| Transaction of the Week |  | |  | | Transaction Description: | | $14,000,000 Ground-Up Construction-to-Perm of a To-Be-Built Assisted Living Facility GSP successfully placed the $14,000,000 construction-to-permanent loan for a to-be-built Assisted Living Facility in Sacramento, California. The recourse construction facility is for eighteen months, interest only with the takeout underwritten and in place prior to construction funding. The permanent take-out loan is priced at SWAPs + 350 with a 6.0% floor, fixed for ten years, amortized over 25 years. The loan will be rate-locked at Certificate of Occupancy once rolled into the perm loan, sized to 70% of total construction costs. While this particular funded facility is for assisted living (considered seniors housing), GSP received significant interest from capital providers for construction financing across all asset classes as well. For National Investment Center Convention attendees, please touch base with Mr. Orchard via cell phone @ (310) 309-7005. Steve will be attending the Seniors Housing Conference in Chicago through its conclusion on Friday. | | | | |  | | | | Closed End Fund for $3,000,000 & Up Joint Venture Opportunities. GSP is working with a fully discretionary equity fund for Joint Venture requests as small as $3,000,000. Requests as high as $40,000,000 will be considered for three to five year hold periods. High teens returns are sought for a 1.5x to 1.7x multiple. Ground-up construction will only be considered with substantive pre-leasing, although reposition bridge transactions do not require cash flow in place at closing. Asset classes may include the four core property types as well as self-storage, data centers, seniors/assisted housing, and/or hospitality. The top 12 metros will be targeted on a national level. Secondary and tertiary markets will not be considered. | | | | Hot Money | One-Stop Capital Stack Debt/Mezz-Debt Funding to 85% LTV Fixed rate and floating rate funding to 85% LTV for stabilized multifamily; 75% for commercial in a debt + mezz structure from a single capital provider. This mezz lender will fund the entire cap-stack from their balance sheet, then syndicate the senior note to either a CMBS originator or a regional bank post-close for an all-in coupon typically in the low 5% range for 10 year money. Transactions may be as short as three years for flexible prepayment options. Fundings will range from $15,000,000 to $50,000,000 and are non-recourse beyond standard carve-outs. This fund has executed with 17 separate Wall Street and Portfolio lenders. Cash flow at close must support a 1.10 dcr or better. | | | 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 Press | Senior Vice President David R. Pascale, Jr. was recently quoted on the overnight calculation of LIBOR in the September edition of the National Real Estate Investor magazine The article and Mr. Pascale's comments may be found on-line. | | | Pascale's Perspective | QE3 Impact? One of the more interesting "ironies" of the Fed's hugely anticipated QE3 announcement was how markets rallied after the Fed announced it was "gravely concerned" with the employment and economic situation. The Fed was unusually bold and specific, using "unconventional tools" stating they will buy $40 billion in mortgage backed securities a month. Also the time horizon seems "open ended" with no hard end date. Treasuries initially rallied on Thursday. However, Friday saw a massive selloff and yields spiked to nearly 1.90% on the 10 year, the highest since May. Why? (1) Equity markets rallied, investors left the "safe haven"; (2) The Fed is not buying Treasuries in this round of QE3, just mortgage backed. Additionally the Fed is continuing "Operation Twist" ie selling shorter term securities and buying longer term securities. So the Fed seems to be trying to raise indices, tighten credit spreads, and flatten the yield curve. …Stay tuned… David R. Pascale, Jr. | |
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