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Land

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    Unentitled Land Financing for Infill Multifamily Development; Los Angeles, CA

    January 25, 2023

    Transaction Description:

    George Smith Partners successfully closed a 1st and 2nd Trust Deed at 85% of the purchase price for unentitled land in the Koreatown neighborhood of Los Angeles, CA. The two loans have a blended rate of 9.98% for the twelve-month initial term. The Sponsor will have a six-month extension option available. GSP was able to identify two lending sources, to maximize leverage, who understood the market and the demand for multifamily development in this location.

    First Trust Deed
    Rate: 8.90% Fixed
    Term: 12 months with One 6-month Extension Option
    LTV: 65%
    Amortization: Interest Only
    Origination Fee: 1.00%
    Exit Fee: None
    Prepayment: Open
    Guaranty: Non-Recourse

    Second Trust Deed
    Rate: 13.50% Fixed
    Term: 12 months with One 6-month Extension Option
    LTV: 65% – 85%
    Amortization: Interest Only
    Origination Fee: 3.00%
    Exit Fee: None
    Prepayment: 6 Months Minimum Interest
    Guaranty: Non-Recourse

    Blended Debt
    Rate: 9.98% Fixed
    Term: 12 Months with One 6-month Extension Option
    LTV: 85%
    Amortization: Interest Only
    Origination Fee: 1.47%
    Exit Fee: None
    Guaranty: Non-Recourse

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    $10,975,000 Bridge Financing for 5 Parcel Land Portfolio; Los Angeles, CA

    January 5, 2023

    Transaction Description:

    George Smith Partners arranged $10,975,000 of financing for the non-recourse refinance of a 5-property portfolio of land parcels in various infill locations in Los Angeles, CA. Most of the land is not fully entitled and is in the pre-development process for multi-family ground-up development. The Sponsor needed a lender that could provide structure for the different ownerships and allow for release provisions as the properties become ready for construction.

    GSP accomplished the Sponsor’s goal of providing liquidity for potential acquisitions with debt that was also pre-payable at any time. GSP was able to identify a lending source that understood the market and demand for multifamily development in these locations.

    Rate: 8.60% Fixed
    Term: 12 Months with One 6-Month Extension Option
    Amortization: Interest Only
    Origination Fee: 1.00%
    Exit Fee: None
    Prepayment: Open
    Guaranty: Non-Recourse

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    Acquisition Financing and JV Equity for 57.62 Acres of Vacant Land; Cibolo, TX

    December 22, 2022

    Transaction Description:

    George Smith Partners successfully placed the land acquisition senior loan and JV equity for 57.62 AC of vacant and unentitled land in Cibolo, TX (suburb of San Antonio). We went out to 40+ sources and the Lender loved the site and was aggressive by bringing the effective financing between debt and equity to about 78% LTP. The deal is in the early stages, with no clear exit plan and most lenders were not comfortable with taking on that risk. Initially, the Sponsor was under LOI to flip 30 acres to a tech-related entity post close, however, that fell through when we were already under app. Regardless, the site was highly favored after putting their feet on the ground and closed on the original structure.

    Senior Loan
    Term: 12 Months
    Guaranty: Non-Recourse

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    Land Acquisition Financing for 6.8-Acre Development Site; Denver, CO

    December 22, 2022

    Transaction Description:

    George Smith Partners successfully placed $6,000,000 (66% Loan to Purchase Price) in acquisition land financing for a 6.8-acre site to be developed into 120 units in the Denver Metropolitan area. An infill site originally zoned agricultural; the Sponsor invested significant time and capital to change the site’s use to residential. The ability to develop attainable housing is the driver for both the city and the developer, as the finalized project will provide much-needed affordable housing to the increasingly expensive Denver Metro. With preliminary entitlements achieved, the Sponsor is working through civil engineering to receive final entitlements and sell the fully-entitled site to a well-known build-to-rent developer.

    GSP was able to source debt with favorable leverage, a fixed-rate, and most importantly, without the need for an appraisal.

    Term: 12 Months
    Rate: 9.25% Fixed
    LTV: 66%
    Prepayment: No Prepay
    Guaranty: Non-Recourse

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    Land Financing for the Redevelopment of SDSU Student Housing Property; San Diego, CA

    December 15, 2022

    George Smith Partners secured a land loan for the acquisition of a 0.35 AC, 15,000 SF student housing property adjacent to San Diego State University. The proceeds represent 35% of the purchase price of the Property. The loan carries a 24-month term with two, 6-month extensions available. The loan is fixed at a rate of 4.5% annually and payments are made on an interest only basis for the entirety of the loan period.

    The Sponsor identified the parcel inclusive of an existing 15,000 SF 66-bed student housing property as a potential redevelopment opportunity due to the vintage of the existing structure and the permitted use through the current zoning. Following the acquisition of the property, the Sponsor intends to demolish the existing building and construct a state-of-the-art 226-bed student housing facility. The approval for the Project is ministerial and by-right, which requires no environmental review or public hearings and is exempt from CEQA. The Sponsor intends to seek a building permit for the by-right development of upon successfully obtaining the appropriate approvals within an anticipated 3-to-4-month timeframe post acquisition.

    Due to strategic advising of GSP, the extremely low leverage of the acquisition loan, and the deep track record of the Sponsorship, the client was able to obtain a non-recourse loan with a very attractive rate. GSP emphasized the massive undersupply of housing at the university along with the lack of entitlement risk in order to attract the best financing possible. GSP was also able to obtain a loan with zero prepayment penalty and no exit fee, allowing the Sponsor flexibility to complete the business plan.

    Term: 24 Months with Two 6-Month Extension Options
    Amortization: Full Term IO
    LTV: 35%
    Rate: 4.5% Fixed
    Origination Fee: 100 bps
    Extension Fee: 50 bps
    Prepayment: No Prepayment Penalty
    Guarantee: Non-Recourse

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    $14,400,000 Land Acquisition Financing Arrangement for a Future Build-for-Rent Project; Austin, TX

    September 14, 2022

    Transaction Description:

    George Smith Partners arranged $14,400,000 of non-recourse land acquisition financing in Austin, TX. The land will eventually be home to 368 Build-for-Rent homes. GSP was able to negotiate accretive terms for the Sponsor and their Limited Partner within a two-month timeframe from marketing to closing. Once the project becomes stabilized, it will enrich the surrounding Austin area.

    LTC: 50%
    Index: PRIME
    Spread: 1.25% (Floor of 6.00%)
    Term: 12 Months
    Extension: One 6-Month
    Guaranty: Non-Recourse

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    Entitled Land Acquisition Financing for a Single Family Home Community; San Marcos, TX

    June 8, 2022

    Transaction Description:

    George Smith Partners secured senior and mezzanine financing for the acquisition of 49.3 acres of land in San Marcos, TX. The City is located midway between Austin and San Antonio, the #1 and #7 fastest growing cities in the US. The Property is fully entitled for single-family residential development. The Sponsor, a Texas-based developer, recognized the Property’s underlying value and the unique opportunity to build much-needed housing for the area. GSP sourced a high leverage lender who not only recognized the booming submarket, but also the Sponsor’s ability to execute on the master-planned community. The transaction closed 17 days after signing the term sheet.

    Term: 1 Year + One, 12-Month Option
    LTPP: 87.5%
    As-Is LTV: 65%
    Prepayment: None

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    $5,340,000 Land Acquisition Loan for 226 Affordable Housing Units; Southern California

    October 20, 2021

    Transaction Description:

    George Smith Partners arranged $5,340,000 in a pre-entitlement land development loan for a proposed 226-unit affordable housing project in California. The 60% loan to acquisition is priced at 4.50% over LIBOR (with a 5.50% floor) interest only. The Sponsor is addressing a major need for affordable housing in the state. GSP secured a unique capital source to arrange favorable and flexible capital that met with the Sponsor’s timeline. The interest-only land loan was priced at 5.50%, with an 18-month term and one 6-month extension option. There is additional flexibility with the loan structure having no prepayment penalty. Despite dealing with a strict closing deadline on the purchase, GSP was able to identify a lender who could execute on terms and close within the purchase agreement.

    Rate: 5.50%
    Term: 18 Months, One 6 Month Extension
    Amortization: Interest Only
    LTV: 60%
    Prepayment: None

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    $4,680,000 Paper Lot Land Acquisition Loan in Ten Days; San Diego, CA

    August 18, 2021

    Transaction Description:
    George Smith Partners successfully placed a $4,680,000, 50% LTV loan to fund the acquisition of a 6.9-acre parcel of land located in North County, San Diego, California, and the funds needed to finalize the entitlements for 135 paper lot townhome subdivision.

    When GSP became involved, the Borrower had already invested over $2,300,000 to secure a tentative map and development agreement while the land was under option. However, there were only ten days remaining on the purchase contract when the land lender with whom the Borrower had been dealing with directly, declined to proceed. When the Seller refused to grant the Buyer an extension on the purchase escrow, GSP was engaged to arrange the land acquisition financing to enable a timely closing.

    GSP had several highly reliable alternative land lenders that could close within ten days. Strategically, GSP selected a lender that was not only willing to finance the land acquisition and final entitlements, but also was willing to give the Sponsor a strong indication that they would favorably consider funding the future stages of the project, including the grading, horizontal land, and infrastructure development as well as the vertical construction financing once the final map was achieved in approximately nine months.

    Rate: 10%
    Term: 18 Months
    LTV: 50%
    Guaranty: Non-Recourse with Bad Boy Carveouts
    Fee: 3%

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    14 Day Quick Close Acquisition Capital for 12 Acre Plot of Land; Western U.S.

    April 21, 2021

    Transaction Description:

    George Smith Partners secured financing for twelve acres of raw land located in the Western U.S. Our Sponsor plans to get a variance for this land to build out five, forty-unit multi-family buildings, with shared open air common areas and a pad for a restaurant. This financing was especially challenging due to the land being unentitled, without water, the location, low loan amount, and lenders being more restricted due to COVID.

    Due to GSP’s vast networks and strong relationships, we were able to secure attractive financing for this Project. GSP arranged a 55% loan to purchase at 9.25% interest only, with a 24-month term and 12-month extension option. GSP’s ability to secure this financing in just 10 business days allowed the Sponsor to renegotiate the purchase price and get a hefty discount.

    Most land lenders are restricted to 40%-50% leverage. This high-leverage financing structure allows our Sponsor to start pre-development, including entitlements and pulling permits. The extension option gives flexibility to the Sponsor should they face delays in getting to entitlement due to COVID effects. There’s additional flexibility because there is no prepayment penalty. Per our long-standing relationship with the capital provider, we were able to close this transaction in 14 days from receiving the request.

    Blended Rate: 8%
    Term: 24-month, plus a one 12-month extension option
    Loan-to-purchase: 55%
    Prepayment Penalty: 6 months minimum interest

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    $28,500,000 Land Loan for a Mixed-Use Multifamily Development Site

    June 10, 2020

    Transaction Description:

    George Smith Partners arranged a $28,500,000 non-recourse bridge loan for the land acquisition and predevelopment of a large TOD site with the potential to accommodate more than 900 units. The financing facility was secured on behalf of best-in-class sponsor LaTerra Development, relating to its planned mixed-use multifamily development project. In the midst of unprecedented market uncertainty, GSP leveraged its network to identify land lenders who were still active in today’s environment and could provide certainty of execution. No appraisal was required for funding.

    All Terms Confidential

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    $5,400,000 Land Acquisition and Predevelopment Financing Facility for a To-Be-Built, 150 Bed Co-Living Community; Highland Park, CA

    March 11, 2020

    Transaction Description:

    George Smith Partners arranged a $5,400,000 financing facility for the acquisition of a 29,930 square foot vacant parking lot in the trendy Highland Park submarket of Los Angeles, CA. In addition to purchase financing, the facility offers good news money for predevelopment costs related to the Sponsors planned 150-unit co-living community on the site, which will be a by-right development and will take advantage of TOC Tier 1 incentives.

    Co-living has emerged as a remedy to address the acute shortage of affordable housing across the country by offering tenants fully furnished, highly amenitized units with the cost of utilities, common area maintenance, and other traditional living spaces bundled into the rent. The Property is within a 5-minute walk from both York Boulevard and Figueroa Street, Highland Park’s two main amenity-rich thoroughfares lined with shopping and dining destinations.

    By focusing attention on land lenders who are active in the local area, GSP identified a capital provider who is familiar with the local market and also understands the importance that the co-living space will serve in the greater rental market going forward. The loan was uniquely structured to disburse the balance of the down payment in addition to sponsor equity at closing. The remaining proceeds will be reserved in a holdback feature to cover the predevelopment soft costs in order to bring the project to permit-ready status. The interest-only predevelopment land loan was priced at 8.50%, with a 15-month term and one 6-month extension option. The loan closed in less than 30 days from application.

    LTC: 70% (including predevelopment costs to take the project to RTI)
    Rate: 8.50%
    Term: 15 Months with One 6-Month Extension
    Amortization: Interest Only
    Guaranty: Recourse