in which to work, learn and be supported. We invite you to consider a career with George Smith Partners. Please direct confidential inquiries to Todd August, Chief Operating Officer, at (310) 867-2995. | | | In the Press | Managing Director Gary E. Mozer was quoted by Multi-Housing News Online regarding the CMBS market: "We saw them getting very lax (toward mid-year), and we saw the market getting crazy again. Then the market crashed and everybody got religion again..." The entire article may be found here. | | | Pascale's Perspective | The euphoria over last week's omnibus Euro-rescue plan has died down with the announcement (or threat/negotiating ploy) of a Greek referendum on their end of the bargain. Regardless of the Greek drama, one of the more important developments was that markets were not spooked by the 50% "haircut" the private investors agreed to take. This means that a restructuring of the massive sovereign debt may not be as cataclysmic as the 2008 Lehman Brothers bankruptcy. Hopefully the parties involved can agree on a workable structure and keep the contagion from spreading to the larger economies of Italy and Spain. US Treasuries remain a safe haven with yields now hovering around the 2% range on 10 year bonds. Look for markets to continue to be headline driven between Europe and the US Deficit "Supercommittee" scheduled to deliver its plan by Thanksgiving. ...Stay Tuned... David R. Pascle, Jr. | |
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