| | Happy 20th Anniversary GSP! | After ten years operating as a division of Grubb and Ellis, GSP regained its independence on June 1, 1992. Co-Principals Steve Bram, Gary Mozer, David Rifkind and I are very proud of what our company has accomplished over the past 20 years, as I know that George would have been if he could have still been with us. We could never have done it without our team of dedicated, motivated, creative and ethical professionals. We proudly thank all of our clients and capital providers for a very successful 20 years. Happy Anniversary, GSP! Gary M. Tenzer | | Transactions of the Week |  | |  | | Transaction Description: | | $10,900,000 Senior Bridge and $4,430,000 Equity (98% Leverage to Total Cost) for a Denver Apartment Acquisition & Rehabilitation George Smith Partners successfully placed both the bridge debt financing and equity placement on a 107-unit, high-rise apartment acquisition and rehabilitation in Denver. The Property represents a one-of-a-kind opportunity in this market, but requires extensive renovations to reposition the asset to a Class A property. Loan proceeds not only funded the acquisition, but will allow the Sponsor to renovate the building's units and common area spaces. The transaction required an extremely quick close. The project proforma underwriting includes a 25% rent increase over the property's in-place collections as existing rents are below market, and the business paln includes a large value add component. GSP was able to fully underwrite market rents, and verified appropriate comparable properties to expedite the process. GSP's extensive capital relationships allowed us to identify debt and equity sources that had successfully executed together in the past and were able to underwrite and fund in a three-week period. | | | Rate: 30 Day LIBOR + 575 w/6.50% Floor | | Term: 3 Years | | Amort: 25 Years w/2 Years IO | | LTC: 74% | | Non-recourse | | Brokers: Malcolm Davies, Michelle Lee | | | |  | | Transaction Description: | | $1,550,000 Cash-Out Refinance of a Special Purpose, Single Tenant Building to 65% LTV Shahin Yazdi successfully placed the 65% LTV cash-out refinance of a Kindercare Daycare facility in Southern California. The special use tenant is privately held; no store sales information was available for underwriting. |
Challenge: Lenders view the pre-school as a special purpose asset, a product type that attracts limited lender interest. The cash-out requirement further complicated the transaction, as did the shortness of the remaining 6-year lease term. |
Solution: The subject property's exceptional location allowed the lender to become comfortable with the special purpose use, leverage, and return of borrower equity. The tenant had been at this location since 1985, in addition to signing a new lease in 2003. The Lender did not require a TI/LC reserve account, and offered the Borrower a 3-year loan extension once the tenant renews their lease. | | | Rate: 4.60% | | Term: 7 Years + One, 3-Year Extension | | Amort: 25 Years | | LTV: 65% | | Recourse | | Broker: Shahin Yazdi | | | |  | | | | Small Loan Bridge Debt from $1,000,000. GSP has identified a regional bank funding asset reposition loans from $1,000,000 to $10,000,000. The program will fill a significant void for California commercial and multifamily assets, as this level of bridge debt is sorely under-capitalized. Non-recourse financing is available, although a repayment guarantee will be required for assets below break-even cash flow at funding. All major property types will be considered, including hospitality. Loan-To-Value can go up to 75% for multifamily and 65% for commercial, with hotels sized to 55%. Pricing ranges from Prime plus 100 to 200 basis points. A fixed rate mini-perm may be provided upon stabilization. | | | | Hot Money | National Bridge to Perm GSP is closing transactions with a national funder of non-recourse bridge loans with a 1.0 or greater going-in debt coverage ratio. This capital provider will also offer a portfolio take-out upon stabilization for transactions over $10,000,000. This is not a forward commitment, and there is no exit fee if their take-out is not executed. Bridge Terms are from $10,000,000 to $50,000,000 priced at LIBOR+450/500 with no floor. The three to five year floater requires a one point lender origination fee. The on-book permanent take-out will be sized and priced at then market conditions upon stabilization. | | | 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. | | | In The News | Founding Partner Gary M. Tenzer was recently quoted in GlobeSt.com on the availability and levels of debt for multifamily and commercial real estate assets. The entire article and more from GlobeSt may be found here. | | | Pascale's Perspective | Eurobonds and USTs Treasuries came off of their historic lows today as worldwide markets rallied on speculation of another round of stimulus from central banks. This isn't exactly "headline driven", its more "speculative headline driven". This should help stabilize CMBS spreads from recent widening. Eurobond? One of the most popular "magic bullets" that will help the Euro crisis is the concept of a Eurobond with all of the countries sharing risk. This may help calm markets, but it may create a viable competitor to US Treasuries in the "safe haven" market. The net effect may be a higher treasury with narrower credit spreads. …stay tuned… David R. Pascale, Jr. | |
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