Rate: LIBOR +300
Term: 24 months
Amortization: Interest Only
LTC: 73%
Debt Yield at Close: 6.3%
Origination Fees: 1.0%

Transaction Description:

George Smith Partners secured $28,700,000 in proceeds for the acquisition of a 254-unit multifamily property in Boise, Idaho. While near full occupancy at close, the Property has dated interiors and common areas, as well as some deferred maintenance. A capital budget was drafted by our Sponsor for unit upgrades at lease-turn as well as common area improvements. Proceeds are structured with $25,500,000 for the initial funding plus an additional $3,200,000 for capital improvements. Floating at 30 day LIBOR plus 3.0%, the two-year term will be paid current, monthly out of cash flow and does not carry a pre-payment penalty. An earn-out for an additional $2,300,000 was structured once the Subject Property achieves an 8.5% debt yield.

Challenges and Solutions:

The Sponsor was in a 1031 exchange and needed to close quickly as their exchange provided a narrow window to close. While the going in cap rate provided meaningful yield Day 1, GSP focused their marketing efforts on the Sponsor’s proven track record to execute on their previous deals.

Several capital providers passed on the deal due to the fact Boise is not a top MSA by population, even though it was recently named as America’s fastest growing city by Forbes Magazine. Certainty of execution was required for this short acquisition escrow, and the need to identify a capital provider knowledgeable with the Boise market was paramount in avoiding educational “ramp-up” delays so that escrow would fund timely.

GSP vetted this location and confirmed market knowledge with loan decision makers prior to the issuance of an application. The loan closed within 40 days of GSP’s engagement on the deal.

Advisors

Matthew Kirisits Director

Rate: 1 Mo. LIBOR + 7.50%
Term: 3+1+1
Amortization: Interest Only
LTC: 68.0%
Guarantee: Non-Recourse (with standard bad boy carve-outs)

Transaction Description:

George Smith Partners secured $17,725,000 in non-recourse construction financing for the development of a 127-key Cambria-flagged lifestyle hotel in the Roosevelt Row Arts District of Phoenix, Arizona. This financing facility allowed the Sponsor to begin construction on the first of several projects slated for delivery within Roosevelt Row (Ro2). The Sponsor won a city-led RFP bid earlier this year that provided them with control and ownership of four contiguous city blocks within the core Ro2 area. This was the Sponsor’s first lifestyle branded hotel development and their first hotel development within the state of Arizona. These facts presented a challenge for many groups, despite their extensive experience developing other asset classes, including Monroe 44, the tallest residential building in Arizona.

GSP sourced a hospitality lender who shared the Sponsor’s vision and excitement about the revitalization of the historic community, recognizing their ability to execute this project under the Cambria Brand. Despite several collateral restrictions presented throughout the application process, GSP was able to facilitate creative alternative scenarios for security of both Lender and Sponsor, ultimately achieving a mutually agreeable solution and additional proceeds to cover the new shortfall. The three year floating rate note was priced at 1 Month LIBOR + 7.50%, and was sized to 68.0% of project costs.

Advisors

Evan Kinne Managing Director, GSP; CEO, AXCS Capital

Rate: 30-Day LIBOR + 3.50%
Term: Three years plus two 12-month extensions
Amortization: 36 months interest only
Max Loan to Cost: 80%
Prepayment: 18-month minimum interest period
Guarantee: Non-recourse
Lender Fee: 1.00%

Transaction Description:

GSP arranged the $10,000,000 first mortgage on a 1990’s vintage, 64-unit multifamily value add property. The National Balance Sheet Lender provided a non-recourse loan at 80% of total project cost including 100% of future CapEx funds totaling $15,000 per unit. Furthermore, the Lender sized the stabilized proceeds to a 7.35% As-Stabilized Debt Yield. Interest expense is not incurred on CapEx funds until drawn, and sponsor cash flow is maximized as the loan is interest only during the initial three-year term. The 30-Day LIBOR plus 3.50% coupon requires interest rate risk protection and in order to minimize associated sponsor cost the lender structured the interest rate cap with a two year duration at closing plus an obligation to renew for the third year of the initial term. Due to low going in cash flow, the Lender structured an interest reserve to cover debt service during the peak reposition period.