| Transactions of the Week | 
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| | Transaction Description: | | $38,000,000 12-Month Forward Take-Out Commitment for a 50,000 sf Santa Monica Medical Facility GSP obtained a 12-month forward commitment to provide a take-out for the construction debt on a partially-constructed three-story 50,000 sf outpatient surgery facility. The center is pre-leased to an investment-grade tenant. The facility, to be complete in December 2011, features special improvements for imaging and radiation services, a robotic six-floor subterranean parking garage, and LEED Gold certification. | |
Challenge: Due to inflation concerns, the borrower wanted to lock-in today's long-term rates - 12 months prior to completing construction. Until recently, forward take-out commitments were constrained to six-months and rate-lock premiums were prohibitive. The building is valued at more than $1,200/sf.
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Solution: GSP solicited conduits, bond issuers, and portfolio lenders (life companies & pension funds) to identify a lender willing to lock rate today for a 12 month forward funding. GSP highlighted the quality of the real estate & borrower, and built a strong case to support the property's high valuation. The Sponsor selected a life company loan at a competitive rate, locked at application in February 2011, with a forward premium of 4 bps per month. The lender was distinguished by their understanding of the location & tenant, their willingness to commit 12 months before funding, and the trusted relationship they developed with GSP and the client.
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| | Transaction Description: | | $2,000,000 Cash-Out Industrial/Manufacturing Refinance GSP successfully arranged the non-recourse financing of an 80,000 sf owner-occupied warehouse in Vernon (Los Angeles), California. The company - an 80 year old furniture manufacturer - owns three separate buildings where they manufacture, assemble and ship finished goods. The company posted operating losses the last three consecutive years and was unable to qualify for bank debt. Corporate ownership was unwilling to guarantee on a personal level. GSP identified a fund willing to provide a return of equity based exclusively on the real estate value on a non-recourse basis. Proceeds will be used to "prime the pump" as corporate sales in Texas and the Southeast have increased and continues to gain momentum. The company posted a profitable first quarter in 2011 and is well positioned for a return to profitability. | | | Rate: 9.0% | | Term: 2 years | | Amort: Interest Only | | LTV: 35% | | Prepayment: None | | Non-recourse | | Broker: Jonathan Lee | | | | | 
| | | | Mobile Home Park Portfolio Lender w/$500,000,000 to deploy A Southern California based portfolio lender is aggressively targeting stabilized Mobile Home Parks in Washington, Oregon, California and Texas. They will advance on infill or tertiary locations in their efforts to deploy $500,000,000. Loans are 30 years due in 30 years with fixed rate terms of 3 years to 15 years, then float over LIBOR after the initial term. All prepayments are step-down regardless of the fixed rate term. To 75% on purchases or 70% on cash-out refinances. | | Transaction Size: $1,000,000 - $5,000,000 | | Rate: 3yrs-4.20%, 5yrs-4.95% | | Loan Term: 30 years | | Amort: 30 years | | Max LTV: 70% refinance | | Max LTC: 75% purchase | | Min DCR: 1.20 | | Property Types: MHPs | | Fees: Par | | Geography: CA, OR, WA & TX | | | |
| | Hot Money | Joint Venture Equity for Value-Add Acquisitions. A California based real estate fund manager is seeking to invest their remaining $95,000,000 of capital in 2011 with strong operating partners. The firm will joint venture on retail, industrial, apartment or office products in major MSAs on a national level. Total capitalizations should be from $20,000,000 to $60,000,000. Larger projects and secondary markets will be considered on a select basis. Existing vacant properties or adaptive reuse potential are of interest - no ground-up construction is currently available. The firm provides pari passu JV equity with structures having co-invests as small as 5%, preferred returns as low as 9% and as much as 50% profit participation above a high-teens IRR. | |
| | If you have an inquiry regarding George Smith Partners' commercial real estate financing or advisory services, please contact your GSP representative or Todd August, Chief Operating Officer at (310) 867-2995 or TAugust@GSPartners.com | |
| | Pascale's Perspective | Federal Government Shutdown?...China Raises Rates... ECB to raise Friday? As of press time, Congressional leaders and President Obama have negotiations scheduled for tonight to avoid a shutdown on Friday. This may impact interest rates. Why? The US is near the debt ceiling. Failure to raise the ceiling may cause investors to lose faith in the "safe haven" of US Treasuries, lowering prices and therefore raising rates. The potential effect on capital markets and risk spreads is a subject of much speculation. As of now, 2 1/2 years after the September/October 2008 credit meltdown, the pace of recovery varies from region to region. Commodity prices are rising on overall worldwide growth, emerging markets needs, etc. The question is not if but when central banks will raise rates. China increased rates for the fourth time since October 2010 as bankers try to cool their overheated economy from the dangers of inflation and "bubble economy" dynamics. The ECB is expected to raise rates Friday as well. This action is controversial due to the potential effect on Portugal, Ireland and Greece. The Bank of England is expected to hold rates steady in the wake of the recent collapse in housing values and industrial output. Their recovery is still quite fragile. As for The Fed, late 2011 or early 2012 More on that next week.... Stay tuned.... David R. Pascale, Jr. | |
| | Speakers Corner | GSP Principal and Managing Director Gary E. Mozer, will be speaking at the BOMA Real Assets Conference at the Biltmore Hotel, downtown Los Angeles on Thursday April 7th @ 3:00. For more information, please contact Michele Dennis at [213] 629-2662. | |
| | Come Grow With Us | George Smith Partners is expanding its team of top-notch mortgage brokers/originators. We offer highly competitive compensation and an excellent environment in which to work, learn and be supported. We invite you to consider a career with George Smith Partners. Please direct confidential inquiries to Todd August, Chief Operating Officer, at (310) 897-2995 | |
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