Rate: L+375 & 12.25%
Term: Three years plus options
Fee: 0.5% & 1.5%
Recourse: Full plus Completion & Carve-Outs Only

George Smith Partners placed the ground-up development debt for a Koreatown (Los Angeles City District) parcel for 51 rental units over 3,350 square feet of ground-floor retail. Structured as an A/B execution, the senior lender was willing to advance up-to 75% of cost subject to a 65% valuation upon stabilization. The senior loan was trimmed to allow for the layering of a $5,000,000 mezzanine tranche. A partial deferral of the development fee rounded out the capitalization. As added security, the bank underwrote the secondary capital provider and executed a recognition acknowledgement with the junior lender. Bank priced debt at LIBOR plus 375 and a half point for the 36 month term. Subordinate debt will charge 12.25% annually on their tranche but will not participate in any upside. The junior debt only requires a carve-out guarantee while the senior note is a full repayment guarantee along with a completion guarantee.

Advisors

Matthew Kirisits Director

ALL TERMS CONFIDENTIAL

GSP successfully secured $8,600,000 in Joint-Venture Equity Financing for the acquisition, pre-development and vertical construction of a 52-unit luxury multifamily apartment complex with 3,000 sf of retail space. The Partnership allowed the Sponsor to acquire the West Los Angeles property, buy-out the existing tenants and fund pre-construction expenses including building permits which are expected to take approximately 12-15 months to obtain. GSP was hired by the Sponsor to provide advisory services throughout the development, including financing the construction loan. After engaging with over seventy groups who focus on providing Joint Venture Equity Financing, GSP was able to identify a West-Coast based family office as an equity finance partner. GSP structured a mutually beneficial, long-term relationship that both the Sponsor and the capital partner stand to gain from.

Advisors

Evan Kinne Managing Director, GSP; CEO, AXCS Capital

Rate: 8.50% LTC: 78%
Term: 12 months with extension options
Fee: 1.5%
Prepayment: None

George Smith Partners placed an acquisition bridge loan for an 8-unit property in Leimart Park, California. The property was operating at below-market rents and the Sponsor’s business plan included increasing rents at market rates and renovating the property’s exterior and interior build. While the lender’s underwriting fully supported the low acquisition basis for the property located in the quickly developing market of Leimart Park, the Borrowers’ track record was not sufficient to sustain the high leverage loan request. GSP worked closely with the lender to get them confident on the group’s growth potential. Sized to 78% of total project cost, the interest-only loan carries a 12-month term and no prepayment penalty.

Advisors

Gary M. Tenzer Managing Director & Principal / GSP Co-Founder