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Construction

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    Construction Multifamily Takeout Financing; Los Angeles, CA

    December 15, 2022

    Transaction Description:

    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.

    Rate: 4.65%
    Term: 5 Years Fixed
    Amortization: N/A, Interest Only for all 5 Years
    Prepayment Penalty: Stepdown; 3/3/2/1/1
    Deposits Required: None

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    $27,020,000 Construction Financing for a 95% Preleased, Grocery-Anchored Retail Center; Inland Empire, CA

    November 30, 2022

    Transaction Description:

    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%
    Guaranty: Non-Recourse

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    $46,800,000 Construction Financing for the Development of a 247-Unit Build-to-Rent Community; Foley, AL

    November 21, 2022

    Transaction Description:

    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%
    LTC: 65%
    Guaranty: Non-Recourse

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    $13,990,000 Construction Revolver Financing for 23 For-Sale, Detached Single Family Residences; Prescott, AZ

    November 9, 2022

    Transaction Description:

    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

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    $57,900,000 Participating Construction Financing for 187-Unit Multifamily; Tempe, AZ

    September 8, 2022

    Transaction Description:

    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
    LTC: 90%
    Guaranty: Non-Recourse

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    $9,000,000 Construction Financing for 28-Unit Apartment Building; Los Angeles, CA

    August 17, 2022

    Transaction Description:

    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
    LTC: 75%
    Stabilized LTV: 65%
    Guaranty: Recourse
    Mini-perm Option: 5-Year Treasury + 2.75% with a 3.95% Floor

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    $21,600,000 Construction Financing and $10,700,000 JV Equity for 142-Unit BTR Community; Savannah, GA

    July 13, 2022

    Transaction Description:

    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
    LTC: 65%
    Fee: 1.00%
    Guaranty: Non-Recourse

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    $23,000,000 Construction Financing and $9,800,000 Equity Placement for 108-Unit Build-to-Rent Community; Charlotte, NC

    June 22, 2022

    Transaction Description:

    George Smith Partners successfully advised on $23,000,000 in construction financing and $9,800,000 in JV Equity for the development of a 108-unit built-to-rent community in Charlotte, NC. The Project features 108 attached single-family homes situated atop a 13.5-acre site. The Site is located just seven miles outside of downtown Charlotte and less than 2 miles from UNC Charlotte. The houses have private entrances, individual backyards and feature shared amenities including a pool, jacuzzi, clubhouse, fitness facility, grilling area, pet park, and game room.

    GSP worked through several strategies with the Sponsor to source the non-recourse financing terms and joint-venture equity partner for the ground-up built-to-rent community. The Sponsor chose a joint-venture partner that GSP had introduced to the sponsors on a previous deal. GSP sourced several highly reliable lender options, and the Sponsor ultimately went with a lender headquartered in Charlotte that provided strong terms and would keep the loan on their balance sheet.

    The Sponsor projects vertical development to be completed by late 2023 and lease-up to be finalized by Q2 2024.

    Rate: SOFR + 5.50%
    Term: 3 Years
    LTC: 70%
    Fee: 1.25%
    Guaranty: Non-Recourse

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    $67,000,000 Construction Financing for the Development of a Mixed-Use Project; Garden City, ID

    April 20, 2022

    Transaction Description:

    George Smith Partners successfully arranged $67,000,000 ($286,324/unit) in non-recourse, construction financing for a 234-unit, mixed-use development in Garden City, ID. This mixed-use development will sit on the edge of the Boise River Greenbelt with stunning views overlooking the water, Boise city and the surrounding mountains. The Project will feature eight retail establishments including a public pub and over 16,000 square feet of open public plaza gathering space. The Project will provide much needed housing to the supply constrained Boise MSA that has seen double digit rent growth in the last few years.

    This mid-construction Project had the horizontal construction work completed. GSP was brought in to secure a debt provider to help recapitalize the Project and to see it through completion. With the recent financings in Boise that GSP had worked on, GSP put together a bespoke marketing process. The Project received a tremendous amount of interest from lenders and was put under application in just 7 days! GSP was able to identify a capital partner that provided the best overall value for the Sponsor with competitive pricing, familiarity with the submarket, comfort with the product type, and a closing timeline matching the Sponsor’s needs. The construction loan closed in mid-April providing the necessary financing to bring this Project to fruition. This Project is expected to begin lease up in the second half of 2023.

    Rate: Libor + 700 bps
    Term: 30 months
    LTC: 85%
    Guaranty: Non-Recourse

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    $47,000,000 Senior Construction Loan for a Mixed-Use Development; Azusa, CA

    April 11, 2022

    Transaction Description:

    George Smith Partners placed a $47,000,000 senior construction loan for the ground-up development of a mixed-use project in Azusa, CA. When complete, the 5-story project will consist of 127 apartment units and approximately 10,000 SF of 1st-floor commercial/retail/restaurant space. The Project is an integral component in the ongoing expansion of the City of Azusa’s Downtown district and is immediately adjacent to the Gold Line Station, which runs from Azusa Pacific University & Citrus College west to Downtown Los Angeles. This is the Sponsor’s second project in Azusa.

    A lack of comparable projects within the submarket posed a challenge. GSP emphasized the supporting employment centers inside a ten-mile radius, including the two colleges and eighteen medical facilities. In addition, a detailed breakdown of the San Gabriel Valley (SGV) submarket helped showcase the presence of a proportionally higher share of younger households than statewide. Data depicting home values that had grown out of reach for those living in a three-mile radius helped the case for a rental project. Further support was provided by the SGV submarket experiencing minor economic impact during the last two years and during Covid.

    GSP executed a full-time marketing campaign and identified the most economically beneficial capital stack scenario for the sponsorship with a stepdown in rate at Temporary Certificate of Occupancy (TCO).

    Rate: Floating rate (SOFR-based) with rate stepdown at TCO
    Term: 36 Months + Two, 12-month Extensions
    Stabilized Loan-To-Value: 70%
    Loan-To-Cost: 85%
    Guaranty: Non-Recourse

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    $32,000,000 Construction Loan and $9,000,000 LP Equity for the Development of a For-Sale Residential Project; Hayward, CA

    April 6, 2022

    Transaction Description:

    George Smith Partners placed a $32,000,000 construction loan and $9,000,000 of LP Equity for a for-sale residential project in Hayward, California with a repeat sponsor. This Project will have 55 townhomes providing much needed workforce housing to the area. The Project will also have some affordable units for sale.

    GSP was able to combine efforts and execute an effective and in-depth marketing campaign to help the capital markets understand the opportunity appropriately while finding solutions to various challenges that arose during the entire process. GSP marketed and highlighted the Project’s strength, the phasing nature of the build schedule, the projected sales prices and the forecasted upward trajectory in both sales price growth and sales pace growth. GSP was able to source capital providers on the Project that were comfortable with both the depth and experience of the Sponsor as well as believe in the continued growth of the Bay Area.

    Ultimately, the professionalism and expertise of GSP on coupled with the proficiency and extensive experience of the sponsor allowed for a successful close.

    Total Project Costs: $45,000,000
    Loan-To-Cost: 75%
    Stabilized Loan-To-Value: 65%
    Term: 30 Months
    Amortization: Interest-Only
    Guaranty: Non-recourse

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    $13,300,000 (total proceeds) Revolver Loan Placement for the Construction of a Pre-Sold 66-Unit Single Family Community for Rent; Montgomery, Texas

    March 30, 2022

    Transaction Description

    George Smith Partners successfully placed a revolving loan with a maximum line of credit of $6,900,000 (80% LTC) and total projected debt proceeds of $13,300,000 for the construction of 66 single family homes for rent in Montgomery, Texas. The loan is a floating rate of LIBOR plus 800 bps with a floor of 25bps and has an 18-month term with two, 3-month extension options. The Sponsors found a partner to acquire the homes at Certificate of Occupancy with a portion of the deposit on the sale to be released to the Sponsors as additional equity to help acquire the land. GSP leveraged its extensive expertise in the single-family rental sector to source revolving debt options that minimized the equity upfront and allowed the Sponsors to take down the entire Project without the need for an equity investor. This is one of the first of many built-for-rent transactions for the local Houston sponsors who have a strong track record in homebuilding.

    Rate: 8.00% Over Libor
    Term: 18 Months
    Amortization: Interest-Only
    LTC: 80%
    Guaranty: Non-Recourse