Bridge

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    $7,100,000 Acquisition Bridge Loan for Near-Vacant Los Angeles Multifamily Property; 70% of Cost

    January 10, 2018

    Transaction Description:

    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.

    Challenges:

    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.

    Solution:

    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.

    Rate: Floating at Prime + 0.25% with a floor of 4.75%
    Term: 5 years
    Amortization: 2 years Interest Only followed by 30 Years
    LTC: 70% of as-completed value
    Origination Fees: 0.5%

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    $17,800,000 Non-Recourse Bridge Loan to Stabilize a 60,500 sf Retail Shopping Center

    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.

    Rate: L+600
    Term: 18 Months + One 6 Mo. Extension
    Amortization: IO
    LTC: 75%
    LTV: 60%
    Prepayment: 6 Mo. Minimum Interest
    Guarantee: Non-Recourse

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    $3,565,000 Refinance Bridge Loan with a Permanent Loan Conversion Feature

    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
    LTV: 61%
    LTC: 72%
    Guarantee: Recourse

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    $7,400,000 Hilton Flag Non-Recourse Reposition Bridge to 75% of Stabilized Value

    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
    Guarantee: Non-Recourse
    Exit Fee: 2.0%
    Prepayment: 18 Month Yield Maintenance

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    $5,810,000 Non-Recourse Bridge Loan to Acquire and Renovate a 117-Unit Apartment in Dallas, TX

    August 23, 2017

    Transaction Description
    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.

    Term: 24 Months + Three 12 Month Extensions
    Rate: 1-Month LIBOR + 4.75%
    Amortization: interest only for the entire loan, including extensions
    LTC: 81% LTC
    Guarantee: Non-Recourse

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    $4,500,000 Acquisition Bridge Financing for the Condominium Conversion of a Historically Designated Trophy West Hollywood Apartment Building

    August 16, 2017

    Transaction Description:
    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.

    Challenges:
    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.

    Solution:
    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.

    Rate: Prime +.50% (4.75% Today)
    Amort: Interest Only
    Term: 18 Months with one 6 Month Extension for a 0.15% Lender Fee
    LTC: 64%
    Partial Release Provision: 125% of Par
    Prepayment Penalty: None
    Lender Fee: 0.35%
    Guaranty: Recourse

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    80% Loan-to-Value, $11,250,000 Refinance of a 44% Occupied Retail Center Shadow Anchored by an Independent Grocery Chain

    August 16, 2017

    Transaction Description:
    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%
    Guaranty: Non-Recourse

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    $4,000,000 Non-Recourse Acquisition Loan for Bel Air SFR Fix and Flip Closed in 5 Days

    August 9, 2017

    Transaction Description
    George Smith Partners secured a $4,000,000 non-recourse acquisition loan to purchase a partially developed SFR project in Bel Air. The spec house development project had halted, and the previous developer was forced to sell the project. Our sponsor became involved in a competitive bid process and needed a quick close loan to purchase the property. George Smith Partners was able to identify a private money lender who not only closed in 5 days, but also gave the sponsor the necessary proceeds to take down the property. The interest only loan is priced at 7.99% and represents 50% of the property’s current value. The loan has a 1-year term with a 1-year extension option and no prepayment penalty.

     

     

    Rate: 7.99%
    Term: 1 year with a 1 year extension option
    Amortization: Interest Only
    Guaranty: Non-Recourse
    Prepayment Penalty: None
    LTV: 50%

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    $12,000,000 Non-Recourse Acquisition Bridge Financing on a 1970’s 300-Unit Workforce Multi-Family Property in the Pacific Southwest

    August 9, 2017

    Transaction Description
    GSP successfully arranged $12,000,000 in first mortgage debt for the acquisition and reposition of a 300-unit workforce multifamily asset in the Pacific Southwest. The national balance sheet lender provided a non-recourse loan up to 70% of total project cost that includes funding 100% of future planned expenses (approximately $3,500,000) to upgrade the property’s common area amenities and interiors and implement a green and energy saving initiative. 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. Additionally, lender structured an interest reserve to cover a debt service shortfall during the peak reposition period.

    Rate: 30-Day LIBOR + 5.15%
    Term: 36 months plus two 12-month extensions
    Amortization: 36 months interest only; 30-year amortization thereafter
    Loan to Cost: 70%
    Prepayment: 18-month minimum interest with a 0.5% exit fee thereafter
    Guaranty: Non-recourse
    Lender Fee: 1.00%

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    $3,500,000 Acquisition Bridge Financing for a Waterfront Newport Beach Multifamily Property Closed in 5 Business Days at a 7.00% Fixed Rate

    July 26, 2017

    George Smith Partners arranged $3,500,000 in quick-close acquisition bridge financing for a waterfront Newport Beach multifamily property.  The sponsor approached GSP with an extremely tight closing time frame and a property with one down unit. The sponsor valued certainty of execution above all else, so he could close on the property in short order. GSP identified a non-bank lender with a long history of providing quick close bridge execution, familiar with the location and comfortable with the property’s weak in place cash flow.  Sized to 65% of purchase with no hold back requirement for interest reserve or capital expenditures, the loan carries a 9-month term, interest only payments at a 7.00% fixed rate and no prepayment penalty.  The loan also includes two 3 month extensions and a 1.5% lender fee.

     

    Rate: 7% fixed
    Term: 9 months
    Amortization: Interest Only
    Loan to Cost: 65%
    Guarantee: Recourse
    Lender Fee: 1.5%

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    $12,000,000 Non-Recourse Acquisition Bridge Financing on a 1970’s 300-Unit Workforce Multi-Family Property in the Pacific Southwest

    July 26, 2017

    GSP successfully arranged $12,000,000 in first mortgage debt for the acquisition and reposition of a 300-unit workforce multifamily asset in the Pacific Southwest. The national balance sheet lender provided a non-recourse loan up to 70% of total project cost that includes funding 100% of future planned expenses (approximately $3,500,000) to upgrade the property’s common area amenities and interiors and implement a green and energy saving initiative.  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.  Additionally, lender structured an interest reserve to cover a debt service shortfall during the peak reposition period.

    Rate: 30-Day LIBOR + 5.15%
    Term: 36 months plus two 12-month extensions
    Amortization: 36 months interest only; 30-year amortization thereafter
    Loan to Cost: 70%
    Prepayment: 18-month minimum interest with a 0.5% exit fee thereafter
    Guaranty: Non-recourse
    Lender Fee: 1.00%

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    80% LTV Land Acquisition Financing at a 9.00% Fixed Rate for a Future Multifamily Development Site in Mid-City Los Angeles

    July 19, 2017

    George Smith Partners arranged 80% LTV land acquisition financing for a future multifamily development site in the Mid-City neighborhood of Los Angeles, California.  The sponsor, a non-resident non-citizen, sought maximum proceeds for the land acquisition and had a 30-day closing time frame from initial contact, which was impractical for many lenders.  Certainty of execution was critical as an extension to the purchase contract was not obtainable.  GSP identified a non-bank lender with a long history of providing quick close bridge execution and who was familiar with the location and comfortable with the land basis.  The loan was sized to 80% of value with no hold back requirement for interest reserve or capital expenditures.

    Rate: 9.00% Fixed
    Term: 12 Months with four 3 month extensions
    Amortization: Interest Only
    LTV: 80%
    Prepayment Penalty: None
    Guaranty: Recourse
    Origination Fee: 2%