| Transaction Description: |
| $17,585,000 Permanent Fixed Rate Financing, 99% of Purchase Price, for two Transitional Multifamily Properties in Los Angeles. GSP arranged long-term fixed rate financing for the acquisition of two apartment complexes with a combined 173 units in Los Angeles, CA for an experienced local apartment operator. The business plan for the properties is to perform capital upgrades (approximately $4,000 per unit) and increase rents 11%. The loans represented 99% of the purchase price, and approximately 92% of the “all-in cost”, including rehab costs, interest reserve, and all fees and closing costs. Properties are approximately 95% occupied. Because the borrower was on a short timeframe for both loans, GSP worked closely with the lender to process these loans, from application to funding, in about three weeks. |
Challenge: The borrower sought fixed rate permanent loans for transitional properties. One of the properties does not have enough cash flow to support the debt service on the requested loan amount, and the permanent loan underwrites properly only upon the borrower successfully increasing the cash flow. |
Solution: GSP was able to identify a permanent lender willing to fund loans for both properties with no holdbacks. For the property with insufficient cash flow, the lender included an interest reserve in the loan to supplement the mortgage payments until the property cash flow covers the debt service. |
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Property A
Rate: 10 Yr T + 1.85%
Term: 10 yrs
Amort: 5 yrs Interest Only, then 30 yr amort
LTV: 90% as-is, 75% stabilized
DCR: 1.10
Prepayment: Defeasance
Non-recourse
Lender Fee: 1.5%
Property B
Rate: 10 Yr T + 1.70%
Term: 10 yrs
Amort: 5 yrs Interest Only, then 30 yr amort
LTV: 95% as-is, 80% stabilized
DCR: 1.04 as-is inclusive of interest reserve, 1.10 stabilized
Prepayment: Defeasance
Non-recourse
Lender Fee: 1%
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