$7,850,000, 40 Unit Ground-Up Apartment Construction Loan, Los Angeles, California

9 – 27 – 12
Transaction Description: GSP arranged the financing for a 40 unit ground-up apartment development in Hollywood, California. The developer had assembled the land over a period of years, and originally intended to develop a “For-Sale” building. Because of the strong demand in the Hollywood market, coupled with a comparatively low basis in the land, the Borrower was able to attract private, passive JV equity to co-invest in the transactions.
Challenge: The Borrower’s previous construction projects were financed by a bank that had stopped lending on construction following the credit crises. While the previous projects were successes, the Borrower struggled to attract debt without a clear pipeline of future projects and the personal capital to build out all of the proposed developments. The Borrower’s private equity sources were reluctant to sign full personal repayment guarantees.
Solution: GSP worked with the Borrower to demonstrate a clear pipeline of projects based on existing assets and future business plans. The Borrower was able to secure capital partners through his private network. The new investors agreed to sign on the current loan but only in a secondary position after all other remedies for cure have been solved. This bolstered financial strength of the request, combined with a clear pipeline of future business gave the lender sufficient confidence to proceed with the loan. To shield the private investors, GSP negotiated a several pro-rata recourse agreement for the investors to a capped amount, which is significantly less than the loan amount. This gave the investor partners comfort that they are not exposed to the full repayment guarantee.
Rate: LIBOR+275
Term: 3 Years + 24 Month Extension
Amort: 30 Years
LTC: 65%
Brokers: Jonathan Lee, Shine Cheng

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    $13,600,000 Non-Recourse Debt and JV Equity to 97% of Total Capitalization for Ground-Up Multifamily

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    Transaction Description: George Smith Partners successfully arranged $13,600,000 in debt and equity financing for the ground-up construction of a 34-unit luxury lifestyle apartment complex. This capitalization represents 97% of total cost for this fully entitled transit-oriented apartment development in a prime Southern California infill location. The non-recourse senior tranche is advanced to 60% of construction cost at traditionally priced bank debt with the balance of capital provided by the Sponsor and Joint Venture Partner. Additional terms and pricing are confidential.


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    $1,800,000 Construction Financing to 75% of Cost Multi-Family Development

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    Transaction Description: Jonathan Lee arranged the ground-up construction financing for a 5 unit multi-family rental building in Hollywood, California. The project will feature attached two-car garages, city views from 3rd story roof-top decks and unit mixes that range from 1,174 to 1,385 square feet. Positioned to draw renters that desire walkable neighborhoods, the subject offers convenient access the cluster of entertainment industry employers nearby. Sized to 75% of cost and floating at Prime + 0.75% w/a 5.0% floor, the 18 month construction term carries a six-month option for an additional fee.

    Rate: Prime + 0.75%; 5.0% Floor
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    $21,000,000 Construction Financing to 80% of Cost Multi-Family Development

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    Transaction Description: Jonathan Lee arranged the ground-up construction financing for 49 unit multi-family rental building in Brentwood, California. The subject will be mapped for condominiums for additional exit flexibility. Sized to 80% of cost, the 30 month loan is priced at LIBOR + 2.5%, netting an all-in coupon of less than 3.0% today. Recourse is limited to the top 50% of the loan amount.

    Challenge: Project features units that are larger than typical rental products in this market, resulting in a higher total rental dollar per unit. A high land basis was required to support the Sponsor equity contribution.

    Solution: Market research, area demographics and asset quality supported the larger unit footprints and thus the higher gross dollar rents underwritten. Exit flexibility added additional comfort to support the higher land basis and value created by the Sponsor through his assemblage and entitlements.

    Rate: LIBOR+2.50%
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    $3,250,000 Construction Loan for Six For-Sale Luxury Condo Units in Westwood, California

    August 21, 2014

    8 – 20 – 2014
    Transaction Description: Jonathan Lee successfully placed the construction financing for a ground-up six unit luxury condominium property in Westwood, California. The Sponsor purchased the entitled land in 2012 all cash and re-designed the building, spending over a year obtaining required approvals. The 18 month construction term is priced at LIBOR plus 3.5% and was sized to 75% of total cost. Imputed equity was factored in to a 65% of value metric.
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    Term: 18 Mnths+ 1-Six Mnth Ext
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    LTV: 65.0%
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    $4,390,000, 18 Unit Ground-Up Apartment Construction Loan

    July 16, 2014

    7 – 16 – 2014
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    $12,100,000 68% Loan to Cost, Limited Recourse Construction of 45 Apartment Units in Los Angeles

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    Transaction Description: GSP successfully placed $12,100,000 of ground-up construction financing for a 45-unit luxury boutique amenities transit-oriented apartment development in Los Angeles. Recourse was limited to a 25% repayment guarantee; burning down to zero once a 9.10% debt yield is achieved. The senior loan was sized to 68% of total cost and priced at LIBOR + 2.65%. The three year loan equates to $269,000 per door.
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