Q10 KDH Vice President Dave Holland arranged a cash-out refinance with a correspondent life insurance company lender for a self-storage property in Houston, TX. The non-recourse loan provided 70% loan to value and had a 15 year term. Dave Holland stated, “The borrower had almost paid off a fully amortizing 15 year note and wanted to recapitalize so he could buy out a partner. This non-recourse small loan program was a perfect fit for this long term owner since he was able to lock the interest rate for 15 years near 5%.
Q10 KDH Vice Presidents Emily Zarcaro and Matt Franke provided acquisition financing with our lender, a Fortune 100 commercial bank, for two retail buildings located in San Antonio, TX. The transaction closed with a 10 year term, 30 year amortization and a 4.70% interest rate.
Emily Zarcaro shared, “Our borrower is a private REIT who was seeking a long term fixed rate loan with substantial prepayment flexibility. We were able to achieve this on a non-recourse basis with our lender who worked quickly to meet the acquisition timeline. The higher LTV is a testament to the strength of the REIT and its manager, a Houston-based retail developer whom KDH has enjoyed a long relationship with.”
Q10 KDH Vice President Larry Peters and Senior Associate Adam Unger provided a cash out refinance with a correspondent bank for a 100,000+ sq ft big box retail center. The loan closed with a fixed interest rate.
This repeat Q10 KDH borrower was looking to reduce their personal recourse and return capital to their partners. They also requested flexible prepayment and needed to close by a certain date. Larry Peters stated, “We are fortunate to have a great relationship with this borrower. Familiarity with their legal team and management company made meeting our short closing time possible. Without the first hand knowledge of the borrower and lender, this deal could not have closed in time.”
Q10 KDH Vice President Ryan Watson provided permanent acquisition financing with our correspondent Securian Financial Group formerly Advantus/Minnesota Life for a retail space located in Houston, TX. The transaction closed with a 10/25 term and a 4.75% interest rate. The property has been a long-standing fixture in the community which the Sponsor recognized. Many of the tenants have been in place for over 20 years offering stability in the current retail market.
Q10 KDH Principal Gary Hough and Vice President Matt Franke provided permanent fixed rate financing with our correspondent lender for a multifamily property located in the Greater Houston Area. The transaction closed with a 10 year term and a 4.04% interest rate for a loan amount of $10,750,000. This property was a refinance of a property KDH financed 10 years ago with another correspondent insurance company.
After taking this loan request to the market, our correspondent lender ultimately offered the best overall terms that most closely aligned with the borrower’s objectives. The loan process was very smooth and resulted in a closing only 33 days from application execution.
The refinance resulted in a 200 basis point reduction in the coupon rate while providing the sponsor with a very significant “cash-out”. KDH has enjoyed a relationship with this borrower for over 20 years.
The team of Q10 KDH Vice President Larry Peters and Senior Associate Adam Unger provided a fixed rate life company loan from our correspondent RiverSource for an apartment community in Houston, TX.
The 10 year, fixed rate loan had a 4.0% interest rate that was locked at application, providing the borrower peace of mind during the recent interest rate market volatility. “Life companies are very competitive with Fannie Mae and Freddie Mac on lower leveraged loans such as these. These agencies could not come close to the low interest rate, provide an early rate lock, or match the low closing costs and minimal servicing requirements of the life company lender.”- Adam Unger
Q10 KDH Vice President, Melissa Mayer provided fixed rate financing for Learning Experience in southwest Houston, TX. The loan provided the KDH client with $2,640,000 in acquisition financing at a rate of 4.5%. The transaction closed with a 10 year term and 25 years of amortization.
The end of the first quarter of 2018 is quickly approaching. Over the last few months we have seen interest rates continue to climb and are projected to go up through the second quarter based on reports from top economic forecasters.
During this week’s FOMC meeting, the first under new Chairman Jerome Powell, the Fed increased the benchmark index by 25 basis points and signaled the necessity to steepen the path of future increases.
We predict the Fed to hike the Fed Funds Rate two to three more times in 2018. We also see yield curves flattening further in 2018. Both of these are consistent with market indicators. With a perfect storm of factors (heavy T-bill issuance, the U.S. tax overhaul, and the Fed’s policy tightening), we anticipate that short-term rates will eclipse 2.25% by year-end and 1-month LIBOR will likely approach 2.5% by this time next year based upon the Forward Curve.
HOW Q10 KDH CAN HELP: Q10 KDH clients are locking rates on longer fixed rate products for immediate funding and forward commitments up to 12 months. Please contact our team to review current or future investments.
Q10 KDH Vice President, Ryan Watson provided acquisition financing for Fort Bend Center in Sugarland, Texas for the Dhanani Private Equity Group. The property is a Kroger anchored retail center that covers over 42,000 SF of space. The CMBS Lender achieved a loan for 75% of the purchase price and 30 year amortization on a non-recourse basis. The loan closed at a 5.05% rate with 10 years fixed rate financing.
“The Dhanani Private Investor Group was able to see the long-term value in the center given the expansion occurring in the city of Sugar Land, Texas. Many of the tenants have been in the center for over a decade and have realized the growth of the area. Q10 KDH was able to provide the acquisition financing needed for the project and execute a smooth closing processes with a CMBS lender with no surprises.” – Ryan Watson
Q10 KDH Vice President, Larry Peters arranged Fannie Mae DUS financing for a multifamily property located in Houston, Texas.
The financing provided our client two years of interest only and a floating rate with flexible prepayment. The asset received a seven year term and a low interest rate in the mid 3% range.
“The asset was located outside the Houston MSA and many lenders were more conservative due to the location. Our job is to educate the lender and show them the value of looking at the opportunity from a perspective that others don’t. We were able to accomplish the borrower’s wishes by delivering a higher LTV than what the majority of the market was comfortable in quoting but maintain the aggressive pricing that is available for multifamily assets in the market today.” – Larry Peters