$13,850,000 Ground-Up Condominium Construction Financing to 87% actual LTC (75% LTC with imputed equity)

Rate: 30 day LIBOR + 315
Term: 24 months plus two 6-month extensions
Amortization: Interest only
LTC: 87% (75% with imputed equity)
LTV: 70%
Prepayment: None

George Smith Partners successfully structured senior construction debt for a 29-unit condominium development 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 was able to use the land lift in the entitlements to achieve imputed equity, making the loan 87% of actual cost and 75% LTC using appraised land value. Priced at LIBOR + 3.15%, the two-year term offers two 6 month extensions.

Advisors

Related Financings

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    $9,300,000 Construction Loan, 80% LTC, L + 2.75%, 32 Unit Multi-Family Development, Los Angeles, CA

    December 12, 2018

    Transaction Description

    George Smith Partners secured $9,300,000 for the ground-up development of a 32-unit multifamily building in the Koreatown neighborhood of Los Angeles. The 5-story project will include a mix of 1 and 2 bedroom units with gated subterranean parking. Sized to 80% of actual costs, the 36-month term carries two – 1-year options and is priced at 2.75% over LIBOR.

    Our Sponsor requested maximum loan proceeds which would require the acceptance of imputed equity. George Smith Partners identified a Los Angeles based construction lender that understood the value that had been created with re-entitlements and permitting since the property was initially acquired four years ago. This capital provider agreed to value the land at current 2018 values as opposed to the acquisition price. The bank ordered appraisal valued the land at over 3x the Sponsor’s 2014 purchase price and imputed equity was utilized in calculating the Sponsor’s equity contribution. No additional funds were required at closing.

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    Rate: LIBOR + 2.75%
    Term: 3+1+1
    LTC: 80% LTC
    Origination Fee: 0.75%
    Recourse: Yes

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    $8,700,000 Acquisition Bridge Loan for Renovation of Strip Retail Center and New Pad Construction

    December 5, 2018

    Transaction Description:
    George Smith Partners secured $8,700,000 of non-recourse, bridge acquisition financing for a 45,000 square foot retail center located in Richardson, TX. The Center, which was built in 1985, has a diverse mix of regional tenants and sits on the corner of two of the main thoroughfares in the area.

    Challenges:
    The Sponsor purchased the Property with the intent to add value through two approaches: (1) increasing rents for tenants that are rolling and paying below-market rates, and (2) constructing an additional 12,000 square feet on undeveloped land within the parcel. There were complications with parcelizing the existing building and the land, which meant that a single lender needed to fund the entire project. The large renovation and construction budget also resulted in only 41% of the total loan being funded at closing.

    Solution:
    George Smith Partners identified a lender that could structure the financing to have two holdback reserves, one for the CapEx and TI/LC’s for the existing space and the other dedicated to funding the construction of the new building. The separate reserves allow the Sponsor to pursue both value-add opportunities simultaneously, which drastically reduces the project timeline and maximizes the Sponsor’s IRR. Our capital source was able to get comfortable with the construction component by requiring 75% of the space to be pre-leased prior to funding.

    Rate: 1-Month LIBOR + 410
    Term: 36 Months + Two, 12-Month Extensions
    Amortization: Interest Only
    Loan to Cost: 76% LTC
    Lender Fee: 1.0% Origination Fee
    Prepayment: 12 Months of Yield Maintenance
    Guarantee: Non-Recourse

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    $115,000,000 of Non-Recourse High-Leverage Senior Construction Financing for the Ground Up Development of a 326-Key Four-Star Radisson BLU Hotel in Anaheim, CA

    December 5, 2018

    Transaction Description

    George Smith Partners placed a $115,000,000 non-recourse senior construction loan for the ground up development of a 326-key four-star Radisson BLU Hotel in Anaheim, CA. The Property is located in the Disneyland/Anaheim Convention Center submarket less than 1 mile from Disneyland Park. Once completed, the 12 story luxury hotel will be one of the few four star offerings available outside the Park and will feature an innovative, modern design. The amenity rich property will include a rooftop pool and deck with unobstructed views of the famous Disneyland nightly fireworks show and surrounding area. Catering to the Park-going family travelers, bunkbeds will be included in over half the rooms, and the hotel will feature a ground floor pool as well as upscale food and beverage offerings.

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    The Project will be the first major development east of Interstate 5 in the Disneyland submarket. Additionally, the Hotel is slated to be the 4th Radisson BLU in the United States and will be one of the first four-star offerings available outside of the Disneyland Park.

    Solutions

    GSP focused on the submarket’s underlying fundamentals, including 28 million annual visitors, as well as its resilient occupancy rates and average daily rates that stayed relatively consistent through the recession. GSP also demonstrated that the Hotel is likely to capture an outsize share of the submarket’s 4 million annual international visitors. This is due to Radisson’s strong international branding supported by the fact that nearly all 300 Radisson BLUs are located outside the United States. Finally, GSP highlighted the Hotel’s upscale nature, which currently does not exist outside the Park, family friendly design and strong amenity package.

    These efforts resulted in a high leverage, non-recourse execution.

    All terms are confidential.

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    Construction Loans California | $3,820,000 Single-Tenant Construction Financing at LIBOR plus 5.00%; 95% LTC

    November 21, 2018

    Transaction Description:
    George Smith Partners arranged a $3,820,000, 95% LTC construction of an 11,500 square foot NNN DaVita Dialysis center in a tertiary market of California. The Borrower entity was a joint venture between a developer and the land owner.

    Challenges:
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    Solution:
    George Smith Partners identified a lender who recognized the strength of the tenant and the lease terms relative to the market. The Lender accepted the as-is value of the land which, after the entitlements were achieved, was significantly more than the limited partner’s cost. The Lender proceeded with the loan without any Sponsor cash equity in the deal, reimbursed the Developer for out of pocket costs to date and gave them additional proceeds as a result of excess value in the land. Because the Lender allowed the land to be contributed at as-is value, the loan amount resulted in a loan to cost ratio of 88%. Given the original cost of the land by the Limited Partner, the actual loan-to-cost ratio was closer to 95%.

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    Term: 15 Months + three 3 month extensions
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    Lender Fee: 1.25%
    Prepayment Penalty: None
    Guarantee: Recourse

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    $26,118,000 Mixed-Use Construction Loan Take-Out; Boise, ID

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    Transaction Description:

    George Smith Partners placed a ten-year permanent loan for “The Fowler”; a recently constructed 159 unit mixed use multifamily development in Boise, ID. GSP placed the construction loan in Spring 2016 and the Borrower received its final Certificate of Occupancy in March 2018. The Property has become one of the most architecturally significant buildings constructed in downtown Boise. It includes live work units as well as 4,000 square foot of retail.

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    $58,820,000 Non-Recourse Ground-Up Construction of 304-Unit Luxury Multifamily Property; Preferred Equity to 87% LTC

    November 14, 2018

    Transaction Description:

    George Smith Partners placed a total of $58,820,000 in structured financing for the ground up development of a luxury 304-unit multifamily development. Proceeds were structured as a $41,070,000 senior construction loan and $17,750,000 of preferred equity. Together these two sources represent 87% of the cost of the project.

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    Since the market has few new multifamily properties with the projected rents, both Capital Providers required extensive market comparable data and a deep dive into the Sponsor’s experience. The business plan was proven out by the Sponsor’s recent successful development, stabilization, and sale of a 220-unit property in the same MSA but a separate sub-market. The Sponsor’s Development Team from the previous project remained intact for the subject property. Financing closed with enough time for the Sponsor to avoid incurring additional fees extending their land loan.

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    Proceeds: $41,070,000
    Rate: LIBOR + 4.0%
    Term: 3+1+1
    LTC: 60%
    LTV: 55%
    Origination Fee: 1%
    Recourse: Completion Guarantee Only

    Preferred Equity
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    Rate: Market
    Term: 3+1+1
    Origination Fee: 1%
    Recourse: Entity Only