Rate: 4.47% Fixed for 7 years; 6 Month LIBOR + 2.25% thereafter
Term: 30 years
Amortization: 30 Years
Prepayment Penalty: 5,5,4,4,3,2,1
LTV: 65%
DCR: 1.15
Guarantee: Non-Recourse
Origination Fees: Par

Transaction Description:
George Smith Partners secured $18,000,000 for the cash-out refinance of two stabilized multifamily buildings in Los Angeles containing a total of 116 units. Constructed in the 1960s these buildings are situated in one of the most sought after areas in Los Angeles and in close proximity to popular restaurants, bars and entertainment. Fixed at 4.47% for seven years, the non-recourse loans float at 6 month LIBOR + 2.25% for the remaining 23-year term. The non-recourse loans are fully amortizing and have a 5,5,4,3,2,1 step down prepayment penalty.

Challenges:
Many of the buildings have long term residents who have lived at the properties for over a decade. The long term residency leaves the owner with dozens of units with uncaptured market rents, ultimately affecting the amount of loan proceeds.

Solution:
GSP worked with a Lender who understood the strength of these assets and was able to underwrite to a 1.15 x DCR at the actual note rate in order to maximize loan proceeds. Both properties also had a handful of recent move ins, which gave the Lender comfort in the future upside of the properties as units continue to turn.

Advisors

Matthew Kirisits Director

Rate: 6.75%
LTV: 80%
Term: 5 years
Amortization: 30 years
Guarantee: Recourse to the entity
Prepayment Penalty: 3,2,1

Transaction Description:
George Smith Partners arranged the $6,500,000 in bridge financing for a Skilled Nursing Facility in the Pacific Southwest. The bridge loan took out a construction loan GSP had previously placed on the same project and was necessary to provide capital to the sponsor. The sponsor needed capital to begin operations of the facility as well as to secure the required approvals to house Medicare patients. Fixed for 10 years at 6.75%, the bridge loan represented 80% of the property’s cost and is recourse. The loan amortizes over 30 years and holds a 5,4,3,2,1 prepayment penalty.

Challenges:
The building had no existing cash flow, and conventional lenders could not get comfortable with the unique use of the property. Additionally, while the sponsor was very experienced as an operator of Skilled Nursing Facilities, this was his first development project. Furthermore, the only way the sponsor could finish the project, start operations, and secure the necessary approvals was if this bridge loan provided all of the required capital to do so. Every aspect of building and opening the facility was not only incredibly capital intensive, but also required government approval.

Solution:
With an expertise in financing Senior Housing, George Smith Partners understood the importance of proving the strength of the operator of the Skilled Nursing Facility and carefully demonstrated this particular operator’s track record and abilities to interested lenders. GSP ultimately identified a community development lender that we have a very strong relationship with, who was comfortable with the niche use of the property. By proving the stabilized value of the property to the lender, GSP was able to push leverage to provide the sponsor the necessary capital for finishing construction, for starting operations, and for gaining the necessary approvals.

Rate: 9.5% Fixed
Term: 12 Months
Amortization: Interest Only
LTV: 80% of Purchase / 65% of Stabilized Value
Guarantee: Recourse
Prepayment Penalty: Three Months
Lender Fee: None

George Smith Partners arranged a quick close acquisition bridge loan for an REO triplex in South Los Angeles. The sponsor approached GSP with an extremely tight closing timeframe of 7 days and a property that had just recently been foreclosed on and had significant deferred maintenance. The sponsor valued certainty of execution above all else, so he could close on the property in short order. GSP identified a non-bank private individual willing to make the loan with no origination fee. Sized to 80% of purchase with no holdback requirement for interest reserve or capital expenditures, the loan carries a 12 month term, interest only payments at a 9.5% rate and a 3 month prepayment penalty.