Rate: SWAPS+2.19%
Term: 10 Years Fixed
Amortization: Interest Only
LTV: 32%
Guaranty: Non-Recourse

Transaction Description:
George Smith Partners successfully arranged $80,000,000 in permanent refinancing for a Class A, high-rise, trophy asset office building in a primary market in California. Sized to 32% of appraised value and a 1.78 DCR, the 10 year interest only loan is priced at 2.19% over the 10 year SWAP Rate. The building was situated on an unsubordinated ground lease, which presented challenges. While the property was widely recognized as a trophy asset in the market, the building had low occupancy and above market rents. GSP sourced a capital provider who underwrote the property with an emphasis on gross potential rent as evidenced by Sponsor’s confidence and willingness for occupancy growth with more aggressive pricing of rents. This allowed the lender to get comfortable with the low occupancy along with strong debt coverage on in place cash flow.

Advisors

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

Term: 5 Years
Amortization: 30 Years
Rate: 4.75%
Prepayment Penalty: No Prepay
LTV: 70%
Origination Fee: ½ Point
Guaranty: Recourse

Transaction Description:
George Smith Partners successfully placed the $9,000,000 bridge loan for a 110 unit Single Resident Occupant (SRO) apartment building in Downtown Los Angeles.  The loan allowed for the renovation and lease up of a 1920’s vintage building.

Challenge:
Prior to engaging George Smith Partners, the borrower attempted to finance this asset with multiple capital providers, but was unsuccessful due to its SRO use.  SROs are essentially studio apartments with a sink and kitchenette, but provide residents with shared bath and kitchen privileges.  The lack of kitchens and full baths in the units, along with past operating issues of Hotel SROs, makes them challenging to finance.  The borrower also required a return of capital given his length of ownership, management, and continued maintenance of the asset which is typically a challenge on un-stabilized assets.

Solution:
GSP used its extensive market expertise and lender relationships to identify a Southern California based lender with unique bridge loan programs that would allow the un-stabilized project to execute business plan.  With an in-depth understanding of this product type and the downtown market, GSP secured a loan for 70% of the current value plus 70% of planned improvements during the loan.

Rate: 4.34% Fixed for 7 years; 6 Month LIBOR + 2.25% thereafter
Term: 30 years
Amortization: 2 years IO; 30 Years thereafter
Prepayment Penalty: 5, 4, 3, 2, 1
LTV: 67%
DCR: 1.20
Origination Fees: Par

Transaction Description:
George Smith Partners secured $6,625,000 for the refinance of a stabilized 40 unit Los Angeles apartment building.  This execution offered a return of equity to our Sponsor.  Fixed at 4.34% for seven years; the loan will self-liquidate and will float at 2.25% over the six-month LIBOR for the remaining 27 year term. There are two years of interest only payments and no prepayment penalty after the 5th year.

Challenges:
Our subject property has a cell tower lease that had provided consistent income for many years, but a 30-day cancellation clause precluded many underwriters from counting this revenue.  Debt coverage constraints that would minimize proceeds were of concern in this rising interest rate environment.  The bank ordered appraisal did not reflect recent market trades.

Solution:
GSP identified a regional capital source that would underwrite down to a 1.20 debt coverage ratio based on going-in cash flow.  The long history of stable collections from the cell tower confirmed this as a viable reoccurring revenue stream. Our ability to lock rate during a market adjustment removed the need for lower DCR constraint.  GSP also provided additional recent neighborhood sale comparables which helped prove up the market value of the property.

Advisors

Matthew Kirisits Director