$13,500,000 Cash-Out Refinance of Student Housing-SRO with Ground Floor Retail

Transaction Description: Beginning in 2010, our Sponsor transformed one of the toughest properties in Downtown Los Angeles from a slum into one a premier Student Housing & SRO project. An SRO (Single Resident Occupant) unit lacks a full kitchen and has shared bathroom facilities. This asset provides residents the option of full single units or dormitory style shared bath rooms within a clean and comfortable building. Our sponsor sought a partial return of equity to reimburse his limited partners. Fixed at 5.13% for 10 years, the non-recourse loan was sized to 70% of current value and a 1.25 DCR on trailing cash flow on a 30 year amortization schedule.

Challenge: The unique use and shared bathroom units make financing of this style of multifamily housing more difficult as agency and most bank lenders are restricted from financing this type of asset. Given the limited number of capital providers willing to underwrite this less than conventional use, loans in excess of $10,000,000 are hard to obtain.

Solution: GSP demonstrated the significant value-add with the Sponsor reposition and Borrower strength in this market with this product type. Future cash flow was modeled based on the conservative underwriting of the actual trailing cash flow. Spiking market rents mandated the need for affordable unit housing for the students of adjacent technical schools.