Term: 12 Years
Amortization: 9 Years IO; 30 Years thereafter
Prepayment: Yield Maintenance
Lender Fee: Par
George Smith Partners placed the $41,000,000 acquisition debt of a Class A 300 unit multifamily in Colorado Springs, Colorado. At the time of inspection, only one unit was available for lease. With the US Air Force Academy and Lockheed Martin located in Colorado Springs, employment drivers include a notable concentration of military and military related jobs. Lender concerns over the potential of transitional employee postings was mitigated with a long historical occupancy above 95% and a resident concentration of less than 6% of active duty personnel. Sized to 75% of the purchase price, the full coupon (index + spread) was locked just prior to the run up in Treasuries. Fixed for 12 years at 4.31%, the first nine years of the loan are Interest Only before rolling into a 30 year amortization schedule. The non-recourse loan carries a yield maintenance prepayment penalty but does allow for future advancements subject to the current LTV and debt coverage constraints.
Senior Vice President
April 12, 2017
George Smith Partners secured $5,625,000 in proceeds for the purchase of a 9,585 square foot, 12-unit multifamily property located in Malibu, CA. The loan is fixed at a rate of 3.95% for 5 years, then floats thereafter at 12 month LIBOR plus 2.5% for 10 years. The loan represented $468,750 per unit.
First, the buyer was purchasing the property at a very high price per unit. Second, the property had been fully renovated by the seller and only had six months of operating history. At the time of application, one unit was vacant and four units had short-term leases, including two units leased to corporate tenants. The seller was receiving rents that averaged over $6.00 per square foot which is common in Malibu, but much higher than most locations in Los Angeles. Finally, the property was located on the inland side of the Pacific Coast Highway and had a steep slope at the front of the property, which caused some lenders to be concerned with earthquake risk.
GSP was able to source a lender that was comfortable with all of the unique aspects of the deal. Although the selected lender had an LTV maximum of 50%, proceeds were considerably higher than other lenders which were constrained by a cap on loan per unit. Also, GSP was able to source rent comp data that showed the in-place rents were well supported. Thus, the lender was willing to provide a term sheet even with the vacant unit and short-term leases in place. Additionally, a previous owner had performed an extensive seismic retrofit on the property, which eliminated the need for earthquake insurance. Once in application, the loan closed in approximately 30 days.
$28,500,000 Non-Recourse Acquisition Financing on a Newly Stabilized Class-A 208 Unit Multifamily Property in Dallas, Texas
February 8, 2017
George Smith Partners successfully structured non-recourse acquisition financing on a 2015 constructed Class-A multifamily property coming out of lease up in Dallas, Texas. The property is located in a submarket with rising concessions and flattening rents due in part to significant supply coming online and seasonality. In order to provide the best execution for the sponsor in an unstable credit market, GSP identified a balance sheet lender whose confidence in the strong macro-market fundamentals allowed them to size the loan to a 7% in place debt yield despite the lack of operating history. The lender did not require an appraisal and locked rate at loan application, which minimized execution risk in a volatile interest rate environment. The seven year loan has a fixed coupon at the 7-year Treasury plus a spread of 1.95%, with one-year interest only before converting to a 30-year amortization schedule, allowing the borrower to maximize cash flow while the property continues to stabilize and concessions burn off. The loan has a flexible pre-payment schedule with four years yield maintenance then converting to a step down pre-payment schedule of 1.0%, 0.5%, 0.0% for the remaining three years of the loan term.
Rate: 7-Year Treasury + 1.95%
Term: 7 Years
Lender Fee: Par
Exit Fee: 4-years Yield Maintenance, step down pre-pay thereafter 1.0%, 0.5%, open.
Amortization: 1-Year Interest Only, 30-Year Amortization thereafter
July 20, 2016
George Smith Partners arranged $5,000,000 in non-recourse acquisition financing for the purchase of a 140-unit apartment building in Jacksonville, Florida. The five year loan floats at 4.27% for 12 months of interest only payment and was sized to 80% of purchase. The loan is also complemented by borrower-friendly prepayment options. George Smith Partners was able to structure the loan to accommodate the TIC (Tenants-in-Common) ownership structure that was preferred by our Sponsor to take advantage of a 1031 exchange option.
May 4, 2016
Transaction Description: George Smith Partners placed the $10,400,000 acquisition loan for a 248 unit garden style apartment in Texas to 75% of purchase. This is our client’s first commercial asset in this region. Our Sponsor was purchasing this asset in an exchange and therefore required certainty of execution to close on time and as applied for. Maximum leverage tied with a lengthy interest-only period was needed to achieve the desired business plan. Despite turmoil in the capital markets, the loan funded at the applied for proceeds, rate, and term. Fixed for 10 years at 4.99%, the first five years are interest-only prior to rolling into a 30 year amortization schedule.