| Transactions of the Week |  | |  | | Transaction Description: | | $11,867,500 Refinance of a Southern California Single-Tenant Office Building George Smith Partners successfully placed the refinance of a single-tenant 100,000 s.f. office building fully occupied by a credit tenant. The tenant rolls within the loan term. The Lender mitigated the rollover risk with a $1,000,000 Letter of Credit as additional collateral. No other structure was required. GSP provided key support that showed the tenant would renew including: (1) the tenant's unique building requirements, and (2) lack of supply within the tenant's geographical area. GSP was able to negotiate $1,500,000 of cash out for capital improvements. | | | Rate: 5.25% Fixed | | Term: 7 Years | | Amort: 25 Years | | LTV: 75% | | Prepayment: 3%-2%-1%-1%-1% open | | Recourse | | Brokers: Steven Orchard, Michelle Lee | | | |  | | Transaction Description: | | $2,373,000 Loan Modification Gilda Rivera of George Smith Partners assisted with the modification of a $2,373,000 fixed-rate note for a mixed-use Dental Office/Retail property in Temecula, California. The 11,000 square foot Class B building was 77% occupied at closing. |
Challenge: The 23% physically vacant project was penalized for holding several month-to-month tenants. The remote and non-core market location discouraged interest from new institutional capital providers that would otherwise offer a lower indexed rate. |
Solution: Using a creative approach to structuring the project, GSP proved to the lender through underwriting and supporting data that the loan modification offered a long-term benefit to both the Borrower and Lender. The interest rate was reduced to a market yield, the amortization was extended, and as a result monthly debt service improved significantly. There was no reduction of principal, forgiveness of debt service, or cash equity returned to the borrower through this note modification. | | | Rate: 4.25% Fixed | | Term: 5 Years | | Amort: 25 Years | | LTV: 65% | | DCR: 1:40:1.0 | | Prepayment: Yield Maintenance | | Recourse | | Lender Fee: 0.25% | | Broker: Gilda Rivera | | | |  | | | | Non-Recourse Bridge Debt from $5,000,000. Today's capital markets are providing ample funds for larger transitional assets. George Smith Partners has identified a national bridge debt provider who will fund down to $5,000,000 of capitalization and to 80% of cost on a non-recourse basis. This capital provider will consider below break-even assets or properties that are currently vacant with no in-place cash flow. Rehab construction funds will also be provided with a completion guarantee. Pricing will range from LIBOR 4.75 to 6.50 plus 1 point origination for up to a three year term before extensions. Products include the four core assets plus hospitality. | | | | Hot Money | Non-Recourse HOA Financing George Smith Partners identified a 113 year-old financial institution lending to non-profit Home Owners Associations (HOAs) with a 100 door minimum. Their collateral is similar to a UCC filing and is not a Deed of Trust. The self-liquidating loan is repaid through the monthly HOA fees and does not carry a warm-body repayment guarantee. This national program may provide funds for the addition of new amenities or capital intensive upgrades and/or repairs for the housing community. | | | 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 | Raising Debt & Equity Capital: GSP Managing Member David Rifkind will be a panel participant on raising capital at the National Crittenden Real Estate Conference held in San Diego on April 22nd through the 24th. Challenges and successes of raising institutional and hedge fund capital will be debated between industry leaders. For more conference information and on-line registration, please click here. | | | Pascale's Perspective | Treasuries and Spreads---Fed, Europe, Risk Trade continues…… Treasury volatility is front and center, up 10 bps on Tuesday, then down 5 bps today. The release of the Fed minutes indicated an aversion to more quantitative easing. This caused a sell-off in equity and debt markets as investors showed they are not ready for "a world without an active Fed", aka a "normal" market dictated by the private sector. It begs the question: when will it be ok to take off the training wheels? Or is massive central bank stimulus part of the "new normal." Today, Treasury yields went back down as the European "fear factor" returned. This time the concern is Spain, its deficits and ability to finance them. CMBS spreads widened slightly today as 5 new CLO deals (Collateralized Loan Obligations, floating rate usually) were issued. Note that these used to be called "CDO's" (Collateralized Debt Obligations). The new supply caused some price softening in CMBS. Originators are interpreting this as a healthy sign—more evidence that appetite for risk is back. ...stay tuned... David R. Pascale, Jr. | |
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