November 16, 2016
George Smith Partners placed the refinance a three-parcel assemblage entitled for future development of 13 small-lot subdivision. A return of equity was sought to fund additional pre-development costs. GSP secured a capital provider comfortable with funding in-fill entitled land at higher leverage points: 80% of total capitalization in this situation. Our Sponsor’s strong development pipeline and proven track record added to the strength of this location/housing market. Sized to 80% of cost, the loan is fixed at 8.50% for a 12 month term with a 1.5% lender origination fee.
$10,700,000 ($318/SF Land) Non-Recourse Acquisition Financing for a Build-to-Suit Grocery Store to 79% of Purchase; 14-Day Close
May 11, 2016
Transaction Description: GSP arranged the $10,700,000 non-recourse first mortgage for the acquisition of a 33,600 square foot land parcel located in Hollywood, California. The parcel is currently improved with 21,425 square feet of retail and office space; 18% of the space held vacant by the seller with the remaining tenants on short-term leases. An interest reserve was funded as in-place cash flow is inadequate to cover debt service. Cash flow will further decrease post-closing as the Sponsor vacates existing tenants in order to demolish existing improvements and build a 38,000 square foot grocery store. GSP was able to source a lender comfortable with the high loan per square foot due to tight market vacancy and in-place tenants paying significantly below market rate rents. Sized to 79% of purchase price, the two-week quick close acquisition loan priced at 9.25% over 30-Day LIBOR for the 12-month loan duration.
March 30, 2016
Transaction Description: George Smith Partners arranged the $7,000,000 non-recourse acquisition loan for the acquisition of a 22,150 square foot parcel located along a major thoroughfare in West Los Angeles, California. Currently improved with a 5,275 square foot retail building occupied by a single tenant, the lender structured an interest reserve as in-place cash flow is inadequate to cover debt service. This loan provides our Sponsor with financing during the entitlement period and will be taken out with a construction loan upon receipt of entitlements for the 15,000 square foot retail redevelopment. Funded to $316 per square foot for the land; $1,327 per square foot improved, GSP sourced a capital provider comfortable with the high loan per square foot on the existing collateral due to the project’s streamlined “by-right” entitlement process and tight market occupancy. Sized to 67% of purchase price, the two-week non-recourse quick close acquisition loan priced at 10% fixed for the 18-month loan duration.
March 2, 2016
Transaction Description: George Smith Partners arranged the $2,680,000 non-recourse acquisition loan on a fully entitled 16 acre parcel of land in North San Diego County. Our Sponsor acquired the land to re-entitle for a higher density housing development for re-sale to a homebuilder. The loan was sized to 65% of purchase, priced at 7.75% over Prime.
Challenge: Several capital sources viewed the Sponsor’s business plan to re-entitle the land within 12 months more as an unentitled land transaction than a re-entitlement opportunity. Due to the higher risk nature of re-entitlement and secondary market location, many lenders rejected the transaction or offered very low leverage with full recourse.
Solution: GSP identified a lender who was comfortable with the business plan, land basis, and short duration that the loan would be outstanding given the Sponsor’s financial strength and previous land entitlement experience. There is no recourse beyond the standard carve-outs.
February 3, 2016
Transaction Description: George Smith Partners successfully placed acquisition & recapitalization financing for a four-parcel land assemblage in the Koreatown area of Los Angeles. Our Sponsor will construct a 90-unit multifamily project on the fully entitled site. All four parcels are currently improved with duplexes or four-plexes. Two of the four subject parcels are owned free and clear, and the additional two were under contract for purchase. Market research identified a strong and improving employment and demographic trajectory of the area. Underwriting modeled the land basis in terms of loan per buildable unit. Recent land sale comparables with similar entitlements produced sufficient value for the lender to qualify the value to justify this level of leverage. Sized to 80% of total capitalization, no additional cash equity was required to complete the purchase. Priced at LIBOR plus 300, there is no interest rate floor netting an all-in coupon under 4.0%.
January 7, 2016
Transaction Description: George Smith Partners successfully the construction financing for the development of three residences in Toluca Lake, California. Currently the subject is a vacant single family home that will be raised and the lot sub-divided for the future homeowners. Sized to 70% of total cost, the 12 month institutional loan is priced at 5.0%.
August 27, 2015
Transaction Description: George Smith Partners successfully arranged $1,680,000 for the acquisition of a two parcel assemblage in the Koreatown area of Los Angeles. The Sponsor is purchasing the land with the intention to entitle and build a 53-unit multi-family residential community. Given most capital providers’ standings on unentitled land, our Borrower required certainty of execution with this quick-close purchase. GSP identified a Los Angeles non-institutional fund familiar with this in-fill location and mapped out market trades for unentitled land while providing comps per unit for a traditional construction debt execution exit. Fixed at 8.9% for one year, this recourse loan has two options to extend should the Sponsor be unable to secure his permits with the first year.
August 6, 2015
Transaction Description: George Smith Partners successfully arranged the $1,900,000 senior loan for the acquisition of an unentitled three-parcel assemblage in the Pico/Robertson area of Los Angeles, in conjunction with a refinance of a Culver City triplex. Cash-out proceeds from the triplex were credited to the acquisition of the land assemblage. The same capital provider funded both transactions in order to accommodate the timing of a 1031 exchange. The land assemblage and triplex were both sized to 60% of the purchase price/value and priced at 8.9% and 8.4% respectively for the 12 month term. The entire transaction executed within 8 days of GSP being introduced to the opportunity.
July 9, 2015
Transaction Description: George Smith Partners successfully placed the $6,060,000 acquisition/bridge loan to acquire two adjacent, unentitled parcels in Beverly Hills, California. Our client’s plan is entitle it for condominium construction. The current tenancy provides some income but is significantly below break-even at 60% leverage. With little development experience and only one other commercial asset in his portfolio, the Borrower’s post-close liquidity and the residential market strength mitigated the underwriters’ exit concerns. Structured to 60% of cost, the loan is fixed for 2 years at 4.25% before options. This recourse loan does not amortize but does pay current from cash flow and Borrower contributions.
June 5, 2015
Transaction Description: Jonathan Lee and Adam Candler successfully placed the acquisition financing of unentitled land for a to-be-built multifamily development near Culver City, California. The Subject is a three parcel assemblage zoned C-2, which allows for a residential development use, currently improved with a two duplexes and a single family home. Surrounding parcels are a mixture of multifamily and commercial. In-place revenue was not underwritten and only used as a compensating factor by credit in the approval of this transaction. Sized to 80% of the contracted purchase price, the 12 month loan is priced at LIBOR + 4.50% subject to a 6.5% floor. There is no prepayment penalty or exit fee for this recourse loan.
April 30, 2015
Transaction Description: Gary E. Mozer, Katie H. Rodd, Michael Anderson and Kyle Howerton successfully placed the $5,800,000 acquisition loan for a parcel of land that is zoned, but requires site plan approval before breaking ground. City of Los Angeles approval is estimated to take 15 months from close of escrow. This loan includes funding for entitlement, permits costs as well as an interest reserve. The site will be for a build-to-suit for a tenant that had executed their lease prior to close. The non-recourse loan is fixed at 10% for 18 months and opens to pre-payment without penalty after nine months and was sized to 75% of total capitalization.
April 2, 2015
Transaction Description: Steve Bram, Allison Higgins and Brian Asheghian successfully arranged an institutional $8,125,000 acquisition bridge loan for an unentitled, three acre site in the Koreatown neighborhood of Los Angeles. The loan allowed the Sponsors to acquire and entitle the land for construction of 225 apartment units. The current use of the site was obsolete so lenders had a difficult time getting comfortable with the unentitled status of the property since there was no fall back use. While most capital providers were pricing around 9% given the risk to entitling, GSP identified an institutional lender that was comfortable in the Sponsor’s business plan given his successful track-record. Fixed at 5.0% for 18 months, the 50% of purchase price loan is full recourse to a warm body. There is no prepayment penalty or exit fee.