Financings

Recent Financings

  • Expand

    $5,500,000 Acquisition Bridge Loan for a 70% occupied Los Angeles Office

    April 26, 2017

    Transaction Description:
    George Smith Partners arranged $5,500,000 in acquisition proceeds on a 15,122 square foot Los Angeles office building. Floating at Prime + 0.5%, the 3 year loan is interest only for 18 months before amortizing over 25 years for the balance of the term. Sized to 65% of the purchase price, there is no prepayment penalty for this loan.

    Challenges:
    Despite the prime location, the subject had somewhat aged interiors and exteriors and was just 70% occupied when our Sponsor executed the purchase contract.  The income was below break-even debt coverage on the proposed loan. Most of the in-place tenants were paying well below market rent. One tenant was under a month to month lease and several others were facing lease roll in the next six months. On-site property management was charging an above market rate. Actual historical cash flow was well below potential.

    Solution:
    GSP researched comparable rent and competitive operating data that proved out our Sponsor’s pro forma rents and business plan. Our Sponsor’s considerable success adding value to similar office properties over the past several years supported the business plan for the loan request. An aggressive lease campaign was initiated during due diligence, securing letters of intent from multiple tenants that would bring occupancy to 95%. A small debt service reserve was structured until the tenants took occupancy to cover all operating loss and mortgage expenses in the short interim.

    Term: 3 years
    Rate: Prime + 0.5%
    Amortization: 18 months IO; 25 years thereafter
    Prepayment Penalty: None
    LTC: 65% maximum
    Origination Fees: 0.5%
    Recourse

  • Expand

    $53,900,000: $42.6MM “Non-Recourse” Construction + $11.3MM Preferred Equity Financing for 228-Unit Multifamily Development

    April 26, 2017

    Transaction Description:
    George Smith Partners secured a $42,600,000 non-recourse senior construction loan along with $11,300,000 preferred equity placement to develop a 228-unit Class A multifamily property in Orange County, CA.

    Challenges:
    The sponsorship required a non-recourse solution at an appropriate leverage to achieve the entire project’s capitalization during a time when many lenders were pulling back on construction financing in general and reducing leverage if able to lend at all.

    Solution:
    GSP utilized its significant experience and deep relationships with active capital providers to secure the non-recourse construction financing. GSP was also able to secure preferred equity in lieu of sponsorship bringing in additional equity which allowed the transaction to be appropriately capitalized for the developer to hit their pro forma return on equity.

    Rate & Terms: Confidential

  • Expand

    $11,845,000 Non-Recourse Acquisition and Reposition Financing up to 75% of Cost on a Non-Cash Flowing Retail Property in Los Angeles

    April 19, 2017

    George Smith Partners arranged an $11,845,000 first mortgage on a value-add retail property with no cash flow located along the main retail corridor of one of the hippest neighborhoods in Los Angeles. The national balance sheet lender provided a non-recourse loan to up to 75% of total project cost including 100% of future capital expenditure funds to gut renovate the asset and convert the property to high-end retail plus an addition of four apartment units. Due to the lack of cash flow, the lender structured a 20-month interest and carry reserve to cover debt service during the reposition period. Over 50% to total loan proceeds are allocated for future funding. Interest is not charged on funds until drawn.

    Rate: 30-Day LIBOR + 6.00%
    Term: Three years plus two 12-month extensions
    Amortization: 24 months interest only; 25-year amortization thereafter
    Max Loan to Cost: 75%
    Prepayment: 15-month lockout; open thereafter subject to 1.00% exit fee
    Guaranty: Non-recourse
    Lender Fee: 1.00%

  • Expand

    $1,253,000 Acquisition Bridge Loan at a 4.50% rate

    April 12, 2017

    Transaction Description
    George Smith Partners arranged a $1,253,000 bridge loan for the acquisition of an 8-unit, value-add multifamily property in Long Beach, California. 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% with no prepayment penalty. Interest is not charged on the hold back until funds are drawn and the lender fee was 0.5%. The property is located in an area of Long Beach that is within a growth corridor, but has yet to gentrify.  The sponsor’s plan includes noticing all below market leases in a fairly short window. By emphasizing the sponsor’s track record of re-positioning similar properties as well as current market rents and occupancy, GSP was able to assist the lender in gaining comfort with the market. The loan was structured with an interest reserve to mitigate the property’s weak cash flow during the renovation period. The loan closed in 45 days from start of application.

    Term: 2 Years
    Rate: Prime + 0.5%
    Amortization: Interest Only
    Prepayment Penalty: None
    LTC/LTV: 70%/65%, including 100% of future funding and interest reserve
    Origination Fee: 0.5%
    Guaranty: Recourse

  • Expand

    $5,625,000 Acquisition Loan for Trophy Multifamily Asset in Malibu

    April 12, 2017

    Transaction Description
    George Smith Partners secured $5,625,000 in proceeds for the purchase of a 9,585 square foot, 12-unit multifamily property located in Malibu, CA. The loan is fixed at a rate of 3.95% for 5 years, then floats thereafter at 12 month LIBOR plus 2.5% for 10 years. The loan represented  $468,750 per unit.

    Challenge
    First, the buyer was purchasing the property at a very high price per unit. Second, the property had been fully renovated by the seller and only had six months of operating history. At the time of application, one unit was vacant and four units had short-term leases, including two units leased to corporate tenants. The seller was receiving rents that averaged over $6.00 per square foot which is common in Malibu, but much higher than most locations in Los Angeles. Finally, the property was located on the inland side of the Pacific Coast Highway and had a steep slope at the front of the property, which caused some lenders to be concerned with earthquake risk.

    Solution
    GSP was able to source a lender that was comfortable with all of the unique aspects of the deal. Although the selected lender had an LTV maximum of 50%, proceeds were considerably higher than other lenders which were constrained by a cap on loan per unit. Also, GSP was able to source rent comp data that showed the in-place rents were well supported. Thus, the lender was willing to provide a term sheet even with the vacant unit and short-term leases in place. Additionally, a previous owner had performed an extensive seismic retrofit on the property, which eliminated the need for earthquake insurance. Once in application, the loan closed in approximately 30 days.

    Term: 15 years
    Rate: Fixed for 5 years at 3.94%, followed by floating at 12 month LIBOR plus 2.5%
    Amortization: 30 years
    Prepayment Penalty: 3,2,1
    LTV: 50% maximum
    DCR: 1.20
    Origination Fee: Par
    Guaranty: Recourse

  • Expand

    $7,600,000 Bridge Loan on 50% Occupied Class C Multifamily

    April 3, 2017

    George Smith Partners secured $7,600,000 non-recourse bridge financing for a 50% occupied class C multifamily property in a secondary market located in the Southwest.   Proceeds included $2,127,000 for renovation on dilapidated units and capital expenditures as well as an interest reserve.  The sponsor acquired the property with no reliable operating history utilizing a seller carry back note.  Many of the tenants were late on their rent at the time of acquisition.  The sponsor systematically put in place stricter underwriting for tenant qualification and value engineered a renovation budget.  Most lenders were unable to understand the business plan, despite the sub-market being at 94% occupancy and the sponsor’s recent rentals already hitting pro forma with very light unit turn expenses.  GSP identified a lender with extensive knowledge of multifamily re-positioning and became comfortable with the pro forma cash flow and stabilized value.  In addition, the lender has capacity to offer a fixed rate permanent loan at stabilization to mitigate refinance risk.

     

    Rate: LIBOR+5.50%
    Amortization: Interest Only
    LTV: 65% LTV
    Term: 24 months
    Lender Fee: 1%

     

  • Expand

    $8,200,000 Quick Close Financing at 90% Loan to Cost on Un-Anchored Strip Retail Center

    April 3, 2017

    Transaction Description:
    George Smith Partners secured a $8,200,000 private money bridge loan to enable the renovation and re-tenanting of an un-anchored retail shopping center in Orange County, CA. The loan included over $1,500,000 of cash out to the sponsor at closing as well as $600,000 for future tenant improvements and renovations.

    Challenges:
    The sponsors requested maximum cash-out proceeds that dissuaded many capital providers. Additionally, several tenants were in the process of significantly upgrading their spaces and had unfinished renovations in place. Finally, the project had unsettled legal issues with one of the major tenants.

    Solution:
    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.

    Rate: LIBOR + 8% (Capped at 9%)
    Amortization: Interest Only
    LTC: 90% Loan to Cost / 75% Loan to Value
    Term: One Year Term With (2) – One Year Options

  • Expand

    $7,350,000 Non-Recourse Pre-Development Financing on a Predominantly Vacant West LA Office & Retail Building

    March 28, 2017

    George Smith Partners arranged a $7,350,000 non-recourse loan to 75% of appraised value from a national debt fund to finance the pre-development period of an existing 12,500 square foot, West Los Angeles office and retail building.  Despite having very low occupancy, the lender was able to advance $588 per square foot after GSP demonstrated the superior location of the asset and experience of the Sponsor in development.  The lender structured a 12-month interest and carry reserve as the Sponsor vacates the remaining in-place tenants in order to implement its business plan of eventually razing the existing improvements and building a new, high-end, multi-tenant retail building. Loan proceeds were priced at 9.50% fixed for the 18-month loan duration, and interest expense is not incurred on the interest and carry reserve until drawn.

     

    Rate: 9.50% fixed
    Term: 18-months plus two six-month extension options
    Amortization: Interest only
    Loan to Value: 75%
    Prepayment: 12-month yield maintenance
    Lender Fee: 1%

  • Expand

    $19,500,000 Acquisition and Reposition Financing with Low 5.00% Going-In Debt Yield on a Multifamily Property in Seattle, Washington

    March 28, 2017

    George Smith Partners arranged a $19,500,000 first mortgage on the acquisition of a value-add multifamily asset located within one of Seattle’s trendiest neighborhoods.  The national balance sheet lender provided a non-recourse loan to 70% of total project cost including 100% of future capital expenditure funds to refresh the property’s exterior, interiors including living and common area spaces, and convert 13 furnished extended stay style “executive suites” to market-rate apartments.  Interest expense is not incurred on future funding until drawn.  Cash flow is maximized as the loan is interest only during the initial three-year term and priced at 4.50% over 30-Day LIBOR.  Due to low going-in cash flow, the lender structured an interest reserve to cover debt service during the reposition period.

    Rate: 30-Day LIBOR + 4.50%
    Term: 36 months plus two 12-month extensions
    Amortization: 36 months interest only; 30-year amortization thereafter
    Loan to Cost: 70%
    Prepayment: 18-month lockout; open thereafter subject to 0.50% exit fee
    Guaranty: Non-recourse
    Lender Fee: 1.00%

  • Expand

    $5,000,000 Acquisition of a Single Tenant Rite Aid in a Tertiary Market

    March 22, 2017

    Transaction Description:

    George Smith Partners arranged $5,000,000 for the acquisition of a newly constructed, 17,200 square foot single tenant build-to-suit Rite Aid. Our Sponsor was focused on minimizing monthly debt service costs plus maintaining prepayment flexibility. The proposed Rite Aid acquisition by Walgreens and the tertiary market location added levels of complexity to the transaction. After evaluating the firm’s extensive lending relationships, GSP sourced a regional lender experienced with this location and comfortable with Sponsor’s financial strength, track record, and personal guarantee. The loan is fixed at 4.75% for five years with a 30-year amortization schedule, sized to a 1.20x DSCR, and is open to prepayment at any time. The lender charged a nominal fixed $2,500 cost for loan processing and documentation.

    Rate: 4.75% fixed
    Term: 5 years
    Amortization: 30 years
    DSCR: 1.20x
    Prepayment Penalty: None
    Lender Fee: 0.50%
    Recourse

  • Expand

    $1,075,000 Multifamily Cash-Out Refinance with Significant Return of Equity at a 3.70% Fixed Rate for 5 Years

    March 15, 2017

    Transaction Description:

    George Smith Partners arranged a $1,075,000 cash-out refinance, including a 65% return of equity, at a 3.70% fixed rate on a multifamily property located in West Hollywood, CA.  The sponsor, a Los Angeles based owner-operator, purchased the property less than two years ago and turned approximately half the units in the intervening period.  Despite the limited ownership and lease seasoning, the Sponsor sought maximum cash-out proceeds to capitalize on the value unlocked through unit turns and to make new acquisitions.  The sponsor also sought a fixed rate permanent loan to hedge against rising interest rates and a flexible prepayment structure to allow for a subsequent near-term refinance or sale, as additional value is unlocked through unit turns.  GSP sourced a lender familiar with the market and underscored the submarket, the property’s additional upside and sponsor’s track record, which ultimately allowed the lender to get comfortable with the large return of equity.  Sized to 65% of appraised value with a 1.20 DCR, the loan provided for a net return of equity of $425,000 to the sponsor.  The loan, which carries a 15 year term and amortizes over 30 years, is fixed at 3.7% for the first 5 years of the term and then resets and floats at 300 basis points over 1-Year Treasuries for the remaining 10 year term.  Sponsor’s application rate lock of 3.7% shortly after the election last year was honored by the lender, even though rates have moved significantly in the interim.  Although the loan provides the benefit of a fixed rate, it carries no prepayment penalty.

    Rate: 3.7% fixed for 5 years
    Term: 15 Years
    Amortization: 30 Years
    LTV: 65%
    DCR: 1.20
    Prepayment Penalty: None
    Recourse

  • Expand

    $1,420,000 in Acquisition Financing for Credit Single Tenant Building

    March 8, 2017

    Transaction Description:
    George Smith Partners secured $1,420,000 in acquisition financing for a single tenant building in Atwater, California. The tenant is a national bank with a strong credit rating and has seven years remaining on the lease with extension options available. The Sponsor wanted to put long term fixed-rate financing on the property. GSP was able to identify a capital source that would provide a 10-year term, even though the tenant rolls within that period. The interest rate is fixed at 4.375% for the first 6 years of the loan. The rate then resets and is fixed again for the last 4 years, with a maximum increase of 50 basis points above the original rate (4.875%). This ensures that the Sponsor has a fixed rate throughout the entirety of the 10-year term, and eliminates interest rate risk. Loan proceeds were constrained by a 1.25x DSCR on a 25 year amortization.

    Rate: 4.375% Fixed for first 6 years; 4.875% Fixed for final 4 years
    Term: 10 Years
    Amortization: 25 Year Amortization
    LTV: 61%
    Recourse
    Lender Fee: None