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Bridge Loans and Financing

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    $16,500,000 Non-Recourse, Pre-Development Bridge Financing for Five-Property Co-Living Land Portfolio; Los Angeles, CA

    February 10, 2021

    Transaction Description:

    George Smith Partners secured $16,500,000 in bridge financing for a five-parcel land portfolio located in Los Angeles, CA. The five individual parcels are entitled (one in process of entitlements) for co-living developments totaling 211 units and 879 beds. The non-recourse loan refinanced existing debt, while providing for permitting and carry costs prior to development, with four assets slated to break ground in early 2021, and the fifth in late 2022. The loan is sized at approximately 50% LTC on a 6.90% fixed rate, non-recourse, with a 12-month term. The loan did not require an interest reserve.

    Given COVID related permitting delays and perceived impacts to the co-living product type brought by the pandemic, GSP was able to identify a lender that understood the stability of the submarkets for future development and the resilience and growth of co-living over the next several years. The infill development sites, and high-density entitlements provide strong value to the collateral base for this financing. The loan closed within five weeks of term sheet execution (including the holiday and New Year’s break).

    Rate: 6.90%
    Term: 12 months with one 12-month extension
    Amortization: Interest Only
    LTC: 50%
    Guaranty: Non-Recourse
    Lender Fees: 1.00%
    Prepayment: Open

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    $83,000,000 Bridge Financing for Pre-Certificate of Occupancy 250-Unit Class-A Multifamily Development; San Fernando Valley region of Los Angeles, CA

    February 3, 2021

    Transaction Description:

    George Smith Partners secured an $83,000,000 senior bridge loan for the construction completion and lease up of a mixed-use community consisting of 250 multifamily units and 6,600 SF of ground-floor retail in the San Fernando Valley, just north of Los Angeles, CA. The non-recourse bridge financing carries a three-year term at LIBOR + 5.00%, reducing to LIBOR + 4.50% upon the Project’s receipt of Certificate of Occupancy.

    The loan provides proceeds for construction completion – anticipated to complete in early 2021 – while allowing for an extended lease up period prior to stabilization. The strength and track record of the Sponsor, coupled with the centralized location within the San Fernando Valley, ensured that the Project would complete and stabilize as anticipated.

    Rate: L+500 until construction completion, reducing to L+450 thereafter
    Term: 3-year with two 1-year extensions
    Amortization: Interest only
    LTV: 75.0%
    LTC: 79.9%
    Guaranty: Non-Recourse

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    GSP Structured Highly Leveraged, Quick Close Acquisition Capital of $2,695,000 for 16-Unit, Multifamily Property; Koreatown area of Los Angeles, CA

    January 27, 2021

    Transaction Description:

    The Sponsor had the opportunity to purchase a well-located property in Koreatown well below the market value because of the sponsor ability to close quickly with the 80% LTC quick-close loan. With the global pandemic, the property had 2 vacancies and a few non-paying residents. Because of the quick timing and the short-term distress in the cashflow, the Property would not qualify for bank or agency financing at this time. The sales broker and the Sponsor approached George Smith Partners for highly leveraged, quick purchase financing. GSP arranged a $2,695,000 non-recourse acquisition loan for the 16-unit apartment project. Despite marketing this deal during the global pandemic with vacancies and unpaying tenants, GSP successfully structured a first trust deed from a debt fund as well as a preferred equity B piece with a different investor to almost 80% of the purchase price. The non-recourse facility was priced at an interest-only fixed rate with a blended rate of 7.97% with a 12-month term plus a 6-month extension option. Thanks to our long-standing relationship with this debt fund and preferred equity investor, GSP was able to close this transaction in less than 10 days from signing the term sheet.

    Blended Rate: 7.97%
    Term: 12-month Bridge Loan plus a one 6-month extension
    Loan-to-purchase: 80%
    Prepayment Penalty: None

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    $11,200,000 Non-Recourse, Cash-Out Bridge Refinance for Two-Story Retail in Koreatown; Los Angeles, CA

    January 27, 2021

    Transaction Description:

    George Smith Partners secured a $11,200,000 non-recourse bridge refinance with cash-out for a two-story retail plaza in the heart of Koreatown in Los Angeles, CA. Located next to a Metro D (Purple) Line subway station along a very busy stretch of Wilshire Boulevard, the Property is anchored by 7-Eleven and Carl’s Jr. and features a fast-casual food hall on the second floor. However, the food hall has been closed due to COVID.

    The Sponsor, a prolific developer and property owner, recently announced plans to replace the plaza with a 17-story, mixed-use apartment tower that includes affordable units and some commercial space. GSP was engaged to source a bridge solution to pay off the existing maturing loan and provide prepayment flexibility once the Project’s entitlements and permits are secured.

    GSP focused on the strength of the Sponsor, the bustling and densely populated Koreatown market, home to several large and small-scale projects currently planned or under construction and the Purple Line Extension project which will provide a dependable, high-speed alternative for travel between downtown Los Angeles, Miracle Mile, Beverly Hills and Westwood. The financing closed within 11 days of the term sheet being signed.

    All Terms Confidential

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    $39,500,000 Non-Recourse Bridge Financing for a 148-Unit Multifamily Acquisition, Mid-Conversion from Office to Multifamily; Santa Ana, CA

    January 6, 2021

    Transaction Description:

    George Smith Partners arranged $39,500,000 in non-recourse financing for the acquisition of a vacant 10-story office building, currently mid-conversion to a 148-unit, Class-A multifamily building. The Property is the only high-rise apartment building in Downtown Santa Ana. The financing allows the Sponsor to complete the conversion, stabilize the Property, and refinance into long-term permanent debt. While the apartment market is very strong in Downtown Santa Ana, there are no other high-rise apartment buildings and no direct comparable properties. Not only did the Lender have to get comfortable with the construction completion, they also had to get comfortable with a new product type in this market.

    GSP identified a local lender that not only understood the market and demand for multifamily but was comfortable with the Sponsor’s ability to step-in and complete the conversion.

    Rate: LIBOR + 7.00%
    Term: 18 Months
    LTV: 77%
    LTC: 74%
    Amortization: Full Term Interest Only
    Prepayment: 10-month Make-Whole
    Guaranty: Non-Recourse

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    $15,500,000 Non-Recourse Bridge Financing for a Mid-Construction 3-Property Multifamily Portfolio; Los Angeles, CA

    December 16, 2020

    Transaction Description:

    George Smith Partners secured a $15,500,000 bridge loan for three newly constructed, pre-Certificate of Occupancy multifamily assets located in Los Angeles, CA. The non-recourse loan provided significant cash-out proceeds to the sponsor, refinanced outstanding construction debt and capitalized construction completion costs. The loan is sized at 70% LTC on a 4.90% fixed rate, non-recourse, 12-month term. The loan did not require an interest reserve or capitalized carrying costs.

    The loan is secured by three new construction multifamily assets in the Koreatown and Eagle Rock submarkets of Los Angeles, totaling 57 units, in various stages of completion. All will be complete by Q1 2021, with lease up occurring throughout the balance of 2021. Given COVID related delays and slower-than-anticipated leasing velocity, GSP was able to identify a lender comfortable with the high quality, new construction product, and the long-term stability of these submarkets. The loan closed three weeks from term sheet execution.

    Rate: 4.90% Fixed
    Term: 12 Month
    Amortization: Interest Only
    LTC: 70%
    Guaranty: Non-Recourse
    Lender Fees: 1.00%
    Prepayment: Open

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    Cash-Out Bridge Loan for Medical Office Building, Laguna Niguel, CA

    November 25, 2020

    Transaction Description:

    George Smith Partners secured a senior bridge loan for a 21,303 square foot office building in Laguna Niguel, CA. The Subject Property was unencumbered; hence the entire loan was comprised of cash-out proceeds which the Borrower is utilizing for a separate project they are developing. The loan represents approximately 60% of the original purchase price and was structured with a 1-year initial term with interest only payments. The loan allows for open prepayment and carries two 6-month extension options.

    The loan was collateralized by a recently renovated 21,303 square foot office building. The building had recently upgraded the facade, landscaping, parking lot, entrance, lobby, bathrooms, HVAC and other interior finishes. A new roof and solar system had also been installed. The building was 47% occupied at loan funding. The first-floor single tenant had vacated at lease expiration several months prior leaving limited debt service coverage and unusually high vacancy compounded by other COVID related issues.

    GSP selected a lender that was able to move incredibly quick to accommodate the Borrower’s development timeline. The Lender’s credit department approved the loan one-week post submission and did not require an appraisal to close. The Lender underwrote to the stabilized asset value, closed with no debt service reserve and no personal recourse.

    Rate: 5.90%
    Term: 12 months
    Amortization: Interest Only
    Loan Fee: 1.0%
    Prepayment: Open
    Options: Two 6-Month Extensions; 0.50% Fee
    Personal Guaranty: None

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    $44,000,000 Non-participating Bridge Financing for Industrial Acquisition and Reposition, 95% LTC, West Coast

    November 25, 2020

    Transaction Description:

    George Smith Partners successfully arranged $44,000,000 in non-recourse, non-participating bridge financing at 95% of cost for the lease-up and repositioning of a 5-property, 650,000 SF, industrial complex located on the West Coast. The Sponsor purchased the complex vacant and the seller carried the first mortgage for 4 months. From the open of escrow with the Seller, to the closing of this loan, there was over 82% of the available space leased making up 77% of rent with letters of intent for the remainder of the space. Although this was during the COVID-19 pandemic, and there was considerable deferred maintenance and capital expenditure required to get the properties rent ready, the space leased quickly due to the Sponsor expertise and relationships and a strong submarket.

    The loan provides funds for the deferred maintenance, the capital expenditures, the tenant improvements, leasing commission and carry until the tenants are in and paying rent. Additionally, there is an earn-out of $2,000,000 after the 18th month as the asset has other potential value-add attributes.

    Rate: LIBOR + 3.95% with a floor on LIBOR of 50 basis points
    Term: 3 years interest only
    Amortization: Two 1-year extensions with 30-year amortization
    LTC: 95%
    Guaranty: Recourse, Completion of deferred maintenance and Cap-Ex, “bad” acts and environmental
    Lender Fees: 1% origination and 0.25% exit fee

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    $4,700,000 Non-Recourse, Bridge Financing for Mid-Construction Apartment Project; Pico-Robertson Area of Los Angeles, CA

    November 18, 2020

    Transaction Description:

    George Smith Partners arranged $4,700,000 in non-recourse, bridge financing for an 85% complete, 13-unit apartment project in the Pico-Robertson area of Los Angeles, CA. Despite marketing this deal as a construction take-out loan for an 85% complete project during the global pandemic, GSP successfully engaged a debt fund to take out the existing construction loan with additional funds to complete construction. The non-recourse bridge facility was priced at an interest-only rate of 5.90% with a 12-month term plus a 12-month extension option. Thanks to GSP’s long-standing relationship with this debt fund, we were able to close this transaction in just 8 business days.

    Rate: 5.90% Interest Only
    Term: 1 + 1
    LTC: 80%
    Guaranty: Non-Recourse

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    $6,275,000 Bridge Financing for a 132-Unit Apartment Community; San Antonio, TX

    November 18, 2020

    Transaction Description:

    George Smith Partners placed a $6,275,000 bridge loan for the refinance of a Class-B 132-unit apartment community in San Antonio, TX. The loan is fixed at 6.45% for three years with full term interest-only payments. The term sheet was signed after the COVID-19 crisis and ensuing economic volatility. GSP identified a balance sheet lender with in-house loan servicing to work with the Sponsor throughout the reposition of the asset. The Property underwent a change in property management in the past few years and required some property maintenance in the reposition. GSP worked with the Client on the original acquisition bridge loan and had to re-evaluate the business plan once the market changed and occupancy dipped due to COVID-19.

     

    Rate: 6.45% Fixed
    Term: 3 Years
    Amortization: Full Term Interest-Only
    Loan-to-Value: 65%
    Prepayment: 15 Months Minimum Interest Period
    Loan Fee: 1% Origination Fee, 0.75% Exit Fee
    Guaranty: Non-Recourse

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    $13,340,000 Acquisition/Bridge Loan for Six-Property Multifamily Portfolio; Long Beach, CA

    November 18, 2020

    Transaction Description:

    George Smith Partners identified a national balance sheet lender with an intimate knowledge of the submarket and arranged $13,340,000 in acquisition/bridge financing for the purchase and reposition of a six-property multifamily portfolio located in Long Beach, CA. The Sponsor placed the portfolio under contract during the COVID-19 pandemic.

    The loan includes a future funding component in which interest is not charged on the holdback until funds are drawn. This Capital Provider also structured and capitalized an interest reserve to cover the shortfall of cash flow during repositions. The three-year bridge loan is interest only for 36 months and carries a floating rate of LIBOR + 5.00% and includes two extension options for up to a term of five years. Our Sponsor’s business plan included a strategy to sell specific assets during the hold period as allowed for by the favorably structured release provisions.

    Rate: LIBOR + 5.00%
    Term: 3 Years
    Amortization: Interest Only
    Loan-to-Cost: 76%
    Prepayment: 12 months
    Loan Fee: 0.75% in / 0.75% exit

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    $8,152,500 Conversion to Co-Living, 68% LTC, Heavy-Lift Bridge-to Perm Loan; San Francisco, CA

    November 11, 2020

    Transaction Description:
    George Smith Partners placed the $8,152,500 bridge-to-mini perm loan for the conversion of an existing 12-unit multi-family community into a 17-unit 44-bed co-living community. The 68% LTC bridge loan converts to a 5-year mini-perm loan fixed at CMT + 2.5% with a 3.75% floor.

    Challenge/Solution:
    The Project came to GSP half-way through construction and was being funded by a lender that had filed bankruptcy with proceeds that were insufficient to complete the new business plan. GSP put the loan under application pre-COVID with a new business plan that included (as a condition in closing) approvals for a 4th floor penthouse/useable roof top level. While in application, the construction and the penthouse level approval process came to a halt due to COVID causing stress on both the existing loan (nearing maturity) as well as the new loan underwriting. The challenges associated with co-living as a new asset class resulted in additional scrutinization from the new lender as well as the appraisal which had a negative impact on value. GSP was able to resolve the valuation issues by successfully arguing the merits of the Project as well as successfully negotiating a waiver of the exit fee on the previous loan which resulted in zero impact to the loan proceeds and the Borrower’s out of pocket cash required at closing.

    Construction Loan:

    Rate: Prime plus 1% with 5% floor
    Term: 18 Months
    LTC: 68%
    LTV: 65%

    Mini-perm Loan:

    Rate: CMT + 2.25% with 3.75% floor
    Term: 5 Years
    Amortization: 30 years
    Prepayment: 5, 4, 3, 2, 1 open