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| | | | | | | | | | | | | | | | | | Shaffer/Rivera Team at George Smith Partners (GSP) Monday Debt & Equity Real Estate Client Briefing | | | | | | | | Email: iretobryan.tom29@blogger.com You are invited to our weekly Debt & Equity Real Estate Client Briefing, To Subscribe - Unsubscribe Bryan's Debt, Mezzanine & Equity Capital Markets Update:
- The commercial real estate debt and equity markets face a mixed picture as rates hit all time lows and the US Stock Market shows signs of a possible summer slowdown. It is possible this is a more serious problems inspired by concerns over the U.S., euro-zone and Chinese economies. On Friday, the Labor Department said Payrolls climbed by 69,000 last month, less than the most- pessimistic forecast, after a revised 77,000 gain in April that was smaller than initially estimated. The uncertainty has kept rates low, but as lenders focus on yields, we may see spreads increase, causing mortgage rates to rise.
- We are seeing incredible loan rates for the best multifamily properties with 5-year pricing in the mid 3%, but we continue to see tight underwriting, liquidity and lending standards. The key to successfully closing financing remains having a strong adviser who is in the market every day and can underwrite to the market requirements. As economist Sam Chandan said, "Lower rates don't mean a thing, if you can't get a mortgage."
- Multifamily apartment rental properties continue to be the most sought-after property type, with sales totaling $54 billion, up more than 50% from the prior year, according to Real Capital Analytics who reports an average apartment prices at $102K per unit nationally; Several Clients that desire better returns are shifting to development projects, as well as retail and industrial sectors. Rates are about 100 basis points less for multifamily communities; Construction loans and Mezzanine Capital are back for the right construction projects.
- Any assets with Value added strategies are more difficult for lenders, but there are ways to finance value added project with the right structure and sponsor. For a recent hotel project, it took out of the box underwriting and 50 calls before finding the right lender.
- On the Mezzanine and Equity capital side, several funds have excess capital and are being very aggressive. For some deals, you can get 7-8% Mezzanine and 12% Equity for stable cash-flowing deals. The key to any highly structured deal is carefully matching each capital partner.
- Our team has been traveling around to several commercial brokerage companies and clients, providing information on the state of the lending market and products we are seeing in the market. For our overview slides in PDF format, click here. or go to https://www.dropbox.com/s/1nufkhbs62m4nv0/CRELendingupdate.pdf.
| | | | Credit Tenant Net Leased Analysis Net Leased Credit Tenant Properties are one of the most active sectors of the retail market. We have developed a portfolio assessment program and will customize the underwriting model to your perimeters. If you own several NNN leased projects or other commercial properties, we can analyze your current loans and develop an outline of possible better options for you. Loans terms and pricing is always based on the property/tenant, market and sponsor. From low to high leverage, as well as CTL programs, we can usually find the right solutions for our clients.
HOT Programs, Closed Deals & Pipeline - Multifamily & Affordable Projects: Our team been busy as Gilda just closed a loan in 10 Days for an 172 unit Multifamily Community in Atlanta. The seller required a fast close for our client to win the deal. Bryan continues to close more and more affordable multifamily and SRO projects in Downtown Los Angeles and San Francisco. We are in Application on a $20M community in San Diego with HUD for a 35 year fixed loan in the low 3s. We have been able to beat most banks and provide amazing solutions for our clients. We also have several development projects under assignment in California and Arizona. We should always be your last call.
- Retail & Net Projects: From San Diego to Cleveland, we are financing Discounted Note Purchases for Retail Projects as well as working on a big retail portfolio in Texas. We also been active with CVS's and Walgreens' fundings. The firm also completed a ground-up Loews as well recently with almost 100% financing.
- Industrial & Mission Critical Data Centers: We are seeing strong demand for industrial assets from lenders. On the Datacenter side, most of the activity has been with Private and Public REITs. We completed both debt and equity in this sector.
- Mezzanine & Cheap Equity Programs: Bryan have been in the market on a Southern California Movie Studio Campus and a New York office building and finding strong bridge and equity options. The firm just finished a large apartment development equity investment in the Inland Empire.
- Healthcare & Medical Office: Gilda had one incredible week in which she funded 3 owner/user medical office deals. Our team has been retained on a ground-up medical office building in Arizona.
- Office: Our client are always first. On one recent project, our underwriting and experience led us to advise a client not to purchase a building that was overpriced. Before investing tons of time into a project, make sure it can be financed at the price you are offering.
- Hotels: We took on a large hotel project in San Diego that had been turned down by over 30 lenders and produced an aggressive letter of interest.
- Note Portfolio Capital & REO Home Investments: The market continues to show strong capital interest in bridge and equity investments for commercial note purchases and discounted pay-offs. We are also seeing new large capital providers invest in distressed single family companies who are leasing foreclosed homes. We are in the market for a discounted payoff on a $60M Texas portfolio and a San Diego note purchase.
- Government/Fannie-Freddie-SBA: Like Fannie Mae and Freddie Mac, several lenders can do SBA loans, but understanding how to underwrite to clients needs and match the needs to the market is what we do best. If you need higher leverage or other groups have turned you down, we have been successful in solving clients' issues and closing loans.
- Hot Bridge Loan Program: 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.
ICSC & IMN Conference / Fresh Look Overall both events were well attended, and the attendees seemed more optimistic. The biggest surprise was how many financeable deals were on hold because the sponsor had given up or had been given bad market information. If you are in this position, we can give your opportunity a fresh look and find options by using our relationships, today's underwriting standards and market knowledge.
 | Shaffer / Rivera Team Contacts: |
| | | | | | | | | | George Smith Partners, 10250 Constellation Blvd., Suite 2700, Los Angeles, California 90067 *Detailed Rates and terms will be based on lender underwriting. This is an example of terms in the marketplace.
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