Bridge Loans and Financing

Transaction Description:

George Smith Partners structured $1,590,000 of acquisition bridge financing for a 6-unit multifamily building in a well-located area of the Koreatown section of Los Angeles. The existing building is almost 100 years old and underutilizes the potential density that the site allows for. The Sponsor plans to entitle the site for a larger multifamily development down the line. A 12-month term will give them ample time to prepare to be shovel ready. GSP was able to secure a high leverage execution between a senior lender and a mezzanine lender that provided 79.5% LTV based on purchase price. The blended rate of the total debt stack is 8.84% and is interest only. While the senior loan is non-recourse, the mezzanine lender does require recourse on their portion.

Transaction Description:

George Smith Partners successfully placed $21,000,000 in bridge financing for a 111-unit apartment community in St. Louis, Missouri that retired a high-leverage construction loan, funded a lease-up and operating reserve, converted from a recourse to non-recourse structure, materially lowered the Borrower’s cost of capital, and provided enough proceeds at close (100% of loan proceeds were released upon loan closing) to cash out 105% of the Borrower’s cost basis, although the Property was less than 10% occupied. The eighteen-month loan term provides the Borrower with time to stabilize and season the asset prior to either selling or refinancing it with long-term permanent debt in today’s low interest rate environment. GSP leveraged its expertise of the St. Louis market, long-standing lender relationships, and capital markets creativity to achieve the Borrower’s goals, which was primarily the maximum return of capital.

Transaction Description:

George Smith Partners arranged $8,400,000 in acquisition and bridge financing for the purchase and reposition of a currently 50% occupied, 1960’s-built apartment complex located in Hayward, CA. Our Sponsor placed the portfolio under contract during the COVID-19 pandemic. The financing includes $1,350,000 of future funding for extensive renovations of unit interiors and exterior upgrades, including an earthquake retrofit. Interest is not charged on the holdback until funds are drawn.

GSP identified a national balance sheet lender with an intimate knowledge of the Hayward submarket. They structured and capitalized an interest reserve to cover the shortfall of cash flow during repositions. Sized to 76% of the total capitalization, the three-year bridge loan is interest only for 36 months and carries a floating rate of LIBOR + 4.25% and include two extension options for up to a term of five-years.

Transaction Description:

George Smith Partners structured and arranged $45,600,000 in bridge financing for the recapitalization of the Lido Marina Village, a 116,000 sf multi-block, waterfront boutique retail and office property on Balboa Peninsula in Newport Beach. Lido Marina Village features retail, restaurant, and office space in 14 separate structures including prime waterfront retail and restaurant spaces featuring spectacular harbor views, along with 47 boat slips, creating an iconic Newport Beach destination. Some highlighted restaurants include Orange County’s only Nobu and Malibu Farm locations. Retail tenants include first-to-market “laid back luxe” retailers such as Elysse Walker, LoveShackFancy, Serena & Lily, the RealReal, and Jenni Kayne. The Property stretches from the waterfront, across a public street and walkway to the Via Lido street-front retail. It also includes a 372-space parking structure and 91 on-grade parking spaces. The Project is located on 17 legal parcels totaling 3.5 acres, with 4 parcels held as leasehold interests. Since the acquisition in 2013, the Sponsor successfully rebranded Lido Marketplace as a super high-quality boutique and restaurant destination, featuring a “who’s who” of tenants. Even during the pandemic, Lido Marina Village occupancy stayed high, and the Sponsor signed new leases at “high street” rents. The Property has been thriving in part due to their shoppers feeling comfortable in the open air, pedestrian friendly and waterfront environment.

Transaction Description:

George Smith Partners secured a $16,500,000 loan for a 173-unit multifamily property in Sunnyvale, CA. The first mortgage has a 12-month term at 5.9% with no prepayment penalty. The loan may be extended for an additional 12 months at 6.9%. The Sponsor developed the Property and has owned it for over 40 years. In the past year, occupancy and collections were negatively affected by COVID-19’s effects on tenants’ ability to pay rent. Occupancy was also negatively affected by the significant upgrades and renovations made to a much larger neighboring property which undertook an aggressive post-renovation releasing program. The Sponsor engaged GSP to supply a quick-close solution when the existing lender declined to renew its loan. Unlike most lenders, GSP’s Lender did not require reserves for potential COVID rental interruptions and closed within 10 days of the issuance of its term sheet without requiring an appraisal or other third-party reports.

Transaction Description:

George Smith Partners secured $5,376,000 of bridge financing for the refinance of a two-tenant industrial building in Fairfield, CA. The Property is favorably located within a mile of three major freeways and is only a 45-minute drive to both San Francisco and Sacramento. The building is currently 100% occupied, but there were cash-out proceeds required to reposition the Property to make it more attractive to potential buyers. The 26,000 SF building also has 95,000 SF of improved yard space adjacent, which is a major draw for the current tenants. GSP was able to secure a lender that could get comfortable with a majority of the income being derived from the yard space. The financing was comprised of a senior and a mezzanine loan. The blended terms provided a 60% LTC priced at 7.43% with a 1.20% origination fee. The 12-month terms provide the Sponsor the ability to execute his business plan.

Transaction Description:

George Smith Partners secured non-recourse bridge financing for a manufacturing facility in California. The Sponsor’s goal was to expand their manufacturing facility from 120,000 s.f. to 200,000 s.f. for their current tenant and provide them with clean manufacturing and dock high loading doors in the warehouse. GSP was able to secure a lender that found the location of the Property desirable due to the close proximity and access to major highways, the Tenant’s long-term investment in the building/equipment and most importantly, the Sponsor’s strong experience and track record.

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).

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.

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.

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.

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.