$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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    $21,000,000 Construction Financing to 80% of Cost Multi-Family Development

    March 4, 2015

    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%
    Term: 30 Months + Options
    LTV: 60%
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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.
    Challenge: The Sponsor required high leverage for a for-sale development and was not seeking to invest additional cash equity into this project. Pro-forma sales were difficult to comp given the older product in the area. The high price per foot added to the comparable challenge.
    Solution: GSP supported the leverage request by highlighting the Sponsor’s and the Contractor’s successful development history with similar project types. By canvassing the market and demographic data, a sales pro-forma for the finished project was developed by GSP, reviewed and accepted by the Appraiser. The estimated demand and price point for new product was independently supported by the MAI appraiser.
    Rate: LIBOR + 3.50%
    Term: 18 Mnths+ 1-Six Mnth Ext
    Amort: Interest Only
    LTV: 65.0%
    LTC: 75.0%
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    Advisors:  Jonathan Lee, Adam Candler


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    $4,390,000, 18 Unit Ground-Up Apartment Construction Loan

    July 16, 2014

    7 – 16 – 2014
    Transaction Description:  GSP arranged the financing for the ground-up development of an 18 unit apartment building in the Warner Center area of Los Angeles. The developer had recently purchased the land before entitling it. Because of the strong housing demand in the Warner Center sub-market, the Borrower was able to syndicate equity amongst friends and family. GSP successfully negotiated for imputed equity to round-out the capital stack in lieu of an additional cash investment. Sized to 75% of cost, the 18 month term floats over LIBOR but requires a 5.5% interest rate floor.
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    $12,100,000 68% Loan to Cost, Limited Recourse Construction of 45 Apartment Units in Los Angeles

    April 30, 2014

    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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    • Rate: LIBOR+2.65%
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    $19,071,000 Senior Construction Financing for 55+ Active Adult Community

    March 13, 2014

    Transaction Description: George Smith Partners placed the ground-up construction of an age restricted active adult community in the Pacific Northwest. The loan equates to $170,277 per door for the 112 luxury unit complex. Sized to 60% of cost, the three year loan does not require a warm body repayment guarantees. A 60% Limited Recourse component is exclusive to a capitalized entity during construction but burns down to 30% at stabilization. There are no warm body repayment, completion or carve-out guarantees. Priced at LIBOR + 350; the capital structure did not require additional mezzanine debt to execute.
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    $51,075,000 Structured Financing; $38,750,000 Senior Trust Deed and $12,325,000 Mezzanine Loan for Ground-Up Construction of a Class-A Multifamily Asset

    February 27, 2014

    2 – 26 – 14
    Transaction Description:  GSP successfully arranged the combined $51,075,000 of construction financing for a 360 unit Class-A Multifamily project located in Las Vegas, Nevada. The subject is adjacent to Green Valley Ranch and “The District” in Henderson, a mixed-use project that includes a life-style shopping center and resort hotel. This project represents one of the highest quality, most amenitized and dynamic rental projects in Las Vegas.
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    Rate: Terms are confidential
    Advisors: David Rifkind, Omer Ivanir