| Transaction of the Week |  | |  | | Transaction Description: | | $15,300,000 Bridge on an Office Building in Salt Lake City George Smith Partners successfully placed the bridge loan to facilitate a refinance of a 221,145 square foot, 68% occupied Class B office building in Salt Lake City. The top-25% partial recourse loan carries a 36-month term with two, 12-month extensions. A 2% prepayment fee applies months 1-12, 1% months 13-18, with no fee thereafter. The loan is priced at LIBOR plus 3.25%. There is no index or rate floor, approximating an all-in coupon today of 3.50% on an interest-only basis. |
Challenge: 28% of gross rents are collected from month to month tenants. Mid-process, the building's largest tenant (both percentage of gross receivables and square footage) conveyed their intention to vacate the space. The relatively weak office market presented an additional challenge to loan funding. |
Solution: GSP identified a capital provider that focused on fostering a long-term relationship with a very experienced Borrower. GSP presented supporting data on the strength of the building's location over its' competitive set as well as the Sponsor's proven recent track record, allowing the underwriter to move-forward with the transaction as applied for. | | | Rate: LIBOR+3.25%, No Floor | | Term: 36-Months | | Amort: Interest Only | | LTV: 65% | | Prepayment: 2%, 1%, open | | Recourse: Limited to the top 25% of the loan. Brokers: Gary E. Mozer, Josh Roseman | | | |  | | | | DPO Funding to 100% of Re-Stated Value George Smith Partners identified a fund currently advancing up to 100% of the re-stated value in a discounted pay-off (DPO) scenario for the existing borrower. Note acquisitions will require new cash equity to close. This capital provider is yield driven and not looking to "Loan to Own". Transactions must have a verifiable exit or obtainable business plan to take the capital provider out upon re-stabilization. Yield requirements will vary based on product type and hold criteria although once the required yield is obtained, the lender will not participate in upside equity. Borrowers are further incentivized to maximize their business plan without the splits of a new equity participant. | | | | Hot Money | When is tiny huge? When is tiny huge? When $250,000 of mezzanine debt is funded behind a $23,000,000 senior note. George Smith Partners is originating stabilized fixed-rate CMBS financing with a Wall Street conduit who is placing their own internal mezz-debt behind their senior tranche. The note and rate are blended in-house, reducing the duplication of paperwork and accounting for the Borrower. This capital provider will fund as low as $250,000 of mezzanine debt to 85% - 90% of the total capital stack. The junior piece will be held on-book and not securitized with senior note. Mezz-debt rates vary based on size, asset type, leverage, etc. but the total blended coupon averages less than 5% fixed for 10 years as of today's indexes. | | | 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 & Managing Member Steve Bram will be a panelist at the annual "How High Is The Sky" conference on Thursday March 29th to be held in Century City. The morning symposium kicks off with an 8am breakfast and will run until 11am. For registration and more information please click here or call The Century City of Chamber of Commerce at (310) 553-2222. | | | Pascale's Perspective... | Treasury Yields Spike, 10 year at 2.27%..... The week long sell-off in US Treasuries gathered steam today, the 10-year T yield is up about 15 bps since this morning….. Why? (1) This is a long awaited "correction" as sub-2% Treasury yields are a historic aberration; (2) Risk is back: corporate bonds, "junk" bonds, CMBS are all rallying as yield seeking investors flee from the safe haven and buy risk. The old story, "fear factor" subsides and "greed factor" returns. Look for spreads to narrow, hopefully keeping coupons attractive; (3) The big catalyst was yesterday's Fed statement. It contained a relatively upbeat reading of the economy and importantly it did not mention any new bond buying, aka quantitative easing. The next few weeks will be interesting and possibly tumultuous as investors balance their portfolios: appetite for yield v. the relative security of US Treasuries. ...Stay Tuned... David R. Pascale, Jr. | |
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