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$25,200,000 in Acquisition Bridge Financing for a 144 Unit Dallas Multifamily Property

Rate: LIBOR + 3.75%
Term: Two Years initial term with (3) One-Year Exts. There are no performance tests to exercise options.
LTC: 70%
Lender Fee: 1.00%
Exit Fee: None
Non-Recourse
Amortization: Interest Only

George Smith Partners successfully structured the 70% loan-to-cost non-recourse acquisition bridge financing on a significantly under-managed 2000 vintage mid-rise multifamily property in Dallas, Texas. The under-managed property was trailing market rents by 20% at acquisition resulting in a debt yield below 6% on in-place income. The Sponsor’s business plan is to recapture the loss to lease, implement a capital improvement plan including washer/dryer installation to enhance unit interiors, and upgrade the lobby, common areas, amenities and exterior to meet the market’s discerning taste. Floating at 375 over LIBOR, this non-recourse loan is Interest-Only for five years (including options) and was sized to 70% of total cost. A portion of the loan proceeds will be used to finance the interior and exterior upgrades, with interest not paid until funds are drawn.

Advisors

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  • $47,000,000 Bridge Acquisition Financing for 624-Unit Multifamily, 80% LTC; Houston, TX

    November 17, 2021

    Transaction Description:
    George Smith Partners secured $47,000,000 for an acquisition bridge loan for a two multifamily property portfolio in Houston, Texas. To meet the sellers 30-day closing requirement, GSP used its experience and relationships to quickly identify and close this 80% interest- only financing within the required timeline. GSP was able to execute the Sponsors business plan and secure a high leveraged bridge loan at L+ 3.95 (4.05% coupon). The loan was cross collateralized with both properties, which totaled 624 Units. The Properties were operating at a going-in 5% debt yield when we closed. This interest-only loan included 100% of the capital needed for rehab.

    Challenge:
    There were multiple challenges regarding timing, leverage, sponsorship experience and property specific issues. Some lenders were not able to quote the transaction in the short timeframe we had to market, identify, and close this transaction. GSP aided a local family office, an international fund and a strong local operating partner who teamed up to purchase this asset in their first effort together. In addition, several lenders were over allocated in the Houston market and could not handle the size of this portfolio.

    Solution:
    GSP focused on the top three best lenders for this asset type. Due to our great relationships, we were able to quickly pick the best lender and expedite the application process. GSP assisted the Sponsorship team in developing a strong business plan. This included proving the benefits of the multiple sponsorship structure, as well as getting the Lender comfortable with the local partners to operate the properties. GSP understood the dynamics of each sponsorship team and helped the Lender upstand the strategy of operating the Properties as one asset. GSP knew by bundling the two properties together and creating a larger transaction that it would be more appealing to lenders. This would enable lenders to increase proceeds and decrease pricing as compared to financing two separate smaller transactions. GSP ultimately utilized one of our relationship lenders who was willing to invest the upfront time and place aggressive bridge financing, with appealing leverage, proceeds, and terms of 3 years interest-only.

     

    Rate: Libor + 3.95% (4.05% Coupon)
    Term: 3 Years, with 2 – 1 Year Options
    Amortization: Interest Only
    LTV: 80%
    Guaranty: Non-Recourse
    Prepayment Penalty: 18 Month
    Lender Fee: 1% in / ½% Exit

  • $10,000,000 Acquisition Loan to Purchase Hotel for Multifamily Conversion; Mountain States

    November 3, 2021

    Transaction Description:

    George Smith Partners successfully brokered both the sale and acquisition financing for an extended stay hotel conversion located in the Mountain States region. The Seller, initially intending to undertake the Project, engaged GSP to source bridge financing for the 126-apartment conversion. Most of the conversion will be cosmetic changing the feel from hotel to residential. The hotel had been closed due to COVID, but the Sponsor needed to cancel the Management Agreement with the Operator and vacate the hotel. Because the hotel was in foreclosure, the Seller put the asset in bankruptcy before the trustee sale. This complicated the transaction and resulted in closing the deal two weeks from court approval.

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    Rate: 7.95%
    Term: 3 Months
    LTV: 68% Loan to Purchase Price
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  • $11,300,000 Acquisition Bridge Loan for 76-Unit Multifamily Property, 70% LTC, 6.5% Stabilized Debt Yield; Salt Lake City, UT

    October 27, 2021

    Transaction Description:

    George Smith Partners secured $11,300,000 in proceeds for the acquisition of a 76-unit multifamily property in a tertiary market outside of Salt Lake City, UT. The bridge loan is structured as $10,795,000 at close and $505,000 in future funding. The fully funded proceeds represent 70% LTC. The loan floats at a rate of LIBOR + 3.15% with a 0.10% floor on LIBOR.

    GSP encountered several challenges when discussing the deal with capital providers. Some lenders quoted a spread as high as 3.65% over LIBOR. Other lenders quoted proceeds less than $10,000,000 because they require a 7.5% exit debt yield. Some lenders considered the market to be too small.

    GSP was able to source a lender that provided very competitive pricing, an exit debt yield of only 6.50%, and an easy close process. The loan closed in about 60 days without any changes to the signed term sheet.

    Rate: Floating at LIBOR+3.15% with a 0.10% LIBOR floor
    Term: 2+1+1+1
    LTV: 71% in/67.5% stabilized
    LTC: 70%
    Debt Yield: 4.75% in/6.50% out
    Guaranty: Non-Recourse

  • $21,700,000 Acquisition Bridge Loan for Multifamily Complex; Phoenix, AZ

    October 27, 2021

    Transaction Description:

    George Smith Partners secured $21,700,000 of bridge financing for the acquisition of a 136-unit multifamily complex in Phoenix, AZ. The Sponsor plans to increase the value of the asset with exterior improvements and interior upgrades as units turn organically. The Property is in the Uptown submarket of Phoenix, which is an up-and-coming area in the Valley that has seen tremendous rent growth in the last few years. Uniquely, there is a disproportionate amount of three-bedroom units compared to one- and two-bedroom units. There is a lack of three-bedroom inventory in the market that the Sponsor believes will help to increase demand at the Property. The non-recourse financing is priced at LIBOR+3.20% and is sized to 70% of total project cost. It carries a three-year initial term and has a yield maintenance period of 15 months.

    Rate: 30-Day LIBOR + 3.20% (0.25% LIBOR Floor)
    Term: 3 Years with Two 12-Month Extensions
    Loan-to-Cost: 70% LTC
    Origination Fee: 0.825%
    Exit Fee: 1.00% (Waived if Refinanced with Same Lender)
    Amortization: Interest-Only
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    September 29, 2021

    Transaction Description:

    George Smith Partners secured $4,030,000 of bridge financing for the acquisition of retail shop space in Tempe, AZ. The collateral encompassed approximately 30,000 sf of in-line retail space and an outparcel pad within a larger anchored retail center. At purchase, the collateral was only 44% occupied. The Sponsors believe that a new leasing strategy will be able to drive tenants to the Center. The Property is located on one of the corners of a major intersection that sees over 65,000 cars per day and is less than two miles from Arizona State University, one of the largest universities in the country. The capital provider structured the financing to have a holdback for future property improvements, leasing costs, and interest payments. Priced at 30-Day LIBOR + 7.00%, the non-recourse loan was sized to 68% of total cost and carries a two-year term with extensions. The Lender was also able to include partial releases if only a portion of the collateral is sold.

    Rate: L + 7.00% (0.25% LIBOR Floor)
    Term: 2 Years with Two 6-Month Extensions
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  • Non-Recourse Bridge Acquisition Financing for Industrial Building; Gardena, CA

    July 21, 2021

    Transaction Description:

    George Smith Partners successfully arranged a bridge acquisition financing for a single-tenant industrial building in Gardena, CA. The Property is 9,300 SF on an approximate 18,731 SF parcel. The previous owner occupied the space, and the building is now vacant. There was an existing environmental issue that limited the pool of interested capital providers. However, GSP leveraged its market expertise and relationships to identify a lender comfortable with the Property and Sponsor, who is a repeat client. GSP secured a 12-month, non-recourse bridge loan at 7.90% fixed with interest-only payments and no prepayment penalty. This will provide the Sponsor time to resolve the environmental issue, lease the Property and season it for permanent financing. The financing closed within 12 days of term sheet issuance.

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    Term: 12 months, with Extension Options
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    LTP: 40%
    Prepayment: None
    Guaranty: None