Bridge Loans and Financing

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    $26,000,000 Bridge Loan for a 65-unit New Multifamily Property, 100% LTC, No DCR Test; Los Angeles, CA

    August 19, 2020

    Transaction Description:

    George Smith Partners secured $26,000,000 in proceeds for a bridge loan refinance of a 65-unit multifamily property located in Los Angeles, CA. The loan is floating at LIBOR + 5.45% with a 1.0% LIBOR floor. The Lender provided proceeds of 75% of appraised value, 100% of cost, and did not require any Debt Coverage Ratio test on underwritten cash flow.

    The Property was newly constructed and began lease-up towards the end of last year. In early 2020, the COVID-19 pandemic began, and the State issued a safer-at-home directive. As a result, leasing halted for several months with the Property at 60% occupancy. Since the in-place loan was coming due, the Borrower required a bridge loan to provide additional time to reach stabilization.

    When initially discussing the transaction with lenders in April, many capital providers were out of the market entirely. Those that quoted the deal provided proceeds of 65% LTV and interest rates around 8%, but these terms did not make economic sense for the Borrower. As the capital markets improved, GSP continued to discuss the transaction with lenders. In June, the selected lender entered the market with a new market-leading bridge loan program. The team quickly signed up the transaction and the loan closed in just 35 days.

    Rate: L+5.45% with a 1.0% LIBOR floor = 6.45%
    Term: 24 months + one 6-month extension
    LTV: 75%
    DCR: none
    Fees: 0.5% in/0.5% out
    Guaranty: Non-Recourse

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    $4,300,000 Acquisition/Bridge Loan for 18-Unit, Multifamily Property; Long Beach, CA

    August 5, 2020

    Transaction Description:

    George Smith Partners arranged $4,300,000 in acquisition bridge financing for the purchase and reposition of an 18-unit multifamily property located in Long Beach, CA. The Sponsor put the Property under contract during the COVID-19 pandemic. The Property has several vacant units which represents an opportunity for the Sponsor to immediately add value and commence their value-add business plan.

    The loan includes future funding for an extensive renovation of unit interiors and an exterior upgrade. The three-year bridge loan is interest only for the first 18 months and carries a floating rate of Prime + 0.50% with a 4.00% floor. Interest is not charged on the holdback until funds are drawn. The lender fee was limited to a 0.50% origination fee with no exit fee. The loan structure has no prepayment penalty, providing the Sponsor with ultimate flexibility.

    Rate: Prime + .50% with 4.00% Floor
    Term: 3 Years
    Amortization: 18 Months Interest Only
    Loan-to-Cost: 73%
    Prepayment: Open Prepay
    Loan Fee: 0.5% in / No exit fee

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    $5,891,700 Value-Add, Bridge, Refinance for a Multifamily Property; Santa Barbara, CA

    July 29, 2020

    Transaction Description:

    George Smith Partners placed a $5,891,700 recourse loan for the refinance and recapitalization of an approved mixed-use conversion back to 100% multifamily use. The Sponsor acquired the mixed-use office and multifamily project in early 2019. They negotiated the early termination of several long-term office leases and obtained approvals to convert the entire Property back to multifamily. The Sponsor will add kitchens to the office units and converted a large multi-story penthouse unit with ocean views into smaller units increasing the unit count to 23. Soft demolition began in early 2020 with insufficient funds available in the existing acquisition/bridge loan to complete the revised business plan.

    GSP placed the original acquisition/bridge loan. Even though the current loan went under application at the start of the COVID-19 pandemic, the only delay was as a result of the appraisal process. The value and the loan were not negatively impacted by the change in market conditions due to the COVID-19 pandemic. GSP identified a bank lender who underwrote to the new business plan and was able to provide capital at less than half of the previous loan cost while providing an additional 40% in proceeds. The bridge loan has an 18-month term at Prime + 0.75%, interest only, with the ability to convert to a 5-year term.

    Rate: Prime + 0.75% with a 4% Floor
    Term: 18 months
    Recourse: Full Recourse
    Amortization: Interest only
    Fees: 0.5%
    Prepayment: None during construction period

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    $62,750,000 Non-Recourse, Bridge Financing for a New 253-Unit, Class A, Mixed-Use Development; Longmont, CO

    July 22, 2020

    Transaction Description:

    George Smith Partners arranged $62,750,000 in non-recourse, bridge financing on a new construction, mixed-use property with 253 apartment units above 10,000 SF of retail in Longmont, CO—approximately 20 minutes northeast of Boulder. Despite delivering in the early stages of a global pandemic and statewide stay-at-home order, the building has maintained relatively robust lease-up velocity through unconventional marketing methods such as virtual touring. Amid such unprecedented market uncertainty, GSP successfully engaged a newly established debt fund to facilitate a cash-neutral, non-recourse refinance of the project’s maturing high-leverage construction debt, which could not be extended. The 75% loan-to-value bridge facility is priced at L+500 with a 36-month term and two 12-month extension options.

    Rate: L+500 (1.00% LIBOR Floor)
    Term: 3+1+1
    LTV: 75%
    Guaranty: Non-Recourse

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    $2,800,000 Two Week Close Bridge Deal; Los Angeles, CA

    June 17, 2020

    Transaction Description:

    George Smith Partners demonstrated our ability to provide full-service financing for a repeat client who is a prolific developer in the Los Angeles area. The quick close $2,800,000 financing was a bridge loan which took out a senior construction loan that was placed by GSP in 2018. The 12-month loan will allow for the Developer to execute on their business plan to market and sell the remaining homes in the Small Lot SFR development. The Project is in the heart of Los Angeles minutes from major job centers and consists of 11 high end fully constructed homes. The development opportunity was purchased in 2015 and the construction was completed in middle of 2019. GSP provided our expertise throughout the entire process, working with our client throughout the acquisition, entitlement, construction, and the for-sale process.

    Rate: 7.9%
    Term: 12 months Interest Only

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    $13,500,000 Non-Recourse Bridge-to-Bridge Loan with a Cannabis User at 6.90%; Echo Park, CA

    June 17, 2020

    Transaction Description:

    George Smith Partners arranged $13,500,000 in quick-close, cash out, bridge-to-bridge financing for a multi-tenant retail center in Echo Park, California. The Sponsor approached GSP with intentions of taking out their existing lender due to an issue with lease approval for a cannabis tenant. In order to purchase an out-parcel on the Property, the cannabis user needed a lease in place so it could obtain a license from the local jurisdiction. If approvals were not granted, the Sponsor would have the ability to break the lease. GSP identified a non-bank lender who was comfortable approving a lease on a space which may never be occupied. The Lender’s flexible prepayment structure allowed the Sponsor to execute their business plan as the cannabis tenant planned to acquire an out-parcel on the Property after receiving approvals from the City. The first trust deed was sized to 60% of value with no hold back requirement for interest reserve or capital expenditures. The non-recourse, interest only loan does not carry any prepayment penalties. The Sponsor plans to take out the loan within 12 months with long-term fixed rate debt.

    Rate: 6.90%
    Term: 12-month term with one 12-month extension option
    LTV: 60%
    Guaranty: Non-recourse

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    $28,500,000 Land Loan for a Mixed-Use Multifamily Development Site

    June 10, 2020

    Transaction Description:

    George Smith Partners arranged a $28,500,000 non-recourse bridge loan for the land acquisition and predevelopment of a large TOD site with the potential to accommodate more than 900 units. The financing facility was secured on behalf of best-in-class sponsor LaTerra Development, relating to its planned mixed-use multifamily development project. In the midst of unprecedented market uncertainty, GSP leveraged its network to identify land lenders who were still active in today’s environment and could provide certainty of execution. No appraisal was required for funding.

    All Terms Confidential

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    $19,775,000 Bridge Loan for Acquisition of Flex Industrial Building; Temecula, CA

    May 6, 2020

    Transaction Description:

    George Smith Partners, on behalf of Stos Partners , arranged $19,775,000 in bridge financing for the acquisition of a specialty flex industrial asset located in Temecula, CA. The Sponsor was able to negotiate a long-term lease renewal for the primary credit tenant, whose term was nearly expired, creating significant value in the process.

    The recently purchased industrial building maintains a mix of specialized uses, as well as an additional near-term vacancy for a smaller flex space, posing both an opportunity and a challenge within the markets. The specialized and varied uses of the building, including laboratory rooms, light manufacturing areas and office/distribution space, required costly buildouts with tenant improvement dollars as the primary tenant expanded into additional space, requiring additional structure. Despite strong market fundamentals, the disruption with the COVID-19 pandemic changed the economy overnight. However, the financials and credit profile of this project only grew stronger and more viable with time.

    George Smith Partners was able to identify a capital source that understood both the quality of the asset and the ability of the Sponsor to execute on the intended business plan. Amidst a time of great market volatility and economic uncertainty, the Capital Provider held their original pre-COVID structure and terms.

    Proceeds: $19,775,000
    LTC: 65%
    Amortization: Interest Only
    Guaranty: Non-Recourse

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    $40,000,000 Non-Recourse, Cash-Out Bridge Financing for a 180-Key Radisson RED Hotel; Portland, OR

    April 1, 2020

    Transaction Description:

    George Smith Partners arranged $40,000,000 in non-recourse, cash-out bridge financing for a 180-key Radisson RED hotel in Portland, Oregon. The bridge facility allowed the Sponsor to pay off its construction loan, return capital to investors and provided additional runway for the hotel to ramp-up. The hotel occupies the first nine floors of a 19-story, Class-A, mixed-use high-rise tower that was delivered in Q4 2018. The remaining 10 floors are Class-A office space leased out at some of the highest rental rates in the Portland MSA.

    GSP was able to leverage market interest to secure the most competitive terms available by focusing attention on the strong sponsorship and its long history of development and investment in the local Portland market. The location of the Property is adjacent to Portland State University and walking distance to the heart of Downtown Portland. The Property offers uniqueness of a select service hotel in a Class-A high-rise. The selected Capital Provider was able to recognize the Property’s intrinsic value and execute in a timely manner. The 75% LTV, non-recourse execution was fixed at a 7.75% interest rate and included a sizable cash-out. The Sponsor concurrently sold the office portion to a core, trophy office buyer through a separate sale.

    Rate: Fixed at 7.75%
    Term: 3 + 1 + 1
    Amortization: Interest Only
    LTV: 75%
    Guaranty: Non-Recourse

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    $23,750,000 Bridge Financing for a 229-Key Hilton Branded Hotel in Ramp Up; Minneapolis, MN

    March 4, 2020

    Transaction Description:

    George Smith Partners arranged $23,750,000 in bridge financing for the refinance of a 229-key, full-service hotel located in Downtown Minneapolis, Minnesota. The Hilton branded hotel is proximal to major demand drivers and includes a partnership with a Fortune 500 company, with headquarters across the street from the asset. The Property, built in 1986, underwent a PIP in 2017. The bridge facility allowed the Sponsor to pay off existing debt, which had an approaching maturity date in addition to completing the ramp-up period, forecasted to finish in 2020.

    GSP conducted a full marketing process and was able to leverage market interest to secure the most competitive terms available by focusing attention on the superior location as well as the Sponsor’s familiarity and confidence in the market. The Sponsor developed, owns, and operates a 290-key hotel less than a mile for the Subject Property. The selected Capital Provider structured around the current market softness, recognizing the strength of the Sponsor and their ability to successfully operate hospitality properties.

    All terms Confidential

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    $15,250,000 Non-Recourse, Cash-Out Bridge Financing for a 200-Unit Multifamily Property in a Tertiary Market; 80% LTC at 375 over 1-Month Libor; Rexburg, ID

    February 26, 2020

    Transaction Description:

    George Smith Partners arranged $15,250,000 in non-recourse, cash-out bridge financing for a 200-unit multifamily property in Rexburg, Idaho. While home to BYU-Idaho (with a student population of 25,000), Rexburg is a small town with a non-student, resident population of only 20,000. The Sponsor approached GSP looking to refinance out a recourse construction loan from a local bank and also return capital to investors, while providing the Property time to season prior to selling or refinancing.

    By emphasizing the demand driven by BYU-Idaho’s presence, the strong sponsorship with a long history of development and investment in the local market, and the Property’s robust in-place cash flow, GSP ultimately sourced a prominent debt fund capital provider that was comfortable assuming tertiary market risk. The 80% loan to cost, non-recourse execution included a sizeable cash-out, given that the in-place construction loan was sized to 65% loan to cost. The loan floats at a spread of 375 over the 1 Month Libor (5.4% all-in today) and is interest only.

    Rate: 1 Month LIBOR + 375
    Term: 2 Years + 1 Year Extension
    LTC: 80%
    Amortization: Interest Only
    Guaranty: Non-Recourse

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    $5,700,000 Non-Recourse Acquisition Bridge Financing for a 2-Property Multifamily Portfolio; 80% LTC and 7.5% Debt Yield; Gardena, CA

    February 5, 2020

    Transaction Description:

    George Smith Partners arranged $5,700,000 in non-recourse acquisition bridge financing for a two-property value-added multifamily portfolio in Gardena, CA. The two 1960’s vintage properties had significant deferred maintenance and below market rents. The Sponsor’s business plan was to reposition the Property and release the units at market rents. Maximum proceeds, despite a tight debt yield, and non-recourse were priorities.

    George Smith Partners sourced a lender familiar with the market and willing to size the loan to a 7.5% debt yield, which resulted in 80%LTC. The loan, which offers an attractive parri-passu funding structure, includes future funding for a full gut renovation of unit interiors and an exterior upgrade. The three-year bridge loan is interest only and carries a fixed interest rate of 6.90%. Interest is not charged on the holdback until funds are drawn. The lender fee was limited to a 1.00% origination fee with no exit fee. The Lender did not charge a legal fee and closed the transaction in 30 days from term sheet execution.

    Rate: 6.90%
    Term: 3 Years
    Amortization: Interest only
    LTC: 80%, including future funding
    Guarantee: Non-Recourse
    Lender Fee: 1% in / no exit fee
    Prepayment Penalty: 12-month interest guarantee

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