Financings

Recent Financings

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    $4,000,000 80% Construction Financing for Senior Care Facility

    January 16, 2018

    Transaction Description:

    George Smith Partners successfully arranged the $4,000,000 construction financing for a senior home care facility in Northern California. The complex will function as an assisted living facility and is comprised of four contiguous houses accommodating six patients each. California Law states that any care facilities accommodating six patients or less do not require a license to operate. By building four contiguous smaller facilities, the sponsors will realize a greater upside, while still abiding by California regulations. Fixed for two years at 6.5%, the 80% of cost interest only loan will convert to a 5-year mini-perm with a fixed rate of 5.5% and a 30-year amortization. There is no prepayment penalty.

    Challenges:

    To obtain the required leverage to complete the project, it was critical to demonstrate the stabilized value of the property as a commercial care facility rather than as four single family residences. The Sponsors decided to build smaller contiguous care facilities because the California law does not require a license for operations. While this regulation substantially accelerated and simplified the predevelopment process, it also made financing the project significantly more difficult. Conventional lenders could not become comfortable with this subset class of an operationally dependent and niche asset. Because of the complex asset type, the Sponsors requested a mini-perm structure where they had a guaranteed takeout of the construction loan.

    Solution:

    GSP identified a capital source to underwrite the project’s stabilized value as a commercial care facility rather than as four single family residences. In order to provide additional comfort to the Borrower, GSP structured the term to have an automatic mini-perm feature upon stabilization. The tremendous upside in the project, with no prepayment penalty ensured the Sponsors the ability to capture the upside and maintain flexibility.

    Rate: 6.5% to 5.5% at Stabilization
    LTC: 80%
    Term: 2 Years Construction 5 years Mini Perm
    Amortization: Interest Only during Construction, 30 year amortization thereafter
    Guarantee: Recourse
    Prepayment Penalty: None

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    $15,150,000 Financing at 70% Loan to Cost for Beverly Hills SFR Estate Construction

    January 16, 2018

    GSP successfully placed $15,150,000 in first mortgage financing for the construction of a shovel-ready luxury single-family residence in Beverly Hills. The loan funds up to 70% of lender-approved costs and the interest rate floats at 1-Month LIBOR plus 6.2644% (7.50% at closing). The 18-month initial term has two three-month extension options with a 0.375% fee payable per extension, with Interest Only payments during the life of the loan. Lender made one third of the 2.25% loan origination fee due at payoff in order to increase upfront Sponsor funds and offered the potential for Sponsor to take on mezzanine debt at closing subject to minimum equity hurdles. The Canadian Sponsor provided a completion guarantee and a repayment guarantee capped at $5,000,000.

    Rate: 7.50% at closing (1 Month LIBOR + 6.2644%)
    Term: 18 Months
    Amortization: Interest Only
    LTC: 70% of lender approved costs
    Guarantee: Completion Guaranty; Repayment Guaranty capped at $5,000,000
    Lender Fee: 1.5% at closing and 0.75% at payoff

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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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    $11,800,000 Non-Recourse Cash-Out Refinance of a Multi-Tenant Retail Center

    January 10, 2018

    George Smith Partners successfully arranged the $11,800,000 non-recourse cash-out refinance secured by a 49,942 square foot multi-tenant retail center in Tarzana, California. GSP identified a capital provider who was comfortable with the return of equity given the Sponsor’s team and experience. Sized to 55% of appraised value, 8.75% Debt Yield, and a 1.65x Proforma DSCR. The 10-year interest only note is fixed at 2.25% over the LIBOR 10 Year SWAP rate (4.62% at closing).

    Rate: SWAP + 2.25% (4.62% at closing)
    Term: 10 Years
    Amortization: Interest Only
    LTV: 55%
    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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    $3,800,000 Single Tenant Colorado Acquisition

    January 3, 2018

    George Smith Partners secured a $3,800,000 permanent loan for the acquisition of a single tenant Tractor Supply Company located in Colorado. The 22,300 square foot building was constructed earlier this year and the tenant has a new 15-year lease. GSP was able to identify a capital source that does not require a reserve structure, which helped to increase the cash flow and bolster loan proceeds. Sized to 73.5% of purchase, the recourse loan carries a 4.84% fixed rate for a 10-year term and amortizes over 30 years. The transaction funded 45 days from application.

    Rate: 4.84% Fixed
    Term: 10 Years
    Amortization: 30 Years
    LTV: 73.5%
    Guarantee: Recourse

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    $4,520,000 Non-Recourse Shopping Center Refinance in Birmingham, Alabama

    December 20, 2017

    George Smith Partners secured $4,520,000 funding to refinance a 110,000 sf multi-tenant retail shopping center located in a tertiary market, Center Point, Alabama. The center did not have any credit tenants; the largest tenants were Dollar Tree, Family Dollar and a regional furniture store. GSP was able to show lenders that these tenants were appropriate for the surrounding demographics. The 2.45% fixed coupon loan is sized to 9.0% debt yield and the 10-year term is fixed with a 30-year amortization schedule thereafter.

    Term: 10 Year Fixed
    Rate: 10 Year Treasury + 230
    Amortization: 30 Years
    LTV: 70%
    Guarantee: Non-Recourse

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    $12,500,000 Non-Recourse Acquisition Financing to Acquire Land in Koreatown

    December 20, 2017

    George Smith Partners arranged $12,500,000 in non-recourse acquisition debt secured by both a 58,237 sf lot containing a K-12 Prep School and a 29,400 sf lot containing a largely vacant retail center. The properties are situated in the Koreatown and Chinatown district of Los Angeles respectively. GSP targeted a capital provider comfortable with foreign sponsorship, proposed entitlements, religious relationship of the property, quick closing timeline, and the ability to focus on the future value of the land parcel. Sized to 45% of the $28MM total purchase price and fixed at 8.50% on an interest only basis, the non-resource facility has an initial term of 18 months followed by an optional 6-month extension. The capital provider closed the loan in 14 business days, allowing the Sponsor to close on the property quickly given the sellers strict timeline. All prepayment penalties were waved, allowing the Sponsor the flexibility to refinance at a lower rate once entitlements or construction financing are obtained.

    Rate: 8.50%
    Term: 18 Months + One 6 Month Extension
    Amortization: Interest Only
    LTV: (Purchase Price): 45%
    Guarantee: Non-Recourse
    Lender Fee: 1%

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    $1,950,000 Refinance for Prime Los Angeles Owner/User Office; 75% LTV

    December 13, 2017

    George Smith Partners secured $1,950,000 for the refinance of an office building in the San Fernando Valley. The owners had purchased the property all cash six months prior and were seeking to recapture a portion of their equity. The ownership structure involved 4 businesses, 5 Trusts, and 7 individuals, all of whom had to go through the documentation process. Although the bank required full recourse from all of the Trusts, they were willing to waive repayment guarantees to some of the individuals behind the Trusts. Fixed for 20 years at 4.43%, the recourse loan was sized to 75% of the total capitalization. Amortization commences on a 20-year schedule and has a 5-year stepdown prepayment penalty.

    Rate: Fixed at 4.43%
    Term: 20 years
    Amortization: 20 years
    Prepayment Penalty: 5,4,3,2,1
    LTV: 75% of value
    Guarantee: Recourse

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    $4,000,000 Mixed-Use San Francisco Acquisition

    December 13, 2017

    George Smith Partners successfully arranged the $4,000,000 acquisition debt of a 62-unit affordable SRO (Single Room Occupancy) property with two retail spaces in San Francisco. SRO units lack a full kitchen and has shared bathroom facilities. As a result of the unique use and shared bathroom units, financing this style of multifamily housing is extremely difficult for conventional lenders, even with very strong sponsorship and an incredible San Francisco location. In addition to challenges related to the asset type, this particular property had strict affordable covenants and complications related to the retail element.

    GSP identified a community development lender who became comfortable with the asset type, affordable nature of the project and the future value of the property. The 15-year loan represented 80% of the stabilized value of the property and also provided funds for the rehab and renovation of the property. Fixed for 10 years at 5.75% and increasing to a 6.0% for the last 5 years, the recourse loan holds a 4,3,2,1 pre-payment penalty while amortizing over a 30-year schedule.

     

    Rate: 5.75% Fixed for Ten Years, 6.0% Fixed Thereafter
    Term: 15 years
    Amortization: 30 years
    LTV: 80%
    Guarantee: Recourse
    Prepayment Penalty: 4,3,2,1

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    West Los Angeles SFR Acquisition and Construction/Reposition Financing

    December 6, 2017

    George Smith Partners placed the 70% loan-to-cost acquisition and construction financing for a speculative single family residence in West Los Angeles. The sponsor’s plan was to acquire an outdated single family property, and re-develop a 4,200 square foot luxury home. Although this was only the Sponsor’s second speculative single family residence, George Smith Partners was able to emphasize the project’s location and basis to ultimately achieve lender comfort with the requested leverage. Sized to 70% of total cost and 60% of as-completed value, the interest only loan will float at 1.00% over the WSJ Prime for 18 months.

    Rate: Prime + 1.00%
    Term: 18 Months
    LTC: 70%
    Lender Fees: 0.75%
    Guaranty: Recourse

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    $13,850,000 Ground-Up 29 Unit Los Angeles Rental to 75% of Cost

    December 6, 2017

    George Smith Partners secured the $13,850,000 ground-up development loan for a 29-unit multifamily rental property in the Pico-Robertson neighborhood of Los Angeles. GSP targeted a capital provider who was not only knowledgeable about the location and marketplace, but also comfortable with the Sponsor’s experience and ability to execute the construction project. GSP surveyed the project’s risks upfront with the capital provider and structured objective criteria that satisfied both the Sponsor and Lender. Sized to 75% of total costs, the 24 month recourse loan allows for two 6 month options and is priced at 30-day Libor + 3.15%.

    Rate: 30 day LIBOR + 315
    Term: 24 months plus two 6-month extensions
    LTC: 75%
    LTV: 70%
    Lender Fee: 0.60%
    Guarantee: Recourse
    Prepayment: None