Financings

Recent Financings

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    $6,000,000 Multifamily Acquisition; 3.78% Fixed For Five Years, 2 Years IO

    October 18, 2017

    Transaction Description:
    George Smith Partners secured $6,000,000 for the acquisition of a stabilized 55 unit Los Angeles apartment building. Fixed at 3.78% for five years; the loan will float at 6 month LIBOR + 3.25 for the remaining 15 years of the loan term. The loan will amortize over 30 years after the initial two-year interest-only term. Pre-payment steps down from 5% and remains at 1% for the final 15 years.

    Challenges:
    In discussing the transaction with capital providers, GSP discovered that a majority of underwriters sized proceeds using a stressed underwriting constant. For these lenders, proceeds were less than 60% of the purchase price. Due to a limited collection history, several lenders would not consider RUBs (Ratio Utility Billings) income for sizing proceeds. Our Sponsor had a short acquisition timeframe.

    Solution:
    GSP identified a capital source that underwrote the actual note rate rather than a higher stressed constant and used a 1.2 DCR for sizing. RUBs income was also credited as additional income and contributed to the NOI. Proceeds netted were $200,000 more than the balance of those surveyed. A 45 day close was orchestrated under the original terms of the application.

    Rate: 3.78% Fixed for 5 Years; 6 Month LIBOR + 3.25% thereafter
    Term: 20 Years
    Amortization: 2 Years IO; 30 Years thereafter
    Prepayment Penalty: 5, 4, 3, 2, 1, then 1
    LTC: 65%
    DCR: 1.20
    Origination Fees: Par

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    $14,400,000 Non-Recourse Financing for Acquisition and Reposition of a 196-Unit Southwest Apartment

    October 18, 2017

    George Smith Partners arranged $14,400,000 of non-recourse, acquisition and renovation financing for a 196-unit garden-style multifamily apartment in a Southwestern MSA. Constructed in 1984, the property consists of 15, two-story, wood frame buildings with flat roofs. In 2014, the seller completed exterior renovations and also upgraded 90 of the 196 units. Our Sponsor’s business plan is to fine tune exterior renovations, finish renovating the remaining 102 units and install low flow plumbing fixtures to take advantage of green program incentives. GSP identified a capital provider able to provide long-term financing and was comfortable with the renovation business plan. The proposed Green program discounted the interest rate by 20 basis points.

    Rate: 4.41%
    Term: 10 Years
    Amortization: 12 months IO, followed by 30 year amortization
    Loan-to-Purchase Price: 75%
    Guarantee: Non-Recourse

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    $85,000,000 Refinance of San Diego Pendry Hotel

    October 18, 2017

    George Smith Partners successfully placed the refinance on the flagship 317 room Pendry Hotel in the historic Gaslamp quarter of downtown San Diego. The Hotel and the brand were launched in early 2017 as the new luxury hotel brand operated under the Montage platform. Pendry fills the void between service-oriented luxury hotels and design-oriented boutique hotels. In 2014, GSP successfully placed the construction financing. Proceeds from this refinance were used to repay that facility.

    GSP’s mandate was to source a lender who would recognize the value in the unique attributes for this Hotel, including its unique Food & Beverage offerings. While there were numerous financing providers who were interested in this opportunity, our client ultimately selected a national debt fund that understood the strength in the asset, the strong capabilities of the Sponsor and market demand of both business and leisure travelers who will frequent the property over the coming years.

    Rate: LIBOR + 585
    Term: 4 years with a 1 year extension option
    Amortization: Interest-only
    Prepayment: 24 months
    Guarantee: Non-Recourse

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    $24,000,000 Construction Loan Modification; Equity Returned to the Sponsor

    October 11, 2017

    GSP placed the 49 unit ground-up multifamily development loan for a well-heeled Sponsor in an affluent Los Angeles suburb two years ago.  Now nearing completion, market dynamics offer stronger support as a “For Sale” exit as condominiums than the originally anticipated rental housing option.  A condo map was in place prior to ground breaking.  Working with our construction lender, GSP negotiated release prices and an additional $3,680,000 funding for capital upgrades and a partial return of cash equity to the Sponsor.  The construction loan was extended to July of 2018 to allow for additional time for the individual unit sell-out.  Recourse is limited to the top 25% of the loan.

    Rate: LIBOR + 2.75%
    Term: Nine months
    Guarantee: Recourse

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    $4,550,000 Refinance/Discounted Payoff for a Multi-Tenant Shadow Anchored Retail Center

    October 11, 2017

    George Smith Partners secured a $4,550,000 bridge loan to refinance a 2007 constructed, distressed 25,000 square foot shadow anchored shopping center in the Inland Empire. The CMBS note was purchased at a discount during the recession and the note buyer agreed to a discounted payoff with the borrower. The largest tenant vacated prior to loan maturity which added another level of complexity to the transaction. George Smith Partners sourced a Lender experienced with this location, comfortable with Sponsor’s financial strength, track record and guarantee. Our Sponsor was not required to invest additional cash into the transaction.  The new loan included an interest reserve as well as funds for leasing commissions, tenant improvements and no prepayment penalty.

    Rate: Confidential
    Term: 12 months plus extensions
    Amortization: Interest Only
    LTV: 75%
    Guarantee: Recourse
    Origination Fee: 1.00%

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    $5,108,000 Fixed Rate Permanent Financing for 160-Unit Multifamily with 5 Year Interest Only

    October 11, 2017

    George Smith Partners placed a $5,108,000 permanent loan for a 160-unit class B garden style multifamily building in a tertiary market located in the southwestern United States after arranging the acquisition loan in late 2016.  During underwriting, the existing national management company exited the market on 30 days’ notice with a looming loan maturity. GSP worked with the lender to demonstrate that the Sponsor had assembled an experienced team in their newly formed management company which allowed the lender to get comfortable with the Sponsor self-managing the asset without a track record of management in similar assets.  Fixed for 10 years at 4.77%, the non-recourse loan is interest only for the first 5 years and 30-year amortization thereafter.

    Rate: 4.77%
    Term: 10 Years
    Amortization: Interest Only for 5 years; 30-year amortization thereafter
    LTV: 65%
    Prepayment: Yield Maintenance
    Origination Fee: Par

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    Cash-Out Refinance for Two Adjacent Newport Beach Duplexes; Closed in 3 Days of Application

    October 4, 2017

    George Smith Partners placed the 80% loan-to-cost financing for a $2,400,000 quick-close cash-out refinance for two adjacent Newport Beach duplexes.  The sponsor approached GSP with an extremely tight closing time frame due to the need to redeploy refinance proceeds into a pending acquisition. GSP identified a non-bank lender who is familiar with the location and also has a long history of providing quick close bridge execution.  Fixed at 7.5% for 9 months, the loan offers two extension periods.

    Rate: 7.50% Fixed
    Term: 9 months plus Two 3-Month Extensions
    Amortization: Interest Only
    LTC: 80%
    Guarantee: Recourse

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    $8,540,000 Non-Recourse Acquisition and Reposition of a 151-Unit Orlando Apartment

    October 4, 2017

    George Smith Partners arranged $8,540,000 of non-recourse, acquisition and renovation debt for a 151-unit multifamily apartment in Orlando, Florida. The subject is composed of 11, two-story buildings and is centrally located to attractions such as Walt Disney World, Universal Orlando Resort, and Sea World Orlando. The business plan is to acquire the performing asset and renovate 100% of the units. Proforma operating expenses were underwritten and supported with the Sponsor’s comparable property expenses in this market.  Fixed for 10 years at 4.37%, the non-recourse loan was sized to 80% of the total capitalization.   Amortization commences on a 30-year schedule after an initial three years of interest only payments.

    Rate: 4.37%
    Term: 10 Years
    Amortization: 3 years IO, followed by 30-year amortization
    LTC: 80% LTV
    Guarantee: Non-Recourse

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    $9,100,000 Non-Recourse Cash Out Multifamily Refinance @ 4.15% Fixed for Ten Years

    October 4, 2017

    George Smith Partners secured the $9,100,000 non-recourse cash out refinance for 256 multifamily units in a Western States secondary market. Our Sponsor refinanced his existing floating rate loan into new long-term fixed rate financing.  Since initial acquisition, the Borrower commenced on a water conservation program but had yet to complete capital upgrades that would qualify him for green certification.  An interest rate reduction was offered if a completion reserve was set-aside to complete upgrades and secure the green certificate.  Initially estimated at over $100,000, the budget and subsequent reserve was confirmed at $38,000.  A pre-commitment rate lock opportunity was structured for 45 days at no cost, allowing the Borrower to monitor secondary market activity and lock at their discretion.  Fixed for 10 years at 4.15%, the non-recourse loan amortizes over 30 years. All lender fees and third party costs including legal were capped at $13,000.  Future secondary financing will be permitted to 75% of value.

    Rate: 4.15%
    Term: 10 Years
    Amortization: 30 years
    LTV: 55%
    Guarantee: Non-Recourse
    Prepayment: Yield Maintenance
    Origination Fee: Par

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    $9,730,000 Shadow Anchored Retail Acquisition Financing

    September 27, 2017

    Transaction Description:
    George Smith Partners secured $9,730,000 acquisition financing for a 56,747 square foot shadow anchored retail center that was 70% occupied at the close of escrow. Shadow anchored by Home Depot and Fry’s Food & Drug, the 14-tenant shopping center is located in a Southwestern MSA. Fixed at 4.2% for ten years, the loan amortizes over 25 years and does not carry a prepayment penalty.

    Challenges:
    During due diligence, a tenant representing 27% of the net rentable area terminated their lease bringing occupancy to 70%. Our Sponsors required a permanent loan execution and would not consider a bridge to perm option.

    Solutions:
    GSP identified a lending source who was knowledgeable about the strength of this sub-market and comfortable with 30% vacancy. They identified the upside potential and rental opportunities in the local market. Our Sponsor’s considerable investment track record and financial strength further solidified the loan strength and allowed for a permanent loan instead of a bridge loan.

    Rate: 4.2%
    Term: 10 year fixed rate loan
    Amortization: 25 years
    LTV: 69%
    Prepayment: None
    Guarantee: Recourse

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    $13,740,000 Non-Recourse Acquisition Bridge Loan of Land Parcels For a Future $200,000,000 Mixed-Use Hotel Development Project; 5-Day Close

    September 27, 2017

    Transaction Description:
    George Smith Partners successfully placed a $13,740,000 acquisition bridge loan to acquire two land parcels and refinance three adjacent land parcels for a large mixed use hotel and condo development site in the heart of the Koreatown district of Los Angeles. With the final components of the land assemblage completed, the $200,000,000 mixed used development project is scheduled to break ground in March of 2018. Our Sponsor’s initial business plan was to build the mixed use project on three parcels of land previously held in his portfolio. The opportunity to acquire two adjacent parcels will allow him to double the total buildable square footage of the project. Fixed for 12 months, the non-recourse loan does not carry any prepayment penalty and closed in 5 days.

    Challenges:
    It was crucial to identify a lender who could close quickly, provide leverage, and waive any prepayment penalty. Due to the upcoming March 2018 groundbreaking, existing tenants on the current 3 parcel assemblage were all on short term leases with discounted rents. As a result, in place cash flow had been compressed and limited the ability for institutional lenders to get comfortable with the property and provide meaningful proceeds. Additionally, a fast close was necessary to take advantage of a seller discount.

    Solution:
    GSP identified an unconventional lender who focused on the future value of the five parcel assemblage and shovel ready development site rather than the current value based on in-place NOI. This capital provider closed the loan in 5 days, allowing the Sponsor to achieve a significant discount on the purchase price. The capital provider also waived all prepayment penalties, assuring the Sponsor would preserve significant capital once the subsequent construction loan is placed within the next few months.

     

    Rate: 7.99%
    Term: 1 Year with a 1 Year Extension
    Amortization: Interest Only
    Guaranty: Non-Recourse
    Prepayment Penalty: None

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    Speculative West Los Angeles SFR Acquisition and Construction/Reposition Financing

    September 20, 2017

    George Smith Partners placed the 77.5% loan-to-cost acquisition and construction financing for a speculative single family residence in West Los Angeles.  The loan was structured to include $471,000 for future funding, transforming the 1,100 square foot 3-bedroom/1-bathroom residence into a 2,500 square foot main house featuring 4-bedrooms/5-bathrooms and a 500 square foot detached guest house.  Fixed at 9.25% for 12 months, the loan offers two extension periods.

    Rate: 9.25% Fixed
    Term: 12 Months plus Two 3-Month Extensions at 0.5% each.
    Amortization: Interest Only
    LTC: 77.50%
    Guarantee: Recourse