$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.
July 12, 2017
George Smith Partners secured a $3,000,000 non-recourse bridge loan to demolish and begin the redevelopment of a fire damaged retail building on a prime corner in Downtown Los Angeles. After the fire, the sponsor decided to demolish and rezone the property. The long term plan is to redevelop the property into a mixed use building with ground floor retail, office, and condos. GSP used its experience and relationships to identify a private money 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. The lender was able to close in 5 days. The interest only loan is priced at 7.99% and represents 55% of the property’s current value. The loan has a 1-year term with a 1-year extension option and no prepayment penalty.
June 27, 2017
George Smith Partners arranged a quick close acquisition bridge loan for a 5-unit property in South Los Angeles. The sponsor approached GSP with an extremely tight closing time frame of 5 days and a property with weak cash flow due to two down units. The sponsor valued certainty of execution above all else, so he could close on the property in short order. GSP identified a non-bank private individual willing to make the loan with no origination free. Sized to 80% of purchase with no hold back requirement for interest reserve or capital expenditures, the loan carries a 12-month term, interest only payments at a 9.5% rate and a 3-month prepayment penalty.
Rate: 9.5% Fixed
Term: 12 Months
Amortization: Interest Only
LTV: 80% of Purchase / 65% of Stabilized Value
Prepayment Penalty: Three Months
Origination Fee: Par
- Advisors: Zachary Streit
March 8, 2017
George Smith Partners secured a $2,250,000 bridge loan for the 70% completed spec luxury waterfront single family residence in Naples, Florida. The sponsors self-funded the development and sought to use the proceeds to recapitalize for other projects.
The Sponsor requested maximum cash-out proceeds that dissuaded many capital providers from considering the request given the luxury home’s vulnerability in a market downturn and overall development risk. Most lenders were not comfortable going over 60% loan to cost.
GSP identified a private capital source who was comfortable with the incomplete project and understood the upside potential at completion. Our Sponsor’s considerable development track record and financial strength further encouraged the capital provider not to shy away from the high dollars per square foot. Sized to 75% of total cost and 53% of as-complete value, the 12-month loan is interest only with no prepayment penalty or yield maintenance.
February 15, 2017
George Smith Partners arranged a $2,700,000 cash-out refinance bridge loan on an unflagged boutique hotel in Sacramento, California. The Borrower approached GSP seeking a financing solution from a lender that could close quickly, provide capital to renovate, and bridge until stabilization. GSP identified a lender who was comfortable lending on an unflagged hotel in the middle of renovations and located in a secondary market. During due diligence, an unpaid occupancy tax from the prior owner was discovered. With the prior ownership unable to pay the tax, the county placed a lien against the property, even though it was under new ownership with no relation to the prior owners. This created a setback for closing, as title could not be cleared until the tax, interest, and fees were paid in full. The borrower weighed the cost of litigating to fight the liens, but chose to pay off the liens which allowed the lender to close on time. Sized to 50% of cost, the interest only loan has an 18 month term to allow for full stabilization of the property and has no prepayment penalty. The loan is priced at 7.90% for the first twelve months and 8.30% thereafter, for the remainder of the term.
$2,500,000 Cash-Out Refinance Private Money Loan at a 7% Fixed Rate for a Luxury Single Family Fix and Flip Property Closed in 5 Business Days
January 18, 2017
George Smith Partners arranged a $2,500,000 cash-out refinance loan at a 7% fixed on a free and clear luxury 7,200 square foot single family residence located in Laguna Beach, California. The sponsor recently purchased the property for $3,465,000 all-cash at an auction and sought a cash-out refinance loan to close on another acquisition opportunity, but was sensitive to pricing and terms. GSP identified a specialty lender that could lend aggressively on the asset and close quickly. Sized to 72.5% of purchase price and 65% of as-complete value, the 9-month loan is interest only with no prepayment penalty or yield maintenance. GSP identified a lender that understood the submarket and that the sponsor was experienced enough to rehabilitate the property in a timely fashion to either sell or lease as a rental. GSP underscored the sponsor’s track record and significant remaining equity in the property after the cash-out at closing. This ultimately allowed the lender to get comfortable with the significant cash out and to not require an interest reserve, even though the property has no cash flow. The lender allowed the sponsor to fund an estimated $125,000 in repairs out-of-pocket versus a hold back due to the sponsor’s financial strength and track record of execution. The loan funded in 5 business days with an exceptionally low rate and lender fee for quick close private money execution.
Rate: 7% Fixed
LTV: 72.5% As-Is / 65% As-Complete
Term: 9 Months
Amortization: Interest Only
Prepayment Penalty: None
Lender Fee: 1%
- Advisors: Zachary Streit
October 15, 2015
Transaction Description: George Smith Partners arranged the take-out financing of a high-yielding private money loan. Structured as an interest only bridge financing for a 70 unit apartment complex, the non-recourse loan is fixed at 5.81% for two years. Located in the Western US, the mid-1980’s vintage subject was over 95% occupied at funding. This financing replaced high-rate financing from a mid-2014 acquisition.
Challenge: The property’s operating history since acquisition had been inconsistent as the Borrower replaced an underperforming management company during his restructuring. The new management improved occupancy and collections but lacked stabilized history to qualify for an agency loan for an out of state Borrower.
Solution: GSP identified a non-recourse bridge lender provided an agency-to-perm option. The fixed rate loan is pre-payable after 12 months and will roll into a long-term agency execution once a stabilized track record is documented.
November 6, 2014
Transaction Description: George Smith Partners successfully placed the financing to construct a nine-unit luxury condominium project in a very desirable Studio City, California location. The Sponsor purchased the land, currently improved with a single family residence, in 2011 and began the entitlement process. Sized to 75% of actual cost, the 12-month term is priced at 11.5% plus a three point lender origination fee. Challenge: Despite the Sponsor being an experienced developer with years of experience, litigation following the housing crisis in 2008 placing significant strain on the ability to source construction capital for “For-Sale” units. A city provision in the entitlements offered a very tight time-frame when construction could begin. Solution: Market research supported the Borrowers’ business plan and exit sale prices. A private non-institutional capital source was identified for a quick-close and certainty of execution as applied for. Rate: 11.5% Term: 12 Months Amort: Interest Only LTC: 75% Recourse Lender Fee: 3% Advisors: David Rifkind, Jonathan Lee, Adam Candler
September 20, 2014
9 – 17 – 2014
Transaction Description: GSP successfully placed the $1,430,000 refinance of a 13,754 square foot family owned Day Care Facility what was operating under a Chapter 11 bankruptcy. The Day Care Facility serves 140 students from kindergarten to 4th grade. Sized to 65% LTV, the 8.99% coupon is fixed for the 12 month term. Challenge: The Borrower was in default with debt service payments and was unable to refinance the asset due to contingencies with its business partner. Our Sponsor filed Chapter 11 bankruptcy in an attempt to negotiate a mutually beneficial resolution. Sufficient proceeds were needed to pay off the existing loan, buy out a shareholder and cover outstanding property taxes. Solution: GSP identified a capital provider who was comfortable with the on-going operating cash flow and agreed to fund the transaction out of bankruptcy. This proposal was ultimately approved by the court. Rate: 8.99% Fixed Term: 12 Months w/two-6 Month Ext Amort: Interest Only LTV: 65% Prepayment: 6 Months Yield Maintenance Recourse Advisor: Gilda Rivera
July 24, 2014
7 – 23 – 2014
Transaction Description: GSP placed $6,279,000 of non-recourse financing to complete the construction of a 35,000 square foot medical office building space in Decatur, Georgia. The client was not a seasoned real estate developer but savvy enough to identify an immediate opportunity in a burgeoning market. The building was only partially completed and required additional construction financing to bring the asset to Certificate of Occupancy. Multiple lenders were not comfortable due to the sponsor being a relatively unseasoned developer and stepping into a partially completed construction project with a new general contractor. The Borrower was unable to provide a repayment guarantee due to a recent bankruptcy, open tax liens and pending litigation. Sensitive to initial lender deposits, the Borrower had previously been under application to a private lender who lacked discretionary capital and utilized the deposit as a profit center, without providing services. GSP procured market rate comps and supporting documentation to confirm market strength and provided an unsolicited LOI for a sale of the subject prior to obtaining the CofO. Sponsor capacity was substantiated by his ability to bring the asset to its’ current level of completion, retain a new GC and pre-lease 100% of the 35,000 square feet to multiple tenants. GSP called on their relationship sources to identify discretionary capital motived by funding loans over collecting one-off fees. The one-year, non-recourse floating rate term is priced at 10.5% and does not require a prepayment penalty. Rate: 10.5% Term: One Year Amort: Interest Only Prepayment: None Non-recourse Advisors: Gilda Rivera, Salar Royaei
July 3, 2014
7 – 2 – 2014
Transaction Description: Raffi Sarkissian successfully placed the acquisition debt for the purchase of a 20,000 square foot single-tenant industrial building in the San Fernando Valley of Los Angeles. The tenant/buyer is a foreign national who will occupy and operate from this location, but has yet to initiate any business here in the States. The capital provider became comfortable with the business plan of feeding existing overseas operations from this location. The vanilla industrial use in a strong market added comfort to the loan execution. Rate: 8.5% Term: 3 Years Amort: Interest Only Prepayment: None Recourse Advisors: Raffi Sarkissian, Tylene Turner, Manuk Boyajian
April 17, 2014
4 – 16 – 14 Transaction Description: George Smith Partners placed a land acquisition and infrastructure construction loan secured by 165 acres of a master planned community in Albuquerque, New Mexico. The collateral allows for over 1,100 apartment units, almost 600 single family residences, plus some commercial development. The Sponsor will develop residential lots and sell them to national and regional homebuilders. Financing included an initial funding to repay the existing lender and other expenses plus a secondary facility to fund future construction of residential lots and infrastructure. The two year term was limited to 65% of current value but was 87% of the actual acquisition price. Financing also allows for a full interest reserve and funding of 65% of new construction costs going forward. Fixed at 12.5%, the loan carries a 30 day interest prepayment penalty. Challenge: Financing this project offered several challenges. Since the last real estate cycle, unimproved residential land has fallen out of favor because it is a non-cash flowing asset and takes considerable time to monetize, posing considerable risk to a lender. Next, the Sponsor was involved with complex negotiations for a discounted payoff to the existing lender and restructuring payments to bondholders. Finally, Albuquerque is considered a tertiary market and, therefore, it is not a popular target location for many lenders and investors. Together, these challenges presented a formidable task to sourcing a financing partner. Solution: GSP immediately commenced on a targeted marketing effort to well-suited financial partners and sourced a capital provider who was not only knowledgeable about the location and marketplace, but also comfortable with 1) the investor’s expertise consisting of 35 years of land development and homebuilding experience including more than 20 years in Albuquerque; 2) a land basis that was the lowest in the marketplace; 3) level of guarantee (full recourse); and 4) a business plan that included already executed homebuilder contracts for residential lot purchases. GSP vetted the risk exposure upfront with the new capital provider and worked to structure objective criteria to satisfy the Sponsor and Lender. Rate: 12.5% Term: 24 Monthsw/extension Amort: Interest Only LTV: 65% Prepayment: 30 Days of Interest Recourse Lender Fee: 3 Points Advisor: Loren Bedolla