Rate: 5.0%
Term: 12 Months
Amort: Interest Only
LTC: 70%
Recourse
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%.
Related Financings
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$14,100,000 Horizontal Land Construction Financing for 98-Single Family Residential Lots; Homestead, Florida
November 15, 2023
Transaction Description:
George Smith Partners has secured $14,100,000 in funding in support of our Sponsor’s horizontal construction of 98-single-family lots in Homestead, FL. The allocated funds are intended to finance the essential infrastructure for the forthcoming single-family residential community. The lots will be sold in stages to a predetermined homebuilder. Our Sponsor has obtained a revolving loan of 60% LTC, which features a floating rate of Prime + 50, spanning a 24-month term.
Term: 2 Years with Extension Options
Rate: Prime + 50
LTC: 60%
Guaranty: Non-Recourse- Advisors: Justin Piasecki Thomas Butler
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Land Financing for Entitled Land; Los Angeles, CA
February 8, 2023
Transaction Description:
George Smith Partners secured a $5,100,000 land loan entitled for a 69-unit multifamily building slated to begin ground-up construction in late 2024. The borrower purchased the original parcel 17 years prior as a fully occupied 32-unit property; since then, the building has been vacated and demolished. To achieve full-term proceeds, the appraisal needed a land value above the original PSA, including the previous building collateral. GSP utilized a broad comp set of per-acre comps, leaning on footprint analysis instead of per-unit. Additionally, the lender’s due diligence concluded there was value creation through both the fully approved entitlements and the fact the Sponsor was able to achieve a condo tract map, giving them optionality for apartments or for-sale units.
Rate: 7.75% Fixed
LTV: 50%
Term: 18 Months + Two 6-month Extension Options
Origination Fee: 0.75%
Prepayment Fee: None
Guaranty: Recourse -
Construction Loans: $21,025,000 75% LTV, Non-Recourse Predevelopment Financing for a Land Parcel Adjacent to a Southern California University
March 14, 2018
GSP arranged the $21,025,000 ($175/Land SF), non-recourse first mortgage from a debt fund for the acquisition of an infill 2.76-acre land parcel located adjacent to a major Southern California university. The acquisition loan will be taken out with a construction loan upon receipt of entitlements for a large-scale student housing redevelopment. GSP worked with borrower and lender to tailor a unique loan structure that provides financing during the entitlement period via an interest and carry reserve. The lender was able to provide a high-leverage loan on an unentitled parcel that provides no cash flow due to the project’s streamlined “by right” entitlement process, experienced sponsorship, and strong market fundamentals. Sized to 75% of as-is value, the acquisition loan priced at 7.25% over One-Month LIBOR for the 24-month loan duration.
Rate: One-Month LIBOR + 7.25%
Term: Two years plus one, one-year extension option
Amortization: Interest only
Loan to As-Is Value: 75%
Prepayment: 12-month yield maintenance- Advisors: Nick Rogers
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$11,173,624 Pre-Development Joint-Venture Equity Financing
November 12, 2014
Commercial Real Estate Advisory Services –
Transaction Description: GSP successfully placed the pre-development capital for the construction of a luxury high rise condominium project. The capital allows the Sponsor to acquire the property, demolish the existing office building, finalize construction drawings, open discovery sales center and prepare the site for vertical development. GSP was hired by the Sponsor to provide advisory services throughout the development, including financing the bridge & construction loans. The 62-Unit project will contain 20 three-bedroom residences; 40 two-bedroom with a den, plus two one-bedroom “guest suites” that will be owned by the HOA and available to homeowners for their guests’ use. Units will feature spacious outdoor terraces, elegant open floor plans with gourmet kitchens, and single level living with highly functional designs. Project amenities will include an exclusive 24/7 concierge service, state of the art fitness center, private wine storage, gathering areas with fire pits and terraces, pet facilities, guest suites, and 24-hour security. Terms and structure are confidential.
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$5,600,000 DPO and Construction Facility for New Mexico Residential Land Development
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 -
Southern California – $2,400,000 Ground-Up Construction Loan in La Jolla, California
September 7, 2011
9 – 7 – 11
Southern California Construction Loans
Description: GSP successfully placed the $2,400,000 construction loan on a vacant parcel for the development of a luxury second home. The 30 year term loan is priced at 4.375% to 75% LTC. The loan allows for interest only payments for the first 10 years including the construction term, then amortizes over a 20 year period. Challenge: The Borrower was very rate sensitive and needed to maximize loan proceeds, requiring quick-close financing with favorable prepayment terms. To accommodate their escrow commitment and close the land on time, the Sponsor necessitated a pledge to fund prior to obtaining the final building permits. Solution: GSP drew on their extensive capital relationships to identify a reliable ground-up construction loan provider willing to offer an aggressive loan structure at favorable pricing. Funding occurred within 30 days of loan application. Rate: 4.375% Term: 30 Years Amort: 10 Years IO, then amortizing over 20 Years LTC: 75% Prepayment: 1/2% Years 1-4; par thereafter Broker: Malcolm Davies
