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Construction

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    $42,500,000 Construction Financing for a 496-Key Hotel-to-Multi Conversion; Colorado Springs, CO

    February 2, 2022

    Transaction Description:

    George Smith Partners arranged $42,500,000 in construction financing for the conversion of a 496-key hotel to a market rate multifamily complex in Southeast Colorado Springs. Spanning 17 acres, the Project features 496 units and boutique amenities: restaurant & bar, fitness center, indoor & outdoor swimming pool, sport court, convenience store, and 294 self-storage units that will be made available to the public. The financing capitalized the hotel acquisition, renovation, and targeted deferred maintenance.

    Colorado Springs is an ultra-high-growth submarket and consistently ranked as one of the best places to live in the United States. Bolstered by substantial job diversification, there has been an influx of young professionals and military personnel due to the surrounding five military bases. The Sponsor identified the hotel as a prime candidate for the conversion, offering a low basis, and best-in-class amenities to create significant value and drive occupancy rates. GSP was able to identify a lender who not only understood the pent-up demand for affordable housing in the booming submarket, but also the Sponsor’s ability to execute on the intended business plan.

    All Terms Confidential

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    $47,500,000 Construction Financing for a Ground-Up, Single-Family Build-to-Rent Development; La Quinta, CA

    January 26, 2022

    Transaction Description:

    George Smith Partners arranged $47,500,000 in construction financing for the development of a single-family build-to-rent community in La Quinta, within Southern California’s Coachella Valley on behalf of Shopoff Realty Investments. Spanning 18 acres, the Project features 131 units, averaging approximately 2,000 SF per unit. The Sponsor completed entitlements on the infill site over the last few years and secured the financing to commence construction.

    Build-to-rent communities have gained significant traction due to, on average, high absorption rates and attractive rental premiums over comparative products. Demand has grown significantly, making it the fastest growing asset class in the U.S. housing market. The Sponsor, a best-in-class developer based in Southern California, recognized the opportunity to capitalize on the booming asset class. GSP was able to identify a lender who understood the investment potential of the high-growth submarket, as well as the Sponsor’s strong local knowledge and expertise in the BTR industry.

    All Terms Confidential

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    $27,300,000 Non-Recourse Construction Financing for Multi-Tenant Spec Industrial Development; Mesa, AZ

    January 18, 2022

    Transaction Description:

    George Smith Partners arranged $27,300,000 in non-recourse construction financing for the development of a 173,193 SF, Class-A, light industrial project in Mesa, AZ. The Project will consist of smaller unit sizes in 10 total buildings ranging in size from 2,500 to 15,000 SF.

    Challenges:

    This Project was built entirely to spec. Tenants signing smaller leases typically do not pre-lease space before a project breaks ground. Due to supply chain constraints and inflationary pressures, raw materials and labor costs increased significantly. While there have been many large box industrial projects developed in the market, there has been limited development of small bay product and therefore limited comparable lease and sales transactions. Most of the Sponsor team are foreign nationals whose assets lie outside of the United States.

    Solution:

    GSP successfully obtained several financing options and selected a lender who had flexible execution, a strong understanding of the growing demand for small bay industrial space and was comfortable with rising construction prices. GSP arranged a co-guarantor to subsidize the non-recourse carve-out guarantees.

    Rate: L + 6.50% with 0.10% Floor
    Term: 24 months + (1) 6-month extension
    LTC: 80%
    2% origination fee, 0% exit fee

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    $129,000,000 Construction Financing for a Multifamily Asset; Downtown Los Angeles, CA

    January 18, 2022

    Transaction Description:

    George Smith Partners secured $129,000,000 in construction financing for a 280-unit mixed-use multifamily development featuring 25,000 SF of ground-floor retail/office space and best-in-class amenities. Located in the heart of the Cornfield-Arroyo Seco Specific Plan (CASP) area, the Property is adjacent to the high-traffic Los Angeles State Historic Park, USC+LAC Medical Center; the Project site is within a 5-minute walk from more than 34 upcoming bars, restaurants (Momofuku by David Chang), cafes and entertainment venues. The financing provided funding for future capital expenditures and related construction costs.

    The top-tier Sponsorship group focused on minimizing their equity contribution through a high leverage debt facility to execute their business plan. GSP was able to identify non-recourse capital with strong local knowledge and confidence in the long-term fundamentals of the high-growth submarket. These efforts were aided by the site’s development potential, given the prime location and thousands of surrounding demand drivers.

    All Terms Confidential

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    $30,875,000 Construction Financing (65% LTC) for Assisted Living and Memory Care Facility; Southern California

    January 12, 2022

    Transaction Description:

    George Smith Partners arranged financing for the construction of a Class-A Assisted Living Facility in Southern California. The Facility was designed similarly to a 4-star hotel property with luxury interior design and a top tier culinary program. Amenities include: gourmet exhibition kitchen and dining area, wellness center, full service spa, hair salon, landscaped outdoor space, private dog park and dog services. The Sponsors have made a tremendous effort to offer a one-of-a-kind experience, with residents being able to tend their own vegetable gardens, attend wellness classes and more. The Facility will also be able to accommodate residents who require memory care.

    This is the sponsor’s first Assisted Living project. GSP was able to structure a strategic partnership to boost the experience profile of the Sponsor. This was essential for the capital provider to get comfortable with the project.

    The financing structure provides flexibility to the Sponsor; after an initial 18-month construction term, the Sponsor can extend the construction loan for 6 months. After construction, the loan converts to a 24-month bridge loan during lease up/stabilization for a total loan term of up to 4 years.

    Interest Rate: Prime Rate + 0.50%
    Term: 18-Month Construction Loan with 6 Month Extension Option (0.25% Extension Fee)
    Converts to 24-Month Bridge Loan During Stabilization at No Additional Fee
    LTC: 65%
    Amortization: Interest-Only
    Lender Origination Fee: 0.75%
    Guaranty: Recourse
    Prepayment Penalty: None

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    $6,225,000 Construction-to-Perm Multifamily Financing; Los Angeles, CA

    January 12, 2022

    Transaction Description:

    George Smith Partners successfully placed construction-to-perm financing of $6,250,000 for the development of a 19-unit multifamily community in West Los Angeles, CA. The 4-story building will provide 1, 2 and 3-bedroom units in a supply-constrained submarket. The recourse loan provides for two-years of interest-only financing with a 6-month extension that converts to a perm loan with a combined term of 10 years. The starting rate is fixed for 7 years then amortizing. The loan represents 60% of stabilized value and 70% of cost and allows for open prepayment based on a prepayment fee of 2%,2%,1%,1% in years 1 to 4. The Project will be Type-V construction consisting of 4-stories, a rear 750 SF community courtyard, partial ground level and partial subterranean parking. Unit mix includes studio, one and two-bedroom units including two low-income units. All units include covered patios however non-studio units include larger than average outdoor living terraces that range from 130 to 193 SF. Community amenities include a rear courtyard with firepit lounge and BBQ grill. The units average 654 SF in size. The Project represents the Client’s second multifamily construction project. GSP was able to assist in bringing in a qualified general contractor and get the Lender comfortable with the Borrower’s ability to execute despite their limited development track record.

    Rate: 3.6% Fixed 7-years
    Term: 10 years
    Amortization: Interest-Only Years 1-2 then 30-year amortization
    Extensions: One 6-Month Option
    Guaranty: Recourse
    Prepayment: 2%,2%,1%,1%
    Loan Fee: 1%

     

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    $13,000,000 Non-Recourse Construction Financing for a 144,000 SF Industrial Property; Madera, CA

    January 5, 2022

    Transaction Description:

    George Smith Partners successfully arranged the non-recourse, construction financing of a 144,000 SF flex-industrial property in Madera, California. The Property is a 74-unit flex industrial/warehouse that will serve the underserved small-scale user. The Sponsors are capitalizing on the very low vacancy rate in the Madera/Fresno industrial market. The Sponsors are very knowledgeable on the market but have not yet completed a ground-up construction project. Their lack of direct experience and the smaller market made it difficult for many lenders to provide the financing. George Smith Partners was able to educate the selected lender on the need for this product in the market and the industrial experience of the Sponsorship which allowed them to get comfortable with the transaction and provide very favorable financing.

    Rate: 7.00% + LIBOR
    Term: 24 Months with Two Six-Month Extension Options
    LTV: 65%
    LTC: 70%
    Amortization: Full Term Interest Only
    Prepayment: 12 Months’ Minimum Interest
    Guaranty: Non-Recourse

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    $26,200,000 Construction Financing for a Mixed-Use Multifamily Asset; Salt Lake City, UT

    January 5, 2022

    Transaction Description:

    George Smith Partners successfully secured $26,200,000 in construction financing for a 138-unit mixed-use multifamily development located in the heart of downtown Salt Lake City, UT. Located on a coveted 0.73-acre site in a designated Opportunity Zone, just steps from the Utah Jazz’s Vivint Arena, the Project features ground-floor retail and best-in-class amenities and outdoor terraces, with an anticipated groundbreaking slated for the first quarter of 2022.

    The greater Salt Lake City submarket is one of the fastest growing, most financially fit metros in the country, bolstered by substantial job growth and diversification. The Project will provide much-needed high-quality multifamily units to a market in need of significant new supply. In addition, the well-appointed units and boutique amenities are poised to be well received in the downtown urban core. The experienced Sponsorship team has an established local presence in Salt Lake City, recognizing the unique opportunity to create a transformative mixed-use apartment complex in the City’s social and employment hub. GSP was able to identify a top tier national bank who understood the growing demand for multifamily housing in an ultra-high-growth submarket.

    All Terms Confidential

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    $5,512,000 Construction Financing for 25-Unit Multifamily Development; Los Angeles, CA

    December 8, 2021

    Transaction Description:

    George Smith Partners secured $5,512,000 of senior construction financing for the development of a 6-story, 25-unit ground-up multifamily building. The Transit Oriented Development (TOD) multifamily Project is within three blocks of the Wilshire/Western Metro station situated in the Koreatown neighborhood of Los Angeles.

    Compared to other areas in Los Angeles, Koreatown has seen a temporary influx of new units in the marketplace. The new supply, coupled with the pandemic, has slowed the rapid rental growth the sub-market has become known for. As a result, there was some hesitation from lenders. GSP generated a wide capital market that allowed the Sponsor to consider several options for the development of the Project. The strong financial position of the Sponsor, along with the extensive relationship with their general contractor, contributed to both pricing and leverage. The 36-month recourse financing is priced at 4% and structured with two, 12-month extension options.

    Rate: 4%
    Term: 3+1+1
    LTC: 55%
    Guaranty: Full Recourse

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    $39,000,000 Construction Debt and Advised on $20,000,000 LP Equity for Seven-Story, 137-Unit Mixed-Use Development; Midtown Sacramento, CA

    November 23, 2021

    Transaction Description:

    George Smith Partners successfully placed $39,000,000 in construction debt and advised on $20,000,000 Limited Partner equity for the ground up construction of 137-unit mixed-use development with ground floor retail in Midtown Sacramento, CA. The Project is the second asset that GSP has structured both debt and equity for a sequence of planned multifamily developments. Pricing for the non-recourse construction loan tightened from the first transaction six months ago.

    The site will be developed into a seven-story building consisting of six levels of rental units, parking, and ground floor retail. Situated in Midtown, Sacramento’s trendiest neighborhood, the Property is walking distance to restaurants, shops and is conveniently positioned near the rail station and a local highway. The area has increasingly attracted significant public and private investment due to its proximity to employment hubs and lifestyle amenities.

    The capital markets were weary of ongoing supply chain and increasing construction costs. GSP worked with the Lender and equity investor to structure contingency levels that were acceptable to both. The Sponsor was provided with competitive, non-recourse construction loan and an investor that could grow with their future development needs.

    Rate: Daily Simple SOFR + 270 (2.79%)
    Guaranty: Non-recourse
    Amortization: Interest Only
    LTV: 65%

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    $46,000,000 Construction Loan for Phase 1 of a 400-Unit Multifamily Development; Bozeman, MT

    October 20, 2021

    Transaction Description:

    George Smith Partners successfully placed financing for phase 1 of a 400-unit multifamily development located in Bozeman, MT. The Project will be a significant upgrade to other assets in the market, offering an in-complex coffee shop, yoga studio, clubhouse, and multi-acre park. Unlike the competition, many units will have direct access to garage parking.

    The garden style project is located within an Opportunity Zone, which drew attention from national equity groups eager to deploy capital. GSP, a leader in Op Zone Capital advisory, brought several equity partners to the table who understood the value add to the market.

    Phase 1, consisting of 268 units, is set to be complete by late 2023. Phase 2, consisting of 132 units, will commence construction in 2023, with the entire project stabilizing in 2024. This market has seen a price increase of over 200% in housing since 2016. It continues to grow at a double-digit rate largely due to remote work, the expansion of the Big Sky and Yellowstone resort destinations, and Kevin Costner being amazing.

    Rate: Sub 3%
    Term: 3 years + 2, 1-year extensions
    Guaranty: Recourse, Burning Off at C of O
    Leverage: 60% Loan-to-Cost

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    $8,700,000 Construction Financing for Office Development; Denver, CO

    October 13, 2021

    Transaction Description:

    George Smith Partners successfully advised on a $8,700,000 construction financing for the development of a 5-story, 23,654 square feet office building located in Denver, CO. The Sponsor’s combined 30-year real estate development experience in conjunction with their partner’s 40+ years of commercial leasing experience was key to securing the financing. GSP worked through several strategies with the Sponsor to source the right non-recourse financing terms for the ground-up ‘spec’ office transaction. Ultimately, GSP successfully obtained several highly reliable financing options, and the Sponsor selected a lender with exceptional terms.

    The Sponsor projects a timely delivery for completion of the project in late 2022 and intends to market the lease of the building during design and construction. With the robust economic recovery from the COVID-19 pandemic, the greater Denver metropolitan area is experiencing rapid job growth and expansion, increasing the demand for office spaces.

    Rate: L + 925 w/ 0.50% Libor floor
    Term: 18 months
    LTC: 75%
    Prepayment Penalty: 12 months min. interest
    Guaranty: Non-Recourse