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Bridge Loans Los Angeles – Bridge Loan for a 17 Unit Multifamily Property in South Los Angeles, CA; 75% Loan to Cost at a 5.50% Rate

Rate: Prime + 0.5%
Term: 2 Years
Amortization: Interest Only
LTC / LTV: 75% / 65%, including 100% of future funding
Prepayment Penalty: None
Recourse: Full Recourse
Lender Fee: 0.5%

Transaction Description:

Bridge Loans Los Angeles – George Smith Partners arranged acquisition bridge financing for a value-add multifamily property in south Los Angeles, California. The 17 unit, 1950’s vintage Property had significant deferred maintenance and below market rents. The Sponsor’s business plan was to reposition the Property and release the units at market rents. Sized to 75% of total project cost, the loan includes 100% of future funding for a full gut renovation of unit interiors and an exterior upgrade. The two year bridge loan is interest only and floats at Prime plus 0.5% (5.50% today) with no prepayment penalty. Interest is not charged on the holdback until funds are drawn. Although the Property had sub 1.0x debt coverage (0.7x), an interest reserve was not required. The Lender also only required a recourse obligation from the general partner, who represented only 10% of the equity, even though there were limited partners representing over 25% of the equity. The Lender fee was negotiated down to 0.5%.

Related Financings

  • $16,100,000 Non-Recourse Acquisition Bridge Financing for a 30-Unit Trophy Multifamily Value-Added Project; West Los Angeles, CA

    October 14, 2020

    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.

    Rate: 1-Month Libor + 500 basis points
    Term: 36-month term with two 6-month extension options (6.00% floor rate)
    LTV: 70%
    Guaranty: Non-Recourse

  • Acquisition Bridge Loan for Multifamily Property in South Los Angeles, CA; 70% Loan to Cost at a 5.25% Rate

    August 29, 2018

    George Smith Partners arranged acquisition bridge financing for a value-add multifamily property in the Mid-City neighborhood of Los Angeles, California, a gentrifying urban submarket. The 9 unit, 1960’s vintage property had significant deferred maintenance and below market rents. The Sponsor’s business plan was to reposition the property and release the units at market rents. Sized to 70% of total project cost, the loan includes 100% of future funding for property renovation, which includes a full gut renovation of unit interiors and an exterior upgrade. The two year bridge loan is interest only and floats at Prime plus 0.5% (5.00% today) with no prepayment penalty. Interest is not charged on the holdback until funds are drawn, and the loan was structured with an interest reserve to mitigate the property’s weak cash flow during the renovation period. The lender fee was negotiated down to 0.5%.

    Rate: Prime + 0.5%
    LTC / LTV: 70% / 65%, including 100% of future funding and interest reserve
    Term: 2 Years
    Amortization: Interest Only
    Prepayment Penalty: None
    Recourse: Full Recourse
    Lender Fee: 0.5%