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Construction

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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

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    $45,000,000 Construction Loan and $10,200,000 Limited Partner Equity for the Development of a For-Sale Residential Project; Silicon Valley, CA (Phase 1)

    March 1, 2022

    Transaction Description:

    George Smith Partners placed a $45,000,000 construction loan and advised on $10,200,000 of LP equity for the first phase of a for-sale residential project in Silicon Valley, California with a repeat sponsor. The Project will be built in two phases. This first phase will have 50 townhomes providing much needed workforce housing to the area. The Project will also have some affordable units for sale.

    GSP executed 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 the deal coupled with the proficiency and extensive experience of the Sponsor allowed for a successful close.

    LTC: 75%
    Stabilized Loan-To-Value: 70%
    Term: 36 Months
    Amortization: Interest-Only
    Guaranty: Non-recourse

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    $59,900,000 Non-Recourse Construction Loan, 180-Unit Apartment Building; Los Angeles, CA

    February 23, 2022

    Transaction Description:

    George Smith Partners successfully arranged $59,900,000 in construction financing for a 180-unit apartment building in an infill Los Angeles location. The Sponsors are capitalizing on the San Fernando Valley’s 3% vacancy rate and very little brand-new apartment construction. While the Sponsors have significant experience in entitlements and apartment operations, this is their first ground-up development Project. The Sponsors were seeking maximum leverage on a non-recourse basis. The Subject Property is across the street from an apartment project that came online while processing the loan. The rents being achieved were above the Sponsors proforma rents which allowed the Lender to underwrite higher rents and increase loan proceeds during the loan processing. The additional loan proceeds were able to cover the escalating construction costs and increase the leverage to 80% of total project cost.

    Rate: 6.95% + SOFR
    LTC: 81%
    Term: 36 Months
    Guaranty: Non-Recourse

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    $25,200,000 Construction Financing for a Mixed-Use, Luxury Multifamily Development; Downtown Culver City, Los Angeles

    February 16, 2022

    Transaction Description:

    George Smith Partners successfully arranged $25,200,000 in senior construction financing for a 54-unit ground-up luxury apartment community featuring 3,000 SF of ground floor retail space in the heart of Downtown Culver City. The Sponsorship Team acquired the Property in 2018, which is now fully entitled and ready to break ground. The Project is expected to deliver in Q4 of 2023.

    As a central and upcoming submarket of Los Angeles, Culver City is peppered with tech startups and major employers from Amazon to Apple, flourishing as an employment hub with over 250,000 high-paying jobs and approximately 8,000 employees within a mile from the Subject site. The best-in-class Sponsorship team has extensive local industry knowledge and recognized the Property’s underlying value, bolstered by the submarket’s immense growth and capital inflow, as well as the area’s historical roots in the movie and entertainment industry. GSP was able to identify a lender who offered highly competitive terms, given the Project’s significant demand and the value of multifamily housing in an ultra-high growth submarket.

    All Terms Confidential

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    $29,250,000 Senior Construction Financing for a Mixed-Use Development; Bellflower, CA

    February 16, 2022

    Transaction Description:

    George Smith Partners placed a $29,250,000 senior construction loan for a ground-up development of a mixed-use project in Bellflower, CA. When complete, the 5-story Project will consist of 91 apartment units and approximately 14,550 SF of 1st-floor commercial/retail/restaurant space. The Subject is located at the northern boundary of the Downtown Bellflower District and is an integral component of the city’s TOD Specific Plan. When complete, residents will be able to access LAX, the South Bay, and DTLA via the Blue and Green Metro lines.

    As the marquee development for the Bellflower TOD Specific Plan, few comparable projects were available in proximity to the Project site. GSP focused interested lenders on the supporting employment centers within a twenty-minute driving distance, including seven medical centers inside of a 5-mile radius. Additionally, while few Class-A style multifamily properties currently exist near the site, GSP used submarket data to show that demographic trends within the immediate area support the need for new product. GSP executed a broad and in-depth marketing campaign to help capital markets understand the opportunity.

    Rate: Prime + 0.75%; Floor 4.375%
    Term: 24 Months + three, 6-Month Extension
    Stabilized Loan-To-Value: 65%
    LTC: 72%

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    $21,250,000 Construction to Perm Multifamily Financing; Los Angeles, CA

    February 9, 2022

    Transaction Description:

    George Smith Partners secured a $21,250,000 construction-to-bridge loan for a new 52-unit high-end multifamily community located in West Los Angeles on a busy prominent corner. The recourse loan will fund construction and transition into a perm loan with a total term of 10 years. The all-in-one loan represents 60% loan to stabilized value and 70% loan to cost and is structured with a 3-year (+ 6-month extension) interest-only period. The loan allows for open prepayment after year 4 without penalty. Prior to, the prepayment penalty is 2% in years 1 and 2 and 1% for years 3 and 4.

    The site is comprised of 5 legal parcels assembled by the Borrower beginning in 2011 through 2015. The proposed Project will consist of 51 residential units and one ground floor retail unit in a Type III, 5-story building with two levels of subterranean parking for 72 cars utilizing a state-of-the-art automated parking system. The proposed unit mix includes studio, 1, 2 and penthouse units as well as 5 live/work units and 4 affordable rent restricted units. Penthouse units include unique/large, covered terraces as well as roof top decks with expansive skyline views.

    GSP was able to secure a lender that underwrote to the proforma stabilized NOI despite the challenges faced during the pandemic especially with higher-end product.

    Rate: 3.6% Floor Fixed for 7 years then 12MAT + 2.75%.
    Term: 10 Years
    Amortization: Interest Only for 36 months with a 6-month extension.
    Guaranty: Recourse
    Min DSCR on Perm: 1.15:1.0
    Loan Fee: 1%
    Prepayment: 2%, 2%, 1%, 1% Years 1-4

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    75% LTC Construction Loan for 19-Unit Apartment Building; Los Angeles, CA

    February 2, 2022

    Transaction Description:

    George Smith Partners secured $4,600,000 of senior construction financing for the development of a 19-unit ground-up multifamily building in Los Angeles, California. 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 2.25%, with a 3.50% 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 of 5%
    Construction Term: 18 months + 6-month option to extend
    Mini-perm Option: 5-year treasury + 2.25% with a 3.50% floor
    LTC: 75%
    Guaranty: Recourse

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    $15,150,000 Construction Take-Out Loan on Stabilized 54-Unit Multifamily; Los Angeles, CA

    February 2, 2022

    Transaction Description:

    George Smith Partners secured senior, permanent financing for a fully stabilized 54-unit, multifamily property in Los Angeles, CA. The recourse debt totaling $15,150,000 was utilized to take out the maturing construction loan and return equity to the Sponsorship. The loan was structured with a 7-year fixed period, with a 30-year term.

    GSP selected a lender capable of providing cash-out, along with keeping the low rate guaranteed for over three months while the Property reached stabilization. The appraisal of the Property came in under the 70% loan-to-value threshold, granting the request for 3-years of interest-only payments added to the loan terms.

    Rate: Fixed 3.25% for 7yrs then floating at SOFR + 2.25%
    Term: 30yrs
    Amortization: 3-year IO followed by 30yr AM
    LTC: 85%
    LTV: 70%
    Prepayment Penalty: 5,4,3,2,1%
    Guaranty: Recourse

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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