$9,220,000 Non-Recourse Bridge Loan for 51-Unit Multifamily Portfolio Priced at L + 3.25%

Transaction Description:

George Smith Partners secured $25,818,000 in proceeds for the cash-neutral bridge loan refinance of a 51-unit multifamily property in Los Angeles. The Lender provided proceeds of 85% of appraised value and underwrote to a 5.2% stabilized debt yield. The new loan refinances both the construction loan and the preferred equity that were part of the original financing. The loan is floating at LIBOR + 6.00% with a 6.65% floor.

At the time of financing the Property was 95% complete but still short of a temporary certificate of occupancy. In addition, the leverage on the loan precluded several lending sources from achieving the necessary proceeds. The Sponsor desired to completely pay off the original construction financing, which was originated at 85% loan to cost. Only a few lenders could get the requested leverage and the market quoted pricing in the high single digits. Lastly, Koreatown experienced Covid related collection issues which affected the rental underwriting. GSP provided rental and sales comps that proved out the strength of the market. As a result, the selected Lender became comfortable with the location and the Sponsor’s ability to lease up the new Property.

Transaction Description:

George Smith Partners secured $16,500,000 in bridge financing for a five-parcel land portfolio located in Los Angeles, CA. The five individual parcels are entitled (one in process of entitlements) for co-living developments totaling 211 units and 879 beds. The non-recourse loan refinanced existing debt, while providing for permitting and carry costs prior to development, with four assets slated to break ground in early 2021, and the fifth in late 2022. The loan is sized at approximately 50% LTC on a 6.90% fixed rate, non-recourse, with a 12-month term. The loan did not require an interest reserve.

Given COVID related permitting delays and perceived impacts to the co-living product type brought by the pandemic, GSP was able to identify a lender that understood the stability of the submarkets for future development and the resilience and growth of co-living over the next several years. The infill development sites, and high-density entitlements provide strong value to the collateral base for this financing. The loan closed within five weeks of term sheet execution (including the holiday and New Year’s break).

Transaction Description:

George Smith Partners secured a $23,500,000 bridge loan for a brand-new mixed-use project located in Santa Clarita, CA. The non-recourse loan will be utilized to refinance the Project’s construction debt and capitalize outstanding TI/LC’s. The loan represents 80% loan to value and is structured with a 1-year initial term with interest only payments. The loan allows for open prepayment and carries two 6-month extension options.

The loan is secured by a recently constructed mixed-use development comprised of 47 Class-A apartment units situated above 20,918 SF of street level retail. This transformative project is a focal point for the continued modernization of the City of Newhall. The Project’s design is indicative of the times where enhancements to public transit connects renters in search of larger amenity filled accommodations with the further suburban pockets of the greater LA Metro. The Subject is shadow anchored by the highly anticipated seven-screen Laemmle Theater and a newly built 372 stall public parking structure which serves the popular Downtown Newhall district.

The loan was placed with many COVID related shutdowns in effect. GSP was able to secure a lender that underwrote to the stabilized NOI, closed with no debt service reserve, no recourse, and funded while several retail tenants were completing their buildouts. GSP selected a lender than could move quickly. The Lender did not require an appraisal and funded within three weeks after issuing an application.

Transaction Description:
GSP secured a $4,200,000 bridge loan for unentitled land in Pasadena, CA. The site is proposed to be developed into 59 luxury townhomes. The loan is fixed at 5.9% for a 12-month term with two 6-month extensions. The proceeds represent 45% of the total cost to purchase the land and entitle it.

Challenges:
The Sponsor acquired the Property in 2015 and has been working with the City to receive entitlements to develop the townhome plot since property acquisition. The land remains unentitled; however, the Sponsor expects to receive Ready-to-Issue (RTI) in 6 months which would provide significant value appreciation. The Sponsor had a loan coming due on the Property and needed to refinance. Given the economic situation due to the COVID-19 pandemic, many lenders were hesitant on providing financing.

Solutions:
GSP demonstrated that the location of the Property and market are very strong, and the specific neighborhood is undergoing a revamp. The Sponsor is an experienced Los Angeles developer who is familiar with the entitlement process and the Property is less than six months away from receiving RTI.

Transaction Description:

George Smith Partners arranged $16,100,000 in non-recourse, acquisition bridge financing on a 30-unit trophy multifamily property in West Los Angeles, California. The Property featured significant below-market rents, deferred maintenance, and physical vacancy (in part due to roommates that decided to downsize in light of COVID-19). The value-add business plan will involve a large capital expenditure budget to renovate the Property’s exterior and units, and reposition the asset utilizing a specialist property manager focused on providing family-oriented housing product with amenities like technology integration, childcare services, and community programming. The Sponsor’s expertise coupled with the Property’s trophy location created a competitive lending environment despite the ongoing pandemic. GSP ran a robust process including marketing the deal to over 70 lenders and fielding multiple lender proposals. The non-recourse financing was sized to 70% LTC and featured a rate of 1-Month Libor plus 500 basis points for a three-year term plus extensions.

Transaction Description:

George Smith Partners arranged $13,500,000 in quick-close, cash out, bridge-to-bridge financing for a multi-tenant retail center in Echo Park, California. The Sponsor approached GSP with intentions of taking out their existing lender due to an issue with lease approval for a cannabis tenant. In order to purchase an out-parcel on the Property, the cannabis user needed a lease in place so it could obtain a license from the local jurisdiction. If approvals were not granted, the Sponsor would have the ability to break the lease. GSP identified a non-bank lender who was comfortable approving a lease on a space which may never be occupied. The Lender’s flexible prepayment structure allowed the Sponsor to execute their business plan as the cannabis tenant planned to acquire an out-parcel on the Property after receiving approvals from the City. The first trust deed was sized to 60% of value with no hold back requirement for interest reserve or capital expenditures. The non-recourse, interest only loan does not carry any prepayment penalties. The Sponsor plans to take out the loan within 12 months with long-term fixed rate debt.