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

Rate: 4.63%
Term: Ten Year Fixed
Amortization: Full Term Interest Only
Prepayment: Yield Maintenance
Recourse: Carve-Outs Only

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.

Our Sponsor obtained +95% physical occupancy in September and was looking to secure a perm loan before year end. Given the rapid lease-up and forecasted rate increases, GSP was commissioned to source the construction loan take-out that would allow for a partial return of equity upon stabilized occupancy but with limited stabilized operating history.

Boise was recently named the fastest growing city in the United States, and the capital markets embraced the Boise MSA’s market dynamics by offering multiple aggressive sizing and pricing structures. Our Sponsor selected an option that allows for a “second bite” for an additional recapitalization once cash flows are further documented and supported by stronger historical operating history. Priced at 153 basis points over the Ten-Year Treasury, the full-term interest only loan allows for future secondary financing.


Related Financings

  • Expand

    $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.

    The non-recourse senior loan floats at a rate of LIBOR + 4.0%, while the preferred equity accrues at a market rate return. Payments on the preferred equity financing are completely deferred until a capital event occurs at project stabilization. The Preferred Equity Provider is receiving a fixed return on their investment and will not participate in any future upside. There are no repayment guarantees to either Capital Provider.

    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.

    Senior Loan
    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
    Proceeds: $17,750,000
    Rate: Market
    Term: 3+1+1
    Origination Fee: 1%
    Recourse: Entity Only

  • Expand

    Construction Loans Los Angeles | $6,000,000 Non-Recourse Predevelopment Financing for Construction of 170-Unit Multifamily Project in Tarzana, CA

    October 24, 2018

    Transaction Description:

    George Smith Partners secured $6,000,000 in non-recourse predevelopment financing for a 170-unit ground-up multifamily project in the Tarzana community of Los Angeles, CA. The site is a collection of five contiguous lots, parceled together by the Sponsor to create an opportunity for larger scale development in the area. This financing facility allowed the Sponsor to recuperate some of the invested equity to be used towards continued advancement of the predevelopment for the Project, including but not limited to design and construction drawings, entitlement costs and permits. The Sponsor is currently building another ground-up multifamily project nearby and is an active local investor and developer, owning several retail and mixed-use assets in the area.

    GSP sourced a lender who offered a fixed-rate financing facility to lessen the burden of development costs on the Project, recapturing nearly 65% of invested dollars for a bridge through the pre-development phase; it will ultimately be taken out by the construction loan when the Project breaks ground. The identified capital group was already familiar with the site, and was able to offer a flexible and low-cost structure without a prepayment penalty. The application was an expeditious process; GSP was able to facilitate a closing less than three weeks from the date the term sheet was signed. The twelve month fixed rate note was priced at 6.90%, and was sized to 64.5% of cost basis.

    Rate: 6.90% Fixed
    Term: 12 Months + 2 (6)-Month Extensions
    Amortization: Interest Only
    LTC: 64.5%
    Guarantee: Non-Recourse

  • Expand

    $11,000,000 Non-Recourse Multi-Family Construction Loan, 75% LTC

    January 31, 2018

    George Smith Partners placed an $11,000,000 non-recourse construction loan for the ground up development of 40 multi-family units in the Conejo Valley sub-market of Los Angeles County. The area has high barriers to entry for new product in regards to entitlements and design review, and took several years to gain all necessary approvals. As a result this project will be the first new development that has broken ground in the sub-market since 2004. Equipped with sub-2% market vacancy, GSP secured a non-recourse loan with an institutional capital provider at leverage of 75% LTC and priced at LIBOR + 375. The loan also provides for extension options and has no prepayment penalty.

    Rate: LIBOR+375
    Term: 24 Months + One 12 Month extension
    LTC: 75%
    Recourse: Completion Only
    Prepayment Penalty: None

  • Expand

    $13,850,000 Ground-Up 29 Unit Los Angeles Rental to 75% of Cost

    December 6, 2017

    George Smith Partners secured the $13,850,000 ground-up development loan for a 29-unit multifamily rental property 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 surveyed the project’s risks upfront with the capital provider and structured objective criteria that satisfied both the Sponsor and Lender. Sized to 75% of total costs, the 24 month recourse loan allows for two 6 month options and is priced at 30-day Libor + 3.15%.

    Rate: 30 day LIBOR + 315
    Term: 24 months plus two 6-month extensions
    LTC: 75%
    LTV: 70%
    Lender Fee: 0.60%
    Guarantee: Recourse
    Prepayment: None

  • Expand

    $60,000,000 Woodland Hills Construction Loan for 241-Units + 34,000 sf Retail

    December 6, 2017

    George Smith Partners arranged $60,000,000 of ground-up construction debt for a mixed-use, luxury multifamily development to build a 241-unit Woodland Hills apartment project that will include 34,139 square feet of retail. GSP sourced a lender comfortable with the Sponsor’s lack of experience, exposure issues and ability to execute on the development plan. This property is located within the Warner Center 2035 Plan, a development blueprint for Warner Center that emphasizes mixed-use and transit-oriented development, walkability, and sustainability. Sized to 70% of cost, the three year term has two – 12 month options that float at 250 basis points over LIBOR.

    Rate: L+250
    Term: 36 month term + Two, 12-month extensions
    LTC: 70%
    LTV: 60%
    Guarantee: Recourse

  • Expand

    $3,150,000 Construction Loan in Los Angeles, Take-Out; 3.10% Fixed

    November 22, 2017

    George Smith Partners placed the construction loan take-out for a new 12-unit multifamily development in the Koreatown District of Los Angeles. At the time of funding, there was no operating history for the property as the Certificate of Occupancy had just been issued. Our Sponsor lacked 30 days of collections to prove out income. The permanent lender underwrote the rent roll in place in conjunction with proforma operating expenses to determine the underwritten Net Operating Income. Fixed for five years at 3.10%, the ten year term will float at LIBOR plus 275 years six through ten, amortized over 30 years. Sized to 65% of stabilized value and 80% of actual costs, prepayment steps down from 3% and is open after the third year.

    Rate: 3.10% Fixed for Five Years
    Term: 10 Years
    Amortization: 30 Years
    LTV: 65%
    Prepay: 3,2,1, open
    Loan Fee: 0.5%