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multifamily

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    $15,800,000 Cash-Out Permanent Financing for a 47-Unit Multifamily Property, Fixed at 3.01% for 10 Years; Torrance, CA

    February 24, 2021

    Transaction Description:

    George Smith Partners arranged $15,800,000 in permanent financing secured by a 47-unit garden-style, multifamily property located in Torrance, CA. The non-recourse loan carries a 3.01% fixed rate for 10 years with 7-years of interest only payments. The recapitalization provided significant cash-out to the Sponsor and reduced their previous interest rate considerably.

    The Property had recently undergone an extensive renovation program and had limited seasoning on the new, higher rental rates achieved on the repositioned units. The Property did however, maintain stable occupancy and collections throughout 2020 despite COVID-19 regulations in California allowing tenants to defer rent payments.

    Amidst a time of market volatility and economic uncertainty, GSP was able to leverage market interest to secure the most competitive terms available by focusing on the desirable location as well as the Sponsor’s track record and familiarity with the asset.

    Rate: 3.01%
    Term: 10 Years
    LTV: 65%
    Amortization: Seven Years Interest Only; 30-Year Amort Thereafter
    Guaranty: Non-Recourse

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    $3,825,000 Cash-Out Permanent Financing for 30-Unit, Multifamily Property; Los Angeles, CA

    February 17, 2021

    Transaction Description:

    George Smith Partners arranged $3,825,000 in cash-out permanent financing (70% LTV) for the refinance of a 30-unit multifamily property located in Los Angeles, CA. The Sponsor used GSP with intentions of taking out their existing expensive lender. The Sponsor recently completed exterior and interior renovations including common area upgrades. The recent improvements allowed the Sponsor to increase rents thus increasing the value of the Property. GSP was able to provide the Sponsor with a 30-year term with the first 5 years being fixed at a very low rate. The rate will then reset every 5 years for the remainder of the term. Rather than most loans having a balloon payment in 5,7 or 10 years, this loan structure allows for flexibility because the loan matures in 30 years. The flexible prepayment structure is equal to 1.75% for the first 3 years, 1% for years 4 and 5, and 0% thereafter. The loan structure allows the Sponsor to refinance out of an expensive loan with a fixed rate of 3.15%, while also receiving cash out. The Sponsor is using cash-out proceeds to continue their business plan of purchasing and renovating additional properties.

    Rate: 3.15% (Fixed for 5 Years)
    Term: 30 Years
    LTV: 70%
    DCR: 1.20

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    2.97% Fixed Rate for 75% LTV Refinance of Apartment Complex; Oregon City, OR

    February 17, 2021

    Transaction Description:

    George Smith Partners successfully obtained $6,487,000 of permanent debt for the refinance of a 43-unit apartment complex in Oregon City, OR. The unique property has a very low density for the area, appealing to residents who are looking for a less condensed living environment. The financing was secured after the Sponsor’s acquisition and renovation plan was implemented. The senior loan was able to provide the Sponsor with cash out above the original basis to return to investors. The 10-year loan is fixed at 2.97%. The financing, which is sized to 75% of appraised value, is non-recourse and carries 5 years of interest only.

    Rate: 2.97% Fixed
    Term: 10 Years
    Amortization: 30 Years
    Interest Only: 5 Years
    LTV: 75%
    Guaranty: Non-Recourse

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    $60,200,000 Ground-Up Construction Financing, 85% LTC, 6.65% Blended Coupon on a 307-Unit, Class-A Apartment Community; St. Louis City, MO

    February 17, 2021

    Transaction Description:

    George Smith Partners successfully placed $60,200,000 in high-leverage construction financing, which funded 85% of total project cost for the construction of a 307-unit mixed-use multifamily and retail project located in the trendy St. Louis City neighborhood of The Grove. GSP leveraged its lender relationships, capitalization structuring acumen, local market expertise, and strong project fundamentals to arrange the most accretive financing structure available in the market during the peak of the COVID-19 pandemic. The capitalization included a senior loan to 60% loan-to-cost and a preferred equity investment with last-dollar exposure to 85% of total project cost. The preferred equity investment is non-recourse and the senior loan required only a top-end 25% repayment guarantee. Additionally, the Lender and preferred equity investor gave credit for a lift in land value above the Borrower’s actual cost due to the Borrower having created substantial value through entitlements and development incentives.

    Rate: 6.65% (blended coupon)
    Term: Three-year initial term plus two, 12-month extension options
    Amortization: Interest only
    LTC: 85%
    Prepayment: 2%, 1%, open
    Guaranty: 25% repayment guarantee on senior loan only; does not apply to the non-recourse preferred equity investment
    Lender Fee: 0.82% blended

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    $26,141,000 Permanent Debt – 12-Years Interest Only – Stabilized Multifamily; Los Angeles, CA

    February 10, 2021

    Transaction Description:

    George Smith Partners secured senior permanent financing for two stabilized multifamily properties in Los Angeles, CA. The two non-crossed loans totaling approximately $26,100,000 were utilized to refinance existing debt and return equity to the Sponsor. Each loan was collateralized by a stabilized multifamily property. The first asset was a 28-unit building that was 100% leased at closing and located in Culver City, CA while the second asset was a 46-unit building that was 97% leased at closing and located in Hollywood, CA. The loans were both structured with a twelve-year term and interest-only payments for the full duration.

    GSP secured a lender that was able to refinance the Sponsor’s existing debt, cover prepayment penalties and return equity while simultaneously lowering the Sponsor’s debt service payments for the next twelve years. GSP worked with the Lender to minimize debt service reserves while addressing lender concerns for potential COVID related shortfalls. Cash-out proceeds were secured on both loans despite two COVID related delinquencies. Lastly, the Sponsor was completing a complicated partnership dissolution. GSP insured the Lender accommodated the Sponsor’s timeline with an accelerated no-cost rate-lock and an extended closing period.

    Rate: 3.00%
    Term: 12 Years
    Amortization: 12 Years Interest Only
    Min DSCR: 1.35x
    Max LTV: 65%
    Loan Fee: Par
    Personal Guaranty: None
    Prepayment: Yield Maintenance

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    90% LTV Acquisition Financing for 6-Unit Building; Beverly Grove Area of Los Angeles, CA

    February 3, 2021

    Transaction Description:

    George Smith Partners secured $2,475,000 (90% Loan to Purchase Price) of senior and mezzanine financing for the acquisition of a 6-unit multifamily building in the Beverly Grove area of Los Angeles. The loans both have a 12-month term and are open to prepay at any time. The Sponsor plans to use the term to entitle the building for a potential future development. The non-recourse financing allowed for the Sponsor to contribute a minimal amount of equity into the purchase of the Property. The blended rate came out to 7.93% across the entire capital stack.

    Blended Rate: 7.93%
    Term: 12 Months
    Amortization: Interest Only
    LTV: 90%
    Blended Loan Fee: 1.67%
    Prepayment Penalty: None
    Guaranty: Non-Recourse

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    $7,986,000 First Mortgage, 65% LTV, 2.9%, 10 Yr., Full Term I/O; West Los Angeles, CA

    February 3, 2021

    Transaction Description:

    George Smith Partners secured a $7,986,000 first mortgage at 65% LTV for a 23-unit multifamily property in West Los Angeles, CA. The loan is non-recourse and supplies significant cash-out proceeds, a low 2.9% 10-year fixed rate, and full-term interest-only payments. The financing replaced a bridge loan that was put in place to acquire the Property and complete significant upgrades including unit renovations, common area and exterior improvements, and conversion to solar power.

    GSP started working on the refinancing in the Spring of 2020 at the height of the COVID-19 quarantine, while the property was still being renovated and released. GSP was able to persuade the Lender to underwrite income on a trailing one month basis rather than a trailing six month basis. This allowed the underwriter to include the higher income from the newly leased units. The loan application process began when the property was approximately 75% leased. The lender agreed to a forward rate lock at 85% occupancy and closed when the building reached 95% occupancy.

    Rate: 2.9% Fixed
    Term: 10 Years, Interest Only
    LTV: 65%
    Prepayment: Yield Maintenance
    Lender Fee: .5%

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    $83,000,000 Bridge Financing for Pre-Certificate of Occupancy 250-Unit Class-A Multifamily Development; San Fernando Valley region of Los Angeles, CA

    February 3, 2021

    Transaction Description:

    George Smith Partners secured an $83,000,000 senior bridge loan for the construction completion and lease up of a mixed-use community consisting of 250 multifamily units and 6,600 SF of ground-floor retail in the San Fernando Valley, just north of Los Angeles, CA. The non-recourse bridge financing carries a three-year term at LIBOR + 5.00%, reducing to LIBOR + 4.50% upon the Project’s receipt of Certificate of Occupancy.

    The loan provides proceeds for construction completion – anticipated to complete in early 2021 – while allowing for an extended lease up period prior to stabilization. The strength and track record of the Sponsor, coupled with the centralized location within the San Fernando Valley, ensured that the Project would complete and stabilize as anticipated.

    Rate: L+500 until construction completion, reducing to L+450 thereafter
    Term: 3-year with two 1-year extensions
    Amortization: Interest only
    LTV: 75.0%
    LTC: 79.9%
    Guaranty: Non-Recourse

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    GSP Structured Highly Leveraged, Quick Close Acquisition Capital of $2,695,000 for 16-Unit, Multifamily Property; Koreatown area of Los Angeles, CA

    January 27, 2021

    Transaction Description:

    The Sponsor had the opportunity to purchase a well-located property in Koreatown well below the market value because of the sponsor ability to close quickly with the 80% LTC quick-close loan. With the global pandemic, the property had 2 vacancies and a few non-paying residents. Because of the quick timing and the short-term distress in the cashflow, the Property would not qualify for bank or agency financing at this time. The sales broker and the Sponsor approached George Smith Partners for highly leveraged, quick purchase financing. GSP arranged a $2,695,000 non-recourse acquisition loan for the 16-unit apartment project. Despite marketing this deal during the global pandemic with vacancies and unpaying tenants, GSP successfully structured a first trust deed from a debt fund as well as a preferred equity B piece with a different investor to almost 80% of the purchase price. The non-recourse facility was priced at an interest-only fixed rate with a blended rate of 7.97% with a 12-month term plus a 6-month extension option. Thanks to our long-standing relationship with this debt fund and preferred equity investor, GSP was able to close this transaction in less than 10 days from signing the term sheet.

    Blended Rate: 7.97%
    Term: 12-month Bridge Loan plus a one 6-month extension
    Loan-to-purchase: 80%
    Prepayment Penalty: None

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    $40,000,000 Construction Completion Loan at 8.00% Fixed, Interest-Only on a 192-Unit Multifamily; Vancouver, WA

    January 27, 2021

    Transaction Description:

    George Smith Partners successfully arranged $40,000,000 in construction completion financing for a 192-unit multifamily community in Vancouver, WA less than 12 miles from downtown Portland, OR.
    The Property consists of three completed buildings that started leasing in late April of last year and were 15.9% leased at the underwritten rents upon closing. GSP was successful in quickly sourcing multiple term sheets and ultimately closed within weeks of going into application with the Lender. The rapid execution allowed the Sponsor to close on an approximately 90% of purchase price (80% of total cost) in a situation where no further extensions were available, and time was of the essence.

    The equity stack was highly structured with multiple tranches of GP and LP equity.

    Rate: 8.00% Fixed
    Term: 18 Months
    Amortization: Interest-Only
    LTC: 80%
    Guaranty: Non-Recourse

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    Construction Debt – 79% LTC – 81 Multifamily Units, Los Angeles, CA

    January 20, 2021

    Transaction Description:

    George Smith Partners secured senior construction financing for a new multifamily development in the Lincoln Heights neighborhood of Los Angeles, CA. The $10.5M loan will be utilized to complete the 81-unit project. The loan represents approximately 79% of the project cost and was structured with an 18-Month initial term and interest only payments for the duration. The Project will be comprised entirely of studio units configured at 540 square feet; each unit will include one bathroom, a full kitchen, modern appliances, and a washer and dryer. Amenities for the project include a roof top deck, barbeque area, gym & recreational room, bicycle storage, secured parking, and access to a swimming pool.

    GSP secured a Lender that understood the future path of development and was comfortable with the emerging market; the current neighborhood is primarily industrial with limited residential product in proximity. The Lender accepted the Sponsor’s imputed equity from entitling the site; this increased leverage to 79% of cost while keeping pricing at a level accretive to the overall yield. The loan was structured with a shorter initial term to minimize upfront points and interest reserves. GSP worked with the Lender to resolve several budget issues that arose during diligence due to the rising price of lumber and concrete; proceeds were successfully increased by $250,000 to ensure the Project would be fully capitalized without additional equity.

    Rate: 5.00%
    Term: 18-Months; Two 6-Month Extensions
    Amortization: Interest Only
    Max LTC: 79%
    Max “As-Complete” LTV: 60%
    Min Stabilized DSCR: 1.15x
    Loan Fee: 0.75%; 0.25% per each extension
    Guaranty: Recourse

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    $10,895,000 Cash-Out Refinance of a 2-Property Multifamily Portfolio at 3.15%; Los Angeles, CA

    January 20, 2021

    Transaction Description:
    George Smith Partners was retained to refinance a 2-Property multifamily portfolio. Sensing buying opportunities in the multifamily market, the Sponsor wanted to pull cash out of their existing multifamily portfolio to use as equity to purchase new properties. GSP obtained a fixed rate of 3.15% for the first 5 years of the 30-year term.

    Challenge:
    With the global pandemic and uncertainty in the market, it was critical to select a capital provider who could successfully close and provide the cash out for the additional purchases. Any delays would have been very costly because of penalties in the purchase contract. In addition, most lenders were overwhelmed with year-end financing requests as several other lenders pulled out of the market and forbearance requests from their current borrowers. There were complex issues around appraisals and inspections that required GSP’s daily oversight.

    Solution:
    Because of GSP’s strong relationship with this capital provider, we were confident that the loan officer would stay focused, close on time and keep the agreed rate and proceeds. GSP is in the debt market every day which gave us the ability to ensure that the selected Capital Provider was closing deals and meeting deadlines. GSP’s experience working with appraisers, inspectors and title/escrow during the COVID period was critical to getting this transaction completed in a timely manner. The loan closed on time and the Sponsor was able to utilize the cash-out to purchase another project. As is common during the COVID crisis, the Capital Provider wanted a 12-month payment reserve. GSP was able to convince the Capital Provider to only require 6-months and allow the reserve to be applied to the first 6-months of payments.

    Rate: 3.15%
    Term: 30 years term, fixed for first 5 years, resets every 5 years after for the term.
    LTV: 70%
    DCR: 1.20