$85,800,000 Senior Construction-to-Perm Financing for a 372-Unit Multifamily Project; Sacramento, CA
May 16, 2023
George Smith Partners successfully arranged $85,800,000 in construction financing for a 10-building, 372-unit multifamily development in Sacramento, CA. The project is located in an opportunity zone of Sacramento and is phase A of a 2,200-unit, transit-oriented development. Breaking ground in Q2 2023, this phase of the development will consist of studios, one, two, and three-bedroom apartments with best-in-class amenities, including a pool, fitness center, playground, and clubhouse.
The Sponsor engaged GSP pre-pandemic. A previous developer had acquired the land in the early 2000s and after completing 95% of the site’s infrastructure, subsequently filed for bankruptcy protection in 2017. The site was given back to the lender in early 2019 and was awarded to the Sponsor by the urging of the City of Sacramento because of their local reputation related to successful projects in the downtown sub-market. Our Sponsor originally intended to begin construction in early 2020 but decided to pivot layout designs to match the new needs of its renters due to the pandemic.
After an extensive capital marketing process, GSP was able to secure financing to the Sponsor’s parameters with the upside of not having a rate cap requirement. The financing structure is also unique in that it transitions from an interest-only period to a traditional permanent fully amortizing financing automatically after month 48. Early prepayment is available even during the construction period and then steps down until a fully open prepay year 4 after CofO.
Rate: 1-Month SOFR + 3.50%
Term: 15 Years
Amortization: Interest Only for First 4 Years, then 30 Year Amortization
Guaranty: Full Recourse with Burn-Off to 20% at CofO
$33,800,000 Construction Loan for 83-Unit Multifamily Property with 50% Co-living Units; Los Angeles, CA
May 3, 2023
George Smith Partners secured $33,800,000 of senior construction financing for the development of an 83-unit ground-up multifamily building in an infill Los Angeles location. The 83 units will be comprised of 50% conventional units and 50% co-living units. While the property is in an A+ location, many lenders were uncomfortable with co-living in general. GSP was not only able to find a lender that was comfortable with the product type but was also able to get to almost 70% of total project cost. The lender also gave the borrower credit for the entitled value of the land as opposed to their acquisition cost from the year prior. The land equity contributed a significant portion of the total equity required.
The construction loan was priced at Prime + 0.75% and the loan term is 18 months plus one 6-month extension option.
Rate: Prime + 0.75%
Term: 24 Months with Two 6-Month Options to Extend
Stabilized LTV: 55%
$8,500,000 Construction Financing for 35-Unit Apartment Building; Los Angeles, CA
April 26, 2023
George Smith Partners secured $8,500,000 of senior construction financing for the development of a 35-unit ground-up multifamily building in Los Angeles, California. GSP was sourcing financing when banks were getting increasingly conservative in their underwriting, with leverage falling and compensating deposits required. Given the strong track record of the developer, GSP identified a bank that was able to maximize the leverage with no deposits held at the bank. The Sponsor was also able to use land equity in the capital stack.
The construction loan was priced at Prime + 1.25%. The loan term is 18 months plus one 6-month extension option.
Rate: Prime +1.25%, with a Floor of 6.50%
Term: 18 Months with One 6-month Option to Extend
Stabilized LTV: 60%
$25,590,000 Stretch Senior Construction Financing for a Community of 90 Modular, Build-for-Rent Homes; Asheville, NC
March 22, 2023
George Smith Partners secured $25,590,000 of stretch senior financing for the construction for a community of 90 modular homes for rent in Asheville, NC. GSP quickly identified a debt fund that suited the client’s needs by arranging an in-person meeting to discuss the project. The Lender recognized the strength of the Asheville market.
The modular homes will be constructed off-site and set onto finished lots over 36 months. The community features spacious floor plans and a common area for future residents. This is the first build-to-rent community for the client and we expect there to be many more.
Rate: 3-Month SOFR + 675
Term: 36 Months with Two 3 Month Extensions
- Advisors: Ed Steffelin Evan Kinne Jordan Lipton
Land Financing for Entitled Land; Los Angeles, CA
February 8, 2023
George Smith Partners secured a $5,100,000 land loan entitled for a 69-unit multifamily building slated to begin ground-up construction in late 2024. The borrower purchased the original parcel 17 years prior as a fully occupied 32-unit property; since then, the building has been vacated and demolished. To achieve full-term proceeds, the appraisal needed a land value above the original PSA, including the previous building collateral. GSP utilized a broad comp set of per-acre comps, leaning on footprint analysis instead of per-unit. Additionally, the lender’s due diligence concluded there was value creation through both the fully approved entitlements and the fact the Sponsor was able to achieve a condo tract map, giving them optionality for apartments or for-sale units.
Rate: 7.75% Fixed
Term: 18 Months + Two 6-month Extension Options
Origination Fee: 0.75%
Prepayment Fee: None
- Advisors: Jonathan Lee
Construction Multifamily Takeout Financing; Los Angeles, CA
December 15, 2022
George Smith Partners arranged permanent financing for the refinance of a stabilized 12-unit multifamily property in Los Angeles, California. The Sponsor finished construction on the Property in the middle of the current rate hike cycle. GSP identified a Capital Provider who allowed an early rate lock before Certificate of Occupancy was issued. The Lender allowed the borrower to go into application with very little lease up, but with the understanding that the property would be stabilized by closing. Although the closing took slightly longer than the 60 day term of the rate lock, the Lender held the rate for no additional charge. The bank did not require deposits to be held at their branch except for the subject property’s operating account.
Term: 5 Years Fixed
Amortization: N/A, Interest Only for all 5 Years
Prepayment Penalty: Stepdown; 3/3/2/1/1
Deposits Required: None
- Advisors: Matthew Kirisits
$27,020,000 Construction Financing for a 95% Preleased, Grocery-Anchored Retail Center; Inland Empire, CA
November 30, 2022
George Smith Partners successfully placed $27,020,000 (83.5% LTC) of construction financing for the development of a 95%-preleased, grocery-anchored retail center in the Inland Empire. Pre-leased with credit tenants like Sprouts, Burlington, and Five Below, the remaining tenant mix included a diverse assortment of community-oriented tenants with strong overall synergy. With loan proceeds funding the acquisition of the 15-acre site, the Sponsor planned to develop ¾ of the site as the aforementioned retail development, holding on to 4-acres as a second phase. Furthermore, the Sponsor planned to sell a pad site to a future tenant at close of the land.
Although capital providers continued to be hesitant in financing retail construction, GSP was able to source competitive financing through the development’s strong sponsorship and significant preleasing. Most importantly, GSP found a lender comfortable with the sponsor’s proposed equity structure, which involved a minimal initial cash contribution followed by additional equity contributions from pad and land sales.
Loan Term: 36 Months
Interest Rate: SOFR + 3.45%
$46,800,000 Construction Financing for the Development of a 247-Unit Build-to-Rent Community; Foley, AL
November 21, 2022
George Smith Partners is pleased to announce the successful arrangement of a $46,800,000 construction loan for the development of a 247-unit build-to-rent community in Foley, Alabama. Through GSP’s strong relationship with the bank, GSP was able to successfully negotiate a 65% LTC, Non-recourse loan to fund parri-passu with the JV’s equity at WSJ Prime + 1.25% through construction. Pricing reduces and leverage increases to 70% LTC upon preset leasing hurdles.
Rate: Prime + 1.25%
- Advisors: Ed Steffelin Evan Kinne Jordan Lipton
$13,990,000 Construction Revolver Financing for 23 For-Sale, Detached Single Family Residences; Prescott, AZ
November 9, 2022
George Smith Partners successfully arranged $13,990,000 in acquisition and construction revolver financing for a 23-lot, for-sale, detached single-family residential community in Prescott, AZ. The Project is located in a gated community within the 1,100-acre Prescott Lakes master-planned community. The City of Prescott, known for its seasonal climate, quality of life, and low property taxes has experienced tremendous population growth. The Sponsor, a repeat client, recognized the opportunity to develop much-needed housing for the area. Despite the increasingly challenging market, GSP leveraged its expertise and relationships to identify a construction lender that had a deep understanding of the submarket, understood the projected sales prices (appraisal requirement waived), and recognized the Sponsor’s ability to execute on their plan. GSP was able to negotiate a high-leverage, fixed-rate loan and worked efficiently with the Lender throughout the one-month closing process.
Rate: 9.25% Fixed
Term: 18 Months, with Two 3-Month Extension Options
Amortization: Interest Only
LTC: 82% (combined on land & construction)
Guaranty: Non-Recourse, with Completion Guaranty
Prepayment: 9 Months Minimum Interest
- Advisors: Evan Kinne Ed Steffelin Miles Musalman Jordan Lipton
$57,900,000 Participating Construction Financing for 187-Unit Multifamily; Tempe, AZ
September 8, 2022
George Smith Partners successfully arranged $57,900,000 in non-recourse, construction financing for a mid-rise, Class A, 187-unit multifamily development in Tempe, AZ. The Project will serve the rapidly developing area of north Tempe. The Property is located immediately adjacent to a Valley Metro light rail stop, offering residents convenient access to Downtown Tempe, Arizona State University, Sky Harbor Airport, and downtown Phoenix.
The Sponsor, headquartered in nearby Scottsdale with a successful track record of multifamily and commercial developments, engaged GSP in 2020 to source high-leverage, non-recourse financing. Despite being relatively early in the Project’s development stage, GSP sourced a Lender offering a 90% LTC loan, which includes a participating feature. This unique structure features the Lender sharing profits with the Sponsor in exchange for the high leverage financing.
The construction budget grew significantly during the longer than expected entitlement and permitting process. Fortunately, thanks to GSP’s close relationship with the Lender, a commensurate increase in market rents, and the strength of the Sponsor, the final loan amount was nearly 40% higher than that of the original loan application in 2021.
Rate: 4.25% Fixed
Term: 5 Years
Amortization: Interest Only
$9,000,000 Construction Financing for 28-Unit Apartment Building; Los Angeles, CA
August 17, 2022
George Smith Partners secured $9,000,000 of senior construction financing for the development of a 28-unit ground-up multifamily Building in Los Angeles, California. The Project will be a conventional 28-unit property with 4 stories, including 12 one-bedroom units and 16 two-bedroom units. The construction loan floats at a rate of Prime + 1%. The 75% loan-to-cost construction loan also comes with the option to convert to a 5-year mini-perm loan upon completion; based on the 5-Year Treasury plus a margin of 2.75%, with a 3.95% floor, eliminating any future financial risks. GSP sourced a Lender that was able to move efficiently and most importantly accommodate the Borrower’s development timeline and experience.
Rate: Prime +1%, with a Floor Rate of 5.00%
Term: 18 Months with Two 6-Month Options to Extend
Stabilized LTV: 65%
Mini-perm Option: 5-Year Treasury + 2.75% with a 3.95% Floor
$21,600,000 Construction Financing and $10,700,000 JV Equity for 142-Unit BTR Community; Savannah, GA
July 13, 2022
George Smith Partners successfully advised on $21,600,000 in construction financing and $10,700,000 in JV Equity for the development of a 142-unit built-to-rent community in Savannah, GA. The Project features 142 detached single-family homes on a 66.15-acre site. The homes will feature three to four bedrooms with an average square footage of 1,500 across four distinct home styles.
GSP worked through several strategies with the Sponsor to source the 65% LTC, non-recourse construction debt financing, and a 90% joint-venture equity partner for the ground-up, build-to-rent community. With our marketing efforts highlighting the strength of the Savannah rental market, this project received interest from several groups for both debt and equity.
The Sponsor projects vertical development to be completed by the end of this year and lease-up to be finalized by Q1 2025.
Rate: WSJ Prime + 50 with a 4.00% Floor
Term: 3 Years
Amortization: Interest Only