| Transaction of the Week |  | |  | | Transaction Description: | | $4,000,000 Cold Storage Industrial Refinance in Salt Lake City. George Smith Partners placed the $4,000,000 refinance of cold storage industrial center in Salt Lake City. The subject is 100% occupied by a single non-investment grade tenant. The premium rents associated with the cold storage were marked-down to vanilla industrial rates by most underwriters. GSP identified a local bank with sufficient experience to underwrite the actual rents. The Borrowers' historical operating experience and strong fundamentals reassured the lender with respect to the short-term single-tenant lease with a return of equity to the borrower on a non-recourse basis. This was the tenth financing GSP placed for this long-standing customer. | | | | |  | | | | Life Insurance Companies Continue to Compete Major Life Insurance funders (loan amounts of $25,000,000 & up) continue to compete with CMBS originators, and are now looking to win opportunities with more than just pricing. Many LifeCo's are branching out and extending product lines to entice borrowers. Below-market yields for moderately and low leveraged assets has always been a staple of Life Funders. The recent Treasuries slide has only benefited LifeCo's as Wall Street providers are locked with SWAP rates that have been less responsive to the European financial fluctuations. Today's 10-Year fixed rates start as low as 3.75% for several Insurers. New LifeCo offerings include long-term LIBOR-based floaters that require little or no pre-payment penalties. Fixed rate loans may now offer flexible pre-payment opportunities as well at a substantially lower cost than yield maintenance. Supplemental fundings can be structured, avoiding the need for refinancing to access trapped equity. One national funder has recently launched a multifamily bridge program as a feeder for perm-debt upon stabilization. Life Companies continue to compete with products that only portfolio providers offer. This includes the no-cost capacity to lock rate and spread at application and the offering of forward commitments. | | | | Hot Money | California Bank Aggressively Seeks Bridge Product A California based bank is aggressively seeking assets slated for reposition to fulfill their bridge loan allocation. The floating rate program offers up to 70% LTV with no prepayment penalty and a mini-perm option upon stabilization. Non-recourse is available for transactions sub-50% LTV. The Prime based loans are floored at 5.50% to $15,000,000. | | | 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. | | | Pascale's Perspective | "Ain't No Cure for the Summertime Blues?" This May is eerily reminiscent of last May…. After a long rally in the "risk trade" and accompanying spread compression arena, uncertainty in Greece is again front and center on investors' minds. Also, "lines in the sand" are being drawn in Washington over the year end debt ceiling debate, with the attendant concerns over further downgrades, etc. Will it be another summer of uncertainty and spread widening? Treasuries are rallying as the "safe haven" with the 10 year T at 1.76%, the 10 year Swap is at about 1.90%. It's possible that the markets are better prepared this time and less headline driven (hopefully). CMBS has some room to widen and still provide historically low coupons to borrowers. All eyes are on a large pool pricing in the next few days (more on that in next week's column). Life Companies are less volatile and aggressively booking large loans, offering innovative structures (see Hot Money) ….stay tuned… David R. Pascale, Jr. | |
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