multifamily

Transaction Description:

George Smith Partners has successfully facilitated a recent cash-out refinance of $4,000,000 for our Sponsor’s multifamily portfolio. This financial arrangement was designed to suit two distinct multifamily properties nestled within the city of Charleston, South Carolina.

The team collaborated with a local bank that demonstrated a keen understanding of these multifamily properties. The negotiations resulted in an arrangement where the lending institution allowed 70% of the appraised value of the Properties for a cash-out refinance. This mutually beneficial agreement showcased the confidence both parties had in the assets’ value and future prospects. The Lender showcased their capacity to offer flexible fixed-rate financing, granting the choice to adjust the fixed rate to market conditions in favor of the borrower throughout the loan’s duration without incurring any expenses.

The Sponsor, represented by the GSP team, was relatively new to the Charleston market and operated from a non-local base, which presented a significant hurdle in the current real estate landscape. The properties were purchased outright with cash in late 2022 and mid-2023.

Transaction Description:

George Smith Partners successfully secured a $4,835,000, 72% LTC, fixed, non-recourse, pre-development bridge loan for a 205-unit multifamily ground-up construction project in Denver, Colorado. The bridge loan will be used to complete all the architecture/engineering milestones required to obtain permits and finalize pre-development work prior to breaking ground in Q3 of 2024.

The Denver metropolitan area is expected to add roughly 216,700 new residents over the next five years, fueled by the expansions of the Denver International Airport and Fitzsimons Medical Campus. The Project is expected to fulfill an underserved workforce demographic by offering an affordable yet high-quality option. The Project will feature a rooftop deck with BBQ grills, outdoor games, picnic areas, a dog run, gym, state-of-the-art security systems, bike parking, package storage, and a mail center with full-time onsite management and maintenance.

Transaction Description:

George Smith Partners (GSP) secured $29,000,000 of bridge financing proceeds for a multifamily project in Bozeman, MT. The project is a newly constructed multifamily property totaling 95 units across 2 buildings and is currently in lease-up. At loan application, only 1 of 2 buildings had received their Certificate of Occupancy and was less than 10% leased. The project also included a small commercial space that was unleased at loan application.

Given GSP’s extensive experience in the Montana submarkets, coupled with the borrower’s track record, a total of 9 lender groups showed interest and participated in providing loan terms. GSP was able to overcome Bozeman’s small submarket challenges by identifying relevant comps and highlighting leasing velocity at the property. By the closing date, the property was over 35% leased.

The new bridge loan proceeds were used to repay the more expensive construction loan and provide sufficient reserves to carry the project through lease up and permanent refinancing. The loan request of $29,000,000 represents an as-is loan-to-value of 70%.

Transaction Description:  

George Smith Partners arranged 7 different loans over a 6-month period for a longtime sponsor. The Properties were acquired from multiple sellers. The loans are individual non-recourse loans (no cross-collateralization).

Transaction Description:

George Smith Partners closed a refinance loan on a 14-unit Los Angeles multifamily rental with a California-based credit union. The loan is fixed at 4.93% for 5 years, a rate that is at least 60 basis points lower than the rest of the market. The prepayment schedule is 5%, 4%, 3%, then open in the 4^th year. This will give the borrower flexibility to refinance if interest rates decline. The loan did not require the borrower to maintain any deposits with the Lender.

Transaction Description:

George Smith Partners has achieved a successful negotiation of a Programmatic Joint Venture Equity Structure amounting to $5,300,000. This arrangement will fund two affordable multifamily developments in The District of Columbia, involving the renovation of 25 existing units and the construction of 87 new ground-up units.

In a climate of increasing interest rates, and with a considerable number of LP equity groups staying on the sidelines, the team and Sponsor faced challenges in finding an LP partner willing to invest in a single development with a satisfactory rate of return. Despite considering the option of utilizing wealthy family funds for a swift closing, the decision regarding the funding source remained unresolved.

GSP successfully negotiated a programmatic equity arrangement that offers both investors enhanced returns over an extended duration. As a result, the sponsor secured a long-term equity provider for their forthcoming projects, while the equity provider gains the opportunity to access the sponsor’s extensive pipeline, enabling potential future funding returns.

Transaction Description:

George Smith Partners has successfully renegotiated the construction debt on a $10,000,000 construction loan on a 15-Unit multifamily property in West Los Angeles.

Challenge:

GSP arranged the original fixed-rate construction loan with a debt fund in 1Q-2020, prior to the Covid moratoria. However, due to the uncertainty of the supply of labor and materials during the pandemic, the Sponsor decided to delay vertical construction for about one year which delayed the lease-up and stabilization thereby reducing the remaining term which reached maturity in May 2023.

Despite the Sponsor’s willingness to pay down the indebtedness, GSP determined that a restructuring of the existing debt would be more cost effective than bringing in additional equity.

Solution:

GSP was able to negotiate with the construction Lender to convert its loan into a one-year bridge facility. The Lender increased the interest rate by 50 bps but did not charge a new origination fee. Hopefully, in one year, the financing markets will improve and an $8,000,000 loan at more conventional pricing will be available.

Transaction Description:

George Smith Partners successfully secured a cash neutral permanent refinance loan for a 12-unit multifamily property in Los Angeles. Due to current market conditions, in which many regional banks are not lending, GSP had to expand its list of capital sources. A national bank was found that provided enough proceeds to pay off the in-place loan plus fees. The loan has 5 years of Interest Only payments on a 7 year fixed rate term. The lender provided non-recourse financing without charging any rate premium compared to a recourse loan. The loan closed in 26 days from application, which may be a record for a bank loan.

Transaction Description:

George Smith Partners secured a bridge loan to finance the takeout of a construction loan on a 17-unit/44-bed Co-Living Community located in the Sunset District of San Francisco. George Smith Partners put the construction loan in place in early 2020 and worked with the construction lender to accommodate delays in the renovation/reposition caused by the Pandemic. The Property represents a former 12-unit apartment community that was repositioned into a Co-Living Community through the addition of 5 rental units in the former ground floor parking garage, as well as the addition of a partial 4th floor on the rooftop of the building. The Borrower went under application in February with closing contingent upon receipt of a Certificate of Completion. GSP was able to leverage its relationship with both Lenders to extend maturity as well as the rate lock in a rising interest rate environment. GSP was also able to negotiate approximately $200,000 in cash to Borrower at close to be used toward FF&E. The property, known as “The Irv,” will be managed by Common. Unlike most co-living products in the market, each unit offers a common area living room, state of the art kitchen, and a bathroom to bedroom ratio of 77% with most units offering en-suite bathrooms. Communal areas include a central courtyard with a BBQ grill and firepit/seating area, a rear yard with secured bike parking, 400 SF roof deck with ocean views, and a surfboard and wet suit wash and storage area.

Transaction Description:

George Smith Partners successfully arranged $85,800,000 in construction financing for a 10-building, 372-unit multifamily development in Sacramento, CA. The project is located in an opportunity zone of Sacramento and is phase A of a 2,200-unit, transit-oriented development. Breaking ground in Q2 2023, this phase of the development will consist of studios, one, two, and three-bedroom apartments with best-in-class amenities, including a pool, fitness center, playground, and clubhouse.

The Sponsor engaged GSP pre-pandemic. A previous developer had acquired the land in the early 2000s and after completing 95% of the site’s infrastructure, subsequently filed for bankruptcy protection in 2017. The site was given back to the lender in early 2019 and was awarded to the Sponsor by the urging of the City of Sacramento because of their local reputation related to successful projects in the downtown sub-market. Our Sponsor originally intended to begin construction in early 2020 but decided to pivot layout designs to match the new needs of its renters due to the pandemic.

After an extensive capital marketing process, GSP was able to secure financing to the Sponsor’s parameters with the upside of not having a rate cap requirement. The financing structure is also unique in that it transitions from an interest-only period to a traditional permanent fully amortizing financing automatically after month 48. Early prepayment is available even during the construction period and then steps down until a fully open prepay year 4 after CofO.

Transaction Description:

George Smith Partners successfully placed an $8,000,000 bridge loan for the refinance of a 28-unit, newly constructed apartment building in La Mirada, California. The bridge loan refinanced the construction loan at building stabilization. The loan amount provided a return of equity to the Sponsor and allowed the Sponsor time to decide whether to sell the property in the future or put a permanent loan on the property if long-term rates start to come down. GSP sourced a lender that was able to provide maximum cash-out and fix the interest rate for the duration of the loan term. The financing is open for prepayment at any point throughout the loan term with a minimum of 12 months interest paid.

Transaction Description:

George Smith Partners secured $33,800,000 of senior construction financing for the development of an 83-unit ground-up multifamily building in an infill Los Angeles location. The 83 units will be comprised of 50% conventional units and 50% co-living units. While the property is in an A+ location, many lenders were uncomfortable with co-living in general. GSP was not only able to find a lender that was comfortable with the product type but was also able to get to almost 70% of total project cost. The lender also gave the borrower credit for the entitled value of the land as opposed to their acquisition cost from the year prior. The land equity contributed a significant portion of the total equity required.

The construction loan was priced at Prime + 0.75% and the loan term is 18 months plus one 6-month extension option.