Rate: 4.18%
Term: 20 years
Amortization: 1 Year Interest Only followed by 30 year amortization
Prepayment: 5,4,3,2,1 then 1
LTV: 80%
DCR: 1.2x
Guarantee: Non-Recourse
George Smith Partners secured a $2,255,000 non-recourse acquisition loan for a 16-unit property in Los Angeles. A number of challenges were encountered in closing the transaction. First, the Sponsor was acquiring the property as part of a 1031 Exchange and did not want to put any additional equity into the deal so they required maximum proceeds; however, the property had 4 vacant units which reduced the in-place cash flow and quoted loan proceeds. Second, the Sponsor had to close within 40 days.
GSP was able to source a lender that provided a solution to both challenges. The Lender was able to quickly close the transaction with a bridge loan. The bridge loan provided sufficient proceeds to complete the purchase with the 1031 Exchange. Next, once the Sponsor controlled the property, they were able to lease up the vacant units. This increased cash flow at the property and met the underwriting criteria for a permanent financing. As a result, the Sponsor was able to refinance the bridge loan and lock in a low fixed rate. The Lender was able to lock the rate for the permanent loan while they were still closing the bridge loan.
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Related Financings
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