Rate: LIBOR + 585
Term: 4 years with a 1 year extension option
Amortization: Interest-only
Prepayment: 24 months
Guarantee: Non-Recourse

George Smith Partners successfully placed the refinance on the flagship 317 room Pendry Hotel in the historic Gaslamp quarter of downtown San Diego. The Hotel and the brand were launched in early 2017 as the new luxury hotel brand operated under the Montage platform. Pendry fills the void between service-oriented luxury hotels and design-oriented boutique hotels. In 2014, GSP successfully placed the construction financing. Proceeds from this refinance were used to repay that facility.

GSP’s mandate was to source a lender who would recognize the value in the unique attributes for this Hotel, including its unique Food & Beverage offerings. While there were numerous financing providers who were interested in this opportunity, our client ultimately selected a national debt fund that understood the strength in the asset, the strong capabilities of the Sponsor and market demand of both business and leisure travelers who will frequent the property over the coming years.

Advisors

Evan Kinne Managing Director, GSP; CEO, AXCS Capital

Rate: 4.41%
Term: 10 Years
Amortization: 12 months IO, followed by 30 year amortization
Loan-to-Purchase Price: 75%
Guarantee: Non-Recourse

George Smith Partners arranged $14,400,000 of non-recourse, acquisition and renovation financing for a 196-unit garden-style multifamily apartment in a Southwestern MSA. Constructed in 1984, the property consists of 15, two-story, wood frame buildings with flat roofs. In 2014, the seller completed exterior renovations and also upgraded 90 of the 196 units. Our Sponsor’s business plan is to fine tune exterior renovations, finish renovating the remaining 102 units and install low flow plumbing fixtures to take advantage of green program incentives. GSP identified a capital provider able to provide long-term financing and was comfortable with the renovation business plan. The proposed Green program discounted the interest rate by 20 basis points.

Advisors

Steve Bram Managing Director & Principal / GSP Co-Founder

David R. Pascale, Jr. Senior Vice President

Rate: 3.78% Fixed for 5 Years; 6 Month LIBOR + 3.25% thereafter
Term: 20 Years
Amortization: 2 Years IO; 30 Years thereafter
Prepayment Penalty: 5, 4, 3, 2, 1, then 1
LTC: 65%
DCR: 1.20
Origination Fees: Par

Transaction Description:
George Smith Partners secured $6,000,000 for the acquisition of a stabilized 55 unit Los Angeles apartment building. Fixed at 3.78% for five years; the loan will float at 6 month LIBOR + 3.25 for the remaining 15 years of the loan term. The loan will amortize over 30 years after the initial two-year interest-only term. Pre-payment steps down from 5% and remains at 1% for the final 15 years.

Challenges:
In discussing the transaction with capital providers, GSP discovered that a majority of underwriters sized proceeds using a stressed underwriting constant. For these lenders, proceeds were less than 60% of the purchase price. Due to a limited collection history, several lenders would not consider RUBs (Ratio Utility Billings) income for sizing proceeds. Our Sponsor had a short acquisition timeframe.

Solution:
GSP identified a capital source that underwrote the actual note rate rather than a higher stressed constant and used a 1.2 DCR for sizing. RUBs income was also credited as additional income and contributed to the NOI. Proceeds netted were $200,000 more than the balance of those surveyed. A 45 day close was orchestrated under the original terms of the application.

Advisors

Matthew Kirisits Director