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Construction

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    $33,000,000 Stretch – Senior Non-Recourse Construction Loan for Ground-Up Luxury Condominiums; Los Altos, CA

    September 15, 2021

    Transaction Description:

    George Smith Partners successfully advised on $33,000,000 in construction financing for a 27- unit luxury condominium project to be built in downtown Los Altos, CA. This high-end offering is the first larger scale project for the newly formed, but individually experienced sponsorship group. The Sponsor has significant historical ground-up experience and will self-perform as the General Contractor. GSP worked through several strategies with the Sponsor including preferred equity, mezzanine debt and an all in one, stretch-senior execution. Ultimately, GSP successfully obtained several highly reliable options for each strategy and the Sponsor selected an integrated full-service construction lender. GSP negotiated a land value contribution in excess of cost and as a result, the land lift allowed the Sponsor to invest less up-front equity than otherwise required to close the transaction.

    The Sponsor projects completion of the project in late 2023. Due to the supply constrained market for the condo units, they expect the project to be completely sold out shortly thereafter.

    Rate: L + 8.25% w/ floor of 9.0%
    Term: 30 months
    LTC: 75%
    Prepayment Penalty: 9 months
    Guaranty: Non-Recourse

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    $20,530,000 Non-Recourse Construction Financing for a 25-Unit Luxury Beachfront Condominium, For-Sale Development; Cocoa Beach, FL

    September 8, 2021

    Transaction Description:

    George Smith Partners successfully arranged $20,530,000 in non-recourse senior construction financing for The Surf, a beachfront condominium project in Cocoa Beach, FL. The Project consists of 25 luxury residential units with sale prices ranging from $975,000 to $2,500,000, as well as 3 ground floor retail units. The Project is currently 75% pre-sold. Per Florida statutes, any buyer deposit amount over 10% of the purchase price may be used towards development costs, but a large portion of those deposits are not due from buyers until building top off. GSP was able to successfully secure a lender comfortable with crediting future deposits to decrease the Sponsor’s up-front equity requirement.

    The Sponsor’s co-developer and GC tragically passed in early 2020, leading them to engage a new group. While the new GC had extensive experience in luxury housing development, they are relatively new to ground-up, multi-level condominium development. GSP leveraged its extensive lender network, strong pre-sales, and the Orlando-based Sponsor’s strong development track record in this submarket and product type to provide non-recourse construction financing.

    The term is 24 months with interest-only payments and 6 months minimum interest. The senior note was sized to 64% LTC. GSP structured the loan, crediting future sales deposits towards the total equity requirement, thereby eliminating any additional out-of-pocket equity required at closing above the land acquisition and predevelopment costs already spent to date.

    Rate: WSJ Prime +4.50%
    Term: 24 Months + Two 2-Month Extensions
    Amortization: Interest-Only
    Loan to Cost: 64%
    Prepayment: 6 Months Minimum Interest
    Guaranty: Non-Recourse
    Lender Fee: 1% In, 1% Out

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    $35,000,000 High Leverage Construction Loan for 40 To-Be-Built Condominiums; Near Lake Tahoe

    September 8, 2021

    Transaction Description:

    George Smith Partners successfully secured $35,064,000 (80% Loan to Cost) in non-recourse construction completion debt financing for a luxury condominium property near Lake Tahoe. The 40-unit project is located in a tertiary market near ski resorts and overlooks Lake Tahoe. The Sponsor acquired the land and existing, partially completed, four-story concrete and steel structure and underground parking garage at a deep discount as an REO from a bank in 2015. Engineering and architectural updates were completed prior to loan closing.

    The for-sale, residential product in a tertiary market presented challenges to the capital markets. GSP was able to source a lender who was familiar with the market, comfortable with the basis, comfortable with the barriers to entry and strong market demand for the product.

    Term: 24 months plus one 1-year extension option
    Loan To Cost: 80%
    Prepayment Penalty: 12 months minimum interest

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    $35,900,000 Construction Takeout Financing for Single Tenant Industrial Asset; Austin, Texas MSA

    September 1, 2021

    Transaction Description:

    George Smith Partners successfully secured $35,900,000 in construction takeout financing for a state-of-the-art industrial project located in the Austin, Texas MSA. The manufacturing, research and office facility is 130,000 square feet. Spanning a 103-acre site, the building offers an additional 93 acres of undeveloped, shovel-ready land, yielding a development potential of more than 1,000,000 square feet of light / heavy commercial and industrial use.

    The financing recapitalized construction costs related to the facility development, and utility infrastructure improvements.

    The Sponsorship team acquired the undeveloped site in 2019, a strategic parcel in a rapidly developing industrial corridor, and subsequently developed the Class A facility. In order to take out the construction financing, GSP was able to identify a local lender with the expertise to develop a credit profile that appropriately accounted for the startup’s long-term viability, while also understanding the significant value of the excess developable land in a high-growth micro market within the Austin MSA.

    All Terms Confidential

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    $23,000,000 Construction Financing for 117-Unit Multifamily Construction; Lansing, MI

    August 25, 2021

    Transaction Description:

    George Smith Partners successfully advised on $23,000,000 in senior debt construction financing for a 117-unit multifamily transaction in Lansing, MI. This is the second financing arranged by GSP for the Sponsor and follows on the successful $44,500,000 financing GSP advised on. GSP successfully navigated the markets to identify and close with a lender that was comfortable with PACE financing layered in the capital stack. This multifamily project will offer studios, one and two-bedroom units with modern furnishings.

    Terms Confidential

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    $26,000,000 Total Construction, LP Equity, & Co-GP Platform Advisory, SFR for Rent; Fort Meyers, Florida

    August 18, 2021

    Transaction Description:

    As the leader in the rapidly emerging Single Family for Rent (SFR for Rent) and Build-to-Rent (BTR) multifamily asset classes, George Smith Partners worked with our client to structure an optimal structure for the development of the 130-unit project located in Fort Meyers, FL. Throughout the year-long engagement, GSP and the Sponsorship secured various investment structures including multiple Co-GP, LP, Pref, and Senior construction facilities, ultimately structuring a high leverage 70% recourse loan and a full equity structure of 80% LP + 20% Co-GP.

    With the intention of securing platform participants, the chosen structure will allow for a rapid expansion of the portfolio on a favorable deal by deal basis. The Sponsorship plans to scale with their partners to an additional 600 units in the next 12 months to meet the rapidly growing need for housing across Florida. The platform investment will also provide the opportunity to grow into other high growth markets across the south and east coasts.

    SENIOR DEBT
    Rate: 3.75%
    Term: 4 years
    LTC: 70%
    Guaranty: Recourse

    EQUITY
    80% JV & 20% Co-GP Equity

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    $18,600,000 Construction Financing for 109-Unit SFR Construction in an Opportunity Zone; Phoenix, AZ

    August 11, 2021

    Transaction Description:

    George Smith Partners successfully advised on $18,600,000 in construction financing for a 109-unit build-to-rent and Opportunity Zone transaction in Phoenix, AZ. This follows on the successful $7,100,000 JV equity financing GSP advised on. This single family for rent community will offer one, two and three-bedroom detached homes with upscale furnishings and private yards for most units. The Sponsor has five more transactions under contract. This was the first transaction for our Sponsor who is optimistic about the popularity and emerging trend of the build-to-rent niche.

    Terms Confidential

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    $38,600,000 Limited Recourse, Cash Neutral Mid-Construction Financing for a 122-Unit Multifamily; Santa Rosa Beach, FL

    July 14, 2021

    Transaction Description:

    George Smith Partners successfully arranged a $38,600,000 mid-construction refinance loan for a multifamily project in Santa Rosa Beach, Florida. The limited-recourse loan refinanced out the existing debt and provided additional proceeds to complete the development and flexibility to explore a condo sell out. The 122-unit Project will include state-of-the-art facilities, including a general store, a fully equipped restaurant, fitness center for guests, and a workspace. The Project is expected to receive certificate of occupancy by September 2021.
    GSP was retained when the Project was 70% complete with an expected certificate of occupancy by September 2021. Since the Project began in 2019, nearly all the land in the area had been purchased by developers at a higher basis and condos began to sell at higher than $500/psf. The Sponsors seized the opportunity to add additional equity, bringing the Project to condo-specifications and the ability to sell out at a higher valuation. GSP canvassed a broad range of lenders with long-standing relationships and fielded multiple proposals. GSP worked with the Sponsor to find a lender that reached a higher proceeds level and provided the flexibility to lease up the Property as multifamily, sell units as condos or a mix of the two.

    Term: 12-month term with 6-month extension option, extension fee @ 1.25%
    LTC: 85%
    Fee: 2 points in – 0 points out

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    $10,000,000 JV Equity for Workforce Housing; Tertiary Mountain States

    June 23, 2021

    Transaction Description:

    George Smith Partners successfully placed $10,000,000 of joint venture equity for the construction of a 134-unit workforce housing development in a tertiary Mountain State market. There is considerable demand due to the quality of life and a D1-university in close proximity. GSP structured a 90/10 co-invest with an out of state developer with a robust pipeline.

    Though guided to an expeditious close, the equity raise faced a few challenges. GSP brought the deal to market early in COVID when the economic ramifications of stay-at-home policies were uncertain. Additionally, the Project’s location in a tertiary market with only 50,000 people led to multiple groups being hesitant to deploy capital. However, the effects from COVID and the state’s pro-business economic policies eventually were shown to be a positive factor in multifamily demand.

    All Terms Confidential

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    $14,750,000 Cash-Out Construction Loan for an 80% completed Single Family Residence; Los Angeles, CA

    May 26, 2021

    Transaction Description:

    George Smith Partners successfully placed $14,750,000 in a cash-out construction loan for the completion of a high-end luxury home in Los Angeles, California. The loan retired a higher interest rate, funded an interest reserve account, and provided additional proceeds to fund the remaining budget of the development. The nineteen-month loan term was structured to provide the Sponsor with time to finish construction, obtain certificate of occupancy and sell the asset. Many lenders were on the fence about lending to the high-end luxury market or did not want to take on the risk of financing a mid-construction project. GSP leveraged its expertise of the Los Angeles market along with its local lender relationships to achieve all the Sponsor’s goals.

    Rate: 6%
    Term: 19 months + two six-month extension options
    Amortization: Interest Only
    LTC: 50%
    Guaranty: Full recourse
    Banking Relationship/Deposits: None

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    $56,500,000 Construction Financing for a Coastal Infill Mixed-Use Asset; Solana Beach, CA

    May 19, 2021

    Transaction Description:

    George Smith Partners arranged $56,500,000 in construction financing for the development of a mixed-use coastal infill project in Solana Beach, CA. The mixed-use development features 55,000 square feet of office space, 9,000 square feet of retail and 25 apartment units.

    Located just one block from the beach and the Cedros Avenue Design District, the two-story development focused on sustainability will be the largest mixed-use project along Highway 101 in the past three decades. The dearth of comparable projects, especially ones with large office floorplates, presented a unique opportunity.
    Amidst a time of market volatility and economic uncertainty, GSP was able to identify capital who not only understood the value of all three components and the subsequent demand but also the ability of the Sponsor to execute on the intended business plan.

    All Terms Confidential

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    $41,100,000 Non-Recourse Stretch Senior Construction Loan for 180 Micro-Unit Multifamily Development; Hollywood, CA

    May 12, 2021

    Transaction Description:

    George Smith Partners placed a $41,100,000 Non-Recourse, stretch senior construction loan for the ground-up development of a 6-story micro unit/co-living project in Hollywood, California. When complete, the Project will consist of 180 fully furnished, all-inclusive micro units within 49 pods with an average micro unit size of 276 sf. The Project lies in an Opportunity Zone.

    Several hurdles presented themselves such as concerns about the newness of the asset class and the availability of direct comparable properties. Also, the Sponsor had already begun excavation & shoring work which created challenges in obtaining full title insurance coverage.

    GSP focused on the Project’s per micro unit price rather than a per pod price to get the Lender comfortable with comparable projects. Further attention was given to the Project’s affordability as each micro unit comes fully furnished with an all-inclusive rental rate. GSP also stressed the Project’s unparalleled location, walkability to every major amenity in Los Angeles, the number of local employer hubs, and significant demand drivers from transient tenants looking for fully furnished offerings. GSP worked with the title company to successfully resolve all title insurance challenges that were presented and executing a high-profile marketing campaign to ensure that the capital markets appropriately understood the unique asset type. The process also included structuring and marketing the deal with several different capital stack variations (including a concurrent separate marketing effort for an A/B structure) to find the best financing option for the transaction. These efforts resulted in a successfully expedited process with a close in approximately 45 days from entering application.

    Rate: LIBOR + 7.50 %
    Term: 30 Months + 6 Month Extension
    Loan-To-Cost: 80%
    Stabilized Loan-To-Value: 75%
    Amortization: Interest Only
    Guaranty: Non-Recourse