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$6,000,000 Bridge Loan to repay Chapter 11 Creditors

Home » Financings » $6,000,000 Bridge Loan to repay Chapter 11 Creditors
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Transaction Description:  GSP arranged the bridge financing of a stalled residential condominium project along the a Pacific Northwest waterfront. The project consisted of a 204- Slip Marina and entitlements for 208 to-be-built condominium units. The original construction lender was seized by the FDIC late 2007 and the project stalled mid-stream. At the time of the bank take-over, $44,000,000 of developer equity and bank debt had been invested in to development. The FDIC later forgave $24,000,000 of the then outstanding debt as a result of the bank failure. Our Sponsor has since engaged GSP to provide construction financing for what is now a re-entitled 373-Unit Apartment site.
Challenge: Although the FDIC settlement forgave a bulk of the bank debt, many creditors were not paid when the project stalled. The sponsor entered into bankruptcy, ultimately exiting in 2011 with a court approved re-organization plan that included the repayment of all mechanic’s liens. The Developer was ordered to pay off the creditors by a specified date or the property would revert back to the creditors. Timing was critical with no opportunity for an extension.
Solution: GSP identified a private bridge lender who became comfortable with the special purpose use, Sponsor credit issues and partial development of the site. The marina was completed and 95% occupied, offering a nominal cash flow to cover taxes and operating expenses. All grading and horizontal improvements were finalized with finished pads. A parking garage for the residential units had been completed to further support the “As-Is” value. GSP also identified a qualified ‘exit’ for the bridge lender having secured a qualified term sheet for the final phase of construction. While the construction due diligence was underway, funding could not occur timely to meet the court ordered schedule. The GSP lender funded literally in the 11th hour.
Rate: 11.75%
Term: 12 Months
Amort: Interest Only
Recourse
Lender Fee: 3.25%
Brokers: Malcolm Davies, Drew Sandler

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    Rate: 7% fixed
    Term: 9 months
    Amortization: Interest Only
    Loan to Cost: 65%
    Guarantee: Recourse
    Lender Fee: 1.5%

  • Bridge Loan For Mixed-Use Hotel Property

    August 7, 2013

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    Transaction Description:  GSP successfully placed the bridge loan for the acquisition of a hotel, RV park, car wash, restaurant and vacant former casino commercial building located near Death Valley. The restaurant features slot machines and video gambling. The Sponsor purchased the mixed use property from the original developer who owned the asset for multiple decades. The subject is the best performing hotel property in this tertiary market, which serves as a gateway for campers traveling to Death Valley.
    Challenge: The tertiary market, an unincorporated town with a population of just over 35,000, proved to be a challenge for most prospective lenders. The large vacancy created by the former casino was a drag on overall occupancy, while driving down property value on a capitalized basis. Due to the multiple uses and lack of directly comparable properties, both Lender and Sponsorship had difficulty deriving an actual cap rate and value for the asset.
    Solution: GSP was able to source a West Coast Lender with the real estate knowledge to understand the strengths of the asset, regardless of the tertiary location. GSP and its Sponsor articulated the strengths of the asset with the large vacancy in place, and the potential upside presented by the space. GSP consulted multiple local appraisers to arrive at a capitalization rate which kept leverage (from a value perspective) at a satisfactory level for the Lender.
    Rate: 11% Fixed
    Term: 1 Year + Two-6 month Extensions
    Amort: IO
    LTC: 65%
    Non-recourse
    Lender Fee: 3%
    Advisors: Malcolm Davies, Peter Kleinberg, Drew Sandler

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