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Land

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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

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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

    February 19, 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 financing 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 Highland Park’s 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 approximately the balance of the down payment in addition to sponsor equity at closing, with the remaining proceeds to be reserved in a holdback feature that will 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.

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

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    $2,800,000 Land Acquisition Financing for a Self-Storage Project; Santa Clarita Valley, CA

    December 4, 2019

    Transaction Description:

    George Smith Partners successfully arranged a $2,800,000 non-recourse, short term acquisition loan for a 4.21-acre parcel near Stevenson Ranch in the Santa Clarita Valley of California. The Sponsor needed financing in a very short timeframe. GSP was able to source a private lender who closed in three business days. The loan offers 60 days of bridge term while the Borrower seeks a construction-to-permanent solution for a fully entitled, six-building, 966-unit, climate controlled, Class-A self-storage facility expected to complete construction in late 2020. The loan is non-recourse and the Lender did not require an appraisal or other third-party reports, thanks to the low leverage and strength of the Sponsor.

    Rate: 7.90% Fixed
    Term: 60 Days
    Amortization: Interest Only
    Loan To Value: 36%
    Prepayment: None
    Guaranty: Non-Recourse

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    $3,500,000 Pre-Development Non-Recourse Bridge Loan; San Fernando, CA

    July 31, 2019

    Transaction Description:

    George Smith Partners placed the cash-out non-recourse refinance of an improved San Fernando Valley lot that had been vacated while the Developer moves forward on an up-zone re-entitlement. Our Sponsor will double the available units on this over-sized lot bringing needed housing to this dense in-fill tract. Proceeds beyond the existing payoff will be used to cover soft costs and will be invested back into the site development. The exit will be via a ground-up construction loan to be funded late 2019. Closing occurred within two weeks from executed application to funding. No appraisal was required for funding. Fixed at 7.50%, the non-recourse loan does not carry a prepayment penalty.

    Rate: 7.50%
    Term: 12 months
    Amortization: Interest Only
    Loan Fees: 1.0%
    Guaranty: Non-Recourse
    Prepayment Penalty: None

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    $7,650,000 For Purchase of 12.66 Acre Parcel of Vacant Land; 65% LTV

    January 9, 2019

    Transaction Description:
    George Smith Partners secured $7,650,000 in proceeds for the acquisition of a 12.66 acre parcel of undeveloped and unentitled land in a major city in the Western United States. The proceeds represent 65% of the appraised value of the land. The loan carries a 12 month term with two, 6 month extensions available. The loan is fixed at a rate of 10% annually and is prepayable at any time.

    Challenges:
    GSP surveyed the market and found that many lenders would only finance the acquisition at 50% LTV. Other lenders could meet the Sponsor’s desired leverage but quoted an interest rate in the low teens. Some capital providers were concerned about the Sponsor’s ability to secure a takeout construction loan next year, and would only finance the purchase if pre-leasing was in place. The Sponsor intended to sell a small portion of the land shortly after closing. The parcel is located in a market that is growing rapidly, but experienced a large downturn during the last recession. There is still a lot of undeveloped land in the immediate area.

    Solutions:
    GSP provided extensive comparable data that demonstrated the Sponsor’s acquisition price per acre was well supported by the market. Since national lenders were hesitant to provide sufficient leverage, GSP focused on local lenders that know the market well. Emphasis was placed on the enormous amount of new development currently underway in the same market as the subject, including a new big box retail store slated to open later this year. The Sponsor had already successfully developed a mixed-use project in the same submarket, demonstrating their ability to execute a complete business plan. The Lender provided a release provision that allows part of the parcel to be sold to a third party without the requirement of any additional pay down from the Sponsor. The third party appraisal supported a value higher than the purchase price, validating the Lender’s cost basis and resulting in them increasing the loan amount while we were under application.

    Rate: 10.0%
    Term: 12 months + 6 + 6
    Amortization: 30 years
    LTV: 65%
    Prepayment Penalty: None
    Lender Fee: 2.5%

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    $8,700,000 Non-Recourse Predevelopment Land Loan in Los Angeles’s Hollywood Neighborhood; 14-Day Close

    November 14, 2018

    Transaction Description:

    GSP arranged the $8,700,000 non-recourse first mortgage from a REIT to refinance a maturing bridge loan on a recently entitled retail site located along a major thoroughfare in Los Angeles. The loan provides an additional 12 months of term while the Borrower evaluates whether to re-entitle the site for a mixed-use project, or move forward with in-place entitlements. Although the loan is non-recourse, the Lender did not require an appraisal or other third-party reports, nor did it require an interest or carry reserve despite insufficient cash flow to cover debt service. Sized to 60% of value, the loan priced at 6.90% fixed for the 12-month loan duration.

    Rate: 6.90% Fixed
    Term: 12 Months
    Amortization: Interest Only
    Loan to Value: 60%
    Lender Fee: 1.00%
    Prepayment: Open Full Term
    Guarantee: Non-Recourse

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    $9,200,000 Non-Recourse Predevelopment Land Loan in Los Angeles’s Beverly Grove Neighborhood; 14-Day Close

    October 31, 2018

    Transaction Description:

    GSP arranged the $9,200,000 non-recourse first mortgage from a REIT to refinance two separate maturing bridge loans on two non-contiguous, recently entitled land parcels totaling 24,725 square feet located along a major thoroughfare in Los Angeles. The loan repaid existing debt, covered 100% of closing costs, and repatriated equity to the borrower. The loan provides an additional 12 months of term while the borrower pre-leases the project and finalizes construction drawings. Although the loan is non-recourse, the lender did not require an appraisal or other third-party reports, nor did it require an interest or carry reserve although there is no in-place cash flow on either parcel. Sized to 60% of value, the loan priced at 6.90% fixed for the 12-month loan duration.

    Rate: 6.90% Fixed
    Term: 12 Months
    Amortization: Interest Only
    Loan to Value: 60%
    Lender Fee: 1.00%
    Prepayment: Open Full Term
    Guarantee: Non-Recourse

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    $8,750,000 Non-Recourse Predevelopment Land Loan in Coastal Los Angeles; 14-Day Close

    September 26, 2018

    Transaction Description:

    GSP arranged the $8,750,000 ($935/Building SF) non-recourse first mortgage from a REIT to refinance a maturing bridge loan on a 29,500 square foot land parcel located along a major thoroughfare in Coastal Los Angeles. The Borrower recently entitled the land for a retail redevelopment and is now pre-leasing the Project. The loan repaid the existing debt, covered 100% of closing costs, and repatriated equity to the Borrower. The loan provides an additional 12 months of term while the Borrower pre-leases the Project. Although the loan is non-recourse, the Lender did not require an appraisal or other third-party reports, nor did it require an interest or carry reserve although there is no in-place cash flow. Sized to 60% of value, the loan priced at 6.90% fixed for the 12-month loan duration.

    Rate: 6.90% Fixed
    Term: 12 Months
    Amortization: Interest Only
    Loan to Value: 60%
    Lender Fee: 1.00%
    Prepayment: Open Full Term
    Guarantee: Non-Recourse