March 14, 2018
George Smith Partners secured a $9,200,000 private money bridge loan to enable the renovation and re-tenanting of an unanchored retail shopping center in Orange County, California. The loan included $850,000 for future tenant improvements, renovations, and leasing commissions. The non-recourse interest only loan closed in 5 days.
The renovation of the shopping center had experienced significant construction cost overruns and needed another $850,000 for completion. Several tenants were in the process of significantly upgrading their spaces and had unfinished renovations in place. The sponsors also needed to close the loan within a 2-week time frame.
GSP used its experience and relationships to identify a lender who could understand the greater value of the project and was able to demonstrate both the inherent value of the property due to its extraordinary location as well as the future value of the project as completed. As a result, the lender became comfortable with the loan’s basis per square foot and closed the loan in 5 days.
$4,500,000 85% Loan to Cost Bridge Financing for Buildout of 30-Unit Vacant Apartment Building in Downtown LA
February 28, 2018
George Smith Partners secured a $4,500,000 private money bridge loan to enable the renovation and buildout of a vacant 30-unit apartment building in the downtown neighborhood of Los Angeles, CA. The building was already in the process of being renovated, but the sponsors needed an additional $1,400,000 to finish renovations of the property. The non-recourse interest-only loan holds a fixed rate of 7.90%
The apartment building had significant structural damage and had become a red tagged building by the City. Subsequently, the building had been placed in REAP (Rent Escrow Account Program). Additionally, renovations were only 65% finished, but the project needed another $1,400,000 for completion as all funds from the prior project financing had been spent. The building had been sitting vacant with zero cash flow for several years.
GSP used its experience and relationships to identify a private local lender who could understand the stabilized/sale value of the project and not be turned away by the lack of in place cash flow. This lender was very comfortable with the Downtown Los Angeles market and was the most aggressive with proceeds. Because of the lender’s comfort with the stabilized/sale value, the local market, and the sponsor’s basis in the property, the lender satisfied all requested terms and closed in 5 days.
February 28, 2018
GSP secured $7,100,000 for the purchase of a near-vacant, 30-unit multifamily property in Los Angeles. The loan is structured with an initial funding of $5,970,000 with additional holdbacks of $1,130,000 in reserves. The loan floats at Prime + 0.25% with a floor of 4.75% and has two years of interest only payments. The purchaser is planning an eighteen-month renovation of the property that includes the addition of eight new units.
At the time the purchase and sale agreement was signed the property had only two units rented. Although the sponsor had extensive experience with ground-up construction of warehouse space, they had only completed one renovation of a multifamily property. The sponsor’s proforma rents were at a premium to un-renovated units in the submarket causing some lenders to stress their underwritten rents. The property was also mistakenly flagged under the LA Soft Story Retrofit ordinance even though the City had already issued a Certificate of Compliance.
GSP was able to source a lender comfortable with the limited cash flow during the renovation period by emphasizing the strength of the submarket and the enormous value-add potential of the property. Rental comps for newly renovated units in the area were provided along with the borrower’s very large per-unit renovation budget. This data showed that the borrower’s rent projections are well supported by the market. A detailed budget and architectural plans were effective at securing comfort with the borrower’s capability to meet the business plan. GSP called the City and they provided the Certificate of Compliance, which led to the removal from the Soft Story list. The acquisition loan closed in 40 days from application.
Rate: Floating at Prime + 0.25% with a floor of 4.75%
Term: 5 years
Amortization: 2 years Interest Only followed by 30 Years
Prepayment Penalty: None
LTC: 70% of as-completed value
Origination Fees: 0.5%
Acquisition Bridge Loan for a 7 Unit Multifamily Property in Inglewood, CA; 70% Loan to Cost at a 5% Rate
February 14, 2018
George Smith Partners arranged acquisition bridge financing for a value-add multifamily property in Inglewood, California. The property is located one mile from the City of Champions development site and the revamped Forum. Sized to 70% of total project cost, the loan includes 100% of future funding for property renovation, which includes a full gut renovation of unit interiors and an exterior upgrade. The two-year bridge loan is interest only and floats at Prime plus 0.5% (5.00% today) with no prepayment penalty. Interest is not charged on the holdback until funds, and the loan was structured with an interest reserve to mitigate the property’s weak cash flow during the renovation period. The lender fee was 0.5%.
Rate: Prime + 0.5%
LTC / LTV: 70% / 65%, including 100% of future funding and interest reserve
Term: 2 Years
Amortization: Interest Only
Recourse: Full Recourse
Prepayment Penalty: None
Lender Fee: 0.5%
- Advisors: Zachary Streit
January 24, 2018
George Smith Partners arranged $6,647,000 of non-recourse financing for the acquisition and reposition of a 1,713-unit self-storage facility in the Pacific Southwest. The national balance sheet lender provided a non-recourse loan up to 80% of total project cost that includes funding 100% of future planned expenses (approximately $1,100,000) to upgrade the property’s roofs, parking lots, curb appeal, signage and down units. Interest expense is not incurred on the capital improvement funds until drawn. Borrower cash flow is maximized as the loan is interest only during the initial three-year term. The loan floats at 4.25% over one-month Libor and carries two one-year extension options.
Rate: 1 Month LIBOR + 4.25%
Term: 36 Months plus two 12-Month Extensions
Amortization: Interest Only During Initial Term & Extensions
Prepayment: 12 Month Minimum Interest
Guarantee: Non- Recourse
Lender Fee: 1.00% In / 0.5% Out
- Advisors: Zachary Streit
January 10, 2018
GSP secured $7,100,000 for the purchase of a near-vacant 30-unit multifamily property in Los Angeles. The loan is structured as initial funding of $5,970,000 with additional holdbacks of $1,030,000 in reserves. The 5-year term loan floats at Prime + 0.25% with a floor of 4.75% and has two years of interest only payments before amortizing over 30 years. The purchaser is planning an 18-month renovation of the property that includes the addition of eight new units.
At the time the purchase and sale agreement was signed, the property had only two units rented. Although the sponsor had extensive experience with ground-up construction of warehouse space, they had only completed one renovation of a multifamily property. The sponsor’s proforma rents were at a premium to unrenovated units in the submarket, causing some lenders to stress their underwritten rents. The property was also mistakenly flagged under the LA Soft Story Retrofit ordinance even though the City had already issued a Certificate of Compliance.
GSP was able to source a lender comfortable with the limited cash flow during the renovation period by emphasizing the strength of the submarket and the enormous value-add potential of the property. Rental comps for newly renovated units in the area were provided along with the borrower’s very large per-unit renovation budget. This data showed that the borrower’s rent projections are well supported by the market. A detailed budget and architectural plans were effective at securing comfort with the borrower’s capability to meet the business plan. GSP contacted the City and secured the Certificate of Compliance, which led to the removal from the Soft Story list. The acquisition loan closed in 40 days from application.
January 10, 2018
George Smith Partners secured $17,800,000 of non-recourse bridge debt to refinance the Home Ranch Shopping Center, a 60,500 square foot multi-tenant retail shopping center in Yorba Linda, California. Of the total financing, the lender provided $13,700,000 in initial funding and $4,100,000 in future funding to pay for tenant improvements and leasing commissions. Pre-leasing activity increased significantly during due diligence and the Sponsor was able to bring the executed leasing from 56% to 97%. Once stabilized, the business plan will be to refinance into a CMBS takeout. GSP was able to source a Bridge Capital Provider to get comfortable with refinancing out another bridge loan as well as allocating a favorable basis for the Sponsor by adding in costs invested to-date since the initial purchase. Our Sponsor requested a return of equity upon completion of their business plan and preferred a new capital provider who would provide these funds at a lower fixed rate cost.
January 3, 2018
George Smith Partners arranged a $3,565,000 refinance for the conversion of a spec creative office property in Santa Monica. Sized to 72% of total project cost, including 100% of future funding for the conversion to creative office, the interest-only loan is structured with an interest reserve. Fixed at 5% for 5 years, the loan offers an extension option once the property is stabilized.
Rate: Prime + 0.75%
Term: 20 Month Floating Rate Bridge plus 5 Year Fixed Rate Permanent Loan Extension Option
Amortization: IO for initial term / 25 year am for perm loan
- Advisors: Zachary Streit
November 1, 2017
George Smith Partners successfully structured a $7,400,000 non-recourse bridge loan secured by a 102-room, limited service Hilton-flagged hotel located in a tertiary Alabama market. GSP targeted a capital provider who was not only knowledgeable about the location and marketplace, but also comfortable with the Sponsor’s management expertise, their ability to execute the property improvement plan, and improve RevPAR penetration. GSP vetted the business risk exposure upfront with the capital provider and structured objective criteria that satisfied both the Sponsor and Lender. Floating at 30 day LIBOR plus 5.50%, the non-recourse loan will be interest only for the 36-month loan term.
Rate: 30 day LIBOR + 550
Term: 36 months plus two 12 month extensions
Amortization: Interest only
Initial Funding: 75% of “as-is” value
Total Funding: 75% of “as-stabilized” value
Lender Fee: Par
Exit Fee: 2.0%
Prepayment: 18 Month Yield Maintenance
August 23, 2017
George Smith Partners arranged $5,810,000 of non-recourse, bridge financing to acquire and renovate a 117-unit multifamily apartment in Dallas, TX. The property is well-located in the North Dallas sub-market with visibility to over 192,000 cars per day. Although the property is 97% occupied, current rents are 10% or more below market. The business plan is to renovate 77% of the units, develop one additional unit, and improve the exterior. These renovations will help bring rents closer to market. GSP was able to source a Capital Provider to structure $5,470,000 of loan proceeds to be funded at closing and include a $340,000 capital expenditure reserve to be future funded. This Capital Provider was able to get comfortable with both the Sponsor’s operational history and the fact that a portion of the equityis crowd funded.
$4,500,000 Acquisition Bridge Financing for the Condominium Conversion of a Historically Designated Trophy West Hollywood Apartment Building
August 16, 2017
George Smith Partners arranged $4.5 million in bridge financing for the acquisition and condominium conversion of Patio del Moro, a seven-unit, historically designated trophy apartment property located in the heart of West Hollywood just one block south of the Sunset Strip. The sponsor’s business plan contemplates converting the apartment property built by famed developers Arthur and Nina Zwebell in their signature Spanish Courtyard style into a condominium complex and selling off units individually as condominiums to end users. This transaction was structured with a $3,500,000 initial advance and a $1,000,000 holdback with no negative arbitrage for condominium conversion fees, property rehab and interest reserve. Sized to 64% of total cost, the bridge loan is interest only and floats at Prime plus 0.5% for its 18-month term. The loan carries no prepayment penalty. Partial releases are subject to a 125% of par pay down and are not subject to a full cash flow sweep. The lender fee was a low 35 basis points.
West Hollywood is among the most challenging submarkets for re-entitlement in all of Southern California. Moreover, the property is historically designated, adding an additional layer of required approval, and is under-parked based on current condominium parking requirements. The project is also one of the first condominium conversions to occur since the Great Recession, so there is no recent precedent to fall back on. Finally, the project’s total cost is estimated at $7,000,000 equating to a high basis of $1,000,000 per door.
George Smith Partners compiled a sales survey demonstrating robust demand for high priced condominiums in West Hollywood and surrounding areas, including recent sales in other Zwebell projects that were condominium converted over a decade ago. Moreover, George Smith Partners also highlighted the sponsor’s significant condominium conversion and real estate investment experience outside of Southern California. By demonstrating these items and leveraging its extensive capital markets relationships, George Smith Partners was able to identify a low cost capital provider that was comfortable with the deal’s entitlement risk and high basis per door.
80% Loan-to-Value, $11,250,000 Refinance of a 44% Occupied Retail Center Shadow Anchored by an Independent Grocery Chain
August 16, 2017
GSP successfully placed $11,250,000 in non-recourse, floating-rate bridge debt on a 44% occupied, but 97% leased, 1960’s vintage Salt Lake City metro multi-tenant retail property. Although the property was only 44% physically occupied at loan application as a result of a planned re-tenanting program, the borrower recently executed two leases with large-format retailers that will bring occupancy to 97%. GSP identified a lender comfortable with the story behind the property’s 1) low physical occupancy at time of application, 2) grocery shadow anchor, 3) temporary tenants paying below-market rent during transition period, and 4) lack of supporting sale comps for the market. The short-term bridge loan was sized to 80% of as-is value, 75% of stable value, and included future funding to cover 100% of lease-up costs with interest not paid on unfunded proceeds until drawn.
Rate: 30-Day LIBOR + 4.75%
Term: 24-month initial term plus two 12-month extension options
Amort: Interest only (initial term)
LTV: 80% as-is, 75% as-stable
Prepayment: 15-month spread maintenance
Lender Fee: 1%