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multifamily

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    $2,600,000 Permanent Financing for 16-Unit, Multifamily Property; Los Angeles, CA

    July 28, 2021

    Transaction Description:

    George Smith Partners arranged $2,600,000 in permanent financing (70% LTV) for the refinance of a 16-unit multifamily property located in Los Angeles, CA. The Sponsor engaged GSP to assist them with the replacement of their existing, expensive, highly leveraged, quick close bridge lender that GSP had arranged in April for the acquisition of this Property. The Sponsor’s plan for this value-add Property was to raise the value through strategic property enhancements that will increase rental revenue. GSP was able to provide the Sponsor with a 5-year floating rate with a floor of 3.85%. The loan structure allows the Sponsor to refinance out of an expensive loan and start to recoup additional cash flow to use for interior and exterior renovations. There is no prepayment with this replacement capital allowing the Sponsor to recapitalize once his business plan is realized. The prepayment flexibility will allow the Sponsor to cash-out refinance once they have implemented their value-add strategy. The renovation plan will improve the Property appearance and support the overall business plan of increasing market rents and value. Due to GSP’ strong-standing relationship with this Lender, this transaction closed within 35 days from signing the term sheet and met the Sponsor’s deadline.

    Rate: 3.85% (Prime +25bp – Floor 3.85)
    Term: 5 Years
    Amortization: 30 Years
    LTV: 70%
    DCR: 1.20
    Prepayment: None

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    $17,820,000 Cash Out Financing Fixed at 3.30% Interest-Only for Stabilized Multifamily Property; Phoenix, AZ

    July 28, 2021

    Transaction Description:

    George Smith Partners secured $17,820,000 of permanent financing for the refinance of a 164-unit multifamily complex located in Mesa, AZ. The Property, which was originally built in 1979, recently completed a renovation project that included updating unit interiors and exterior amenities. The unit mix is comprised of 1-bedrooms (49%) and 2-bedrooms (51%). Amenities include a pool, an open pet area, and an on-site laundry facility. GSP was able to a secure a 7-year fixed rate of 3.30%. The financing is interest-only for the entire term and non-recourse to the Sponsor. Refinancing provided the Sponsor with a much lower rate and a significant return of equity. The loan is sized to 60% LTV and a 1.35x DCR.

    Rate: 3.30% Fixed
    Term: 7 Years
    Amortization: Full-Term Interest-Only
    LTV: 60%
    Prepayment: Yield Maintenance
    Guaranty: Non-Recourse

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    $38,600,000 Limited Recourse, Cash Neutral Mid-Construction Financing for a 122-Unit Multifamily; Santa Rosa Beach, FL

    July 14, 2021

    Transaction Description:

    George Smith Partners successfully arranged a $38,600,000 mid-construction refinance loan for a multifamily project in Santa Rosa Beach, Florida. The limited-recourse loan refinanced out the existing debt and provided additional proceeds to complete the development and flexibility to explore a condo sell out. The 122-unit Project will include state-of-the-art facilities, including a general store, a fully equipped restaurant, fitness center for guests, and a workspace. The Project is expected to receive certificate of occupancy by September 2021.
    GSP was retained when the Project was 70% complete with an expected certificate of occupancy by September 2021. Since the Project began in 2019, nearly all the land in the area had been purchased by developers at a higher basis and condos began to sell at higher than $500/psf. The Sponsors seized the opportunity to add additional equity, bringing the Project to condo-specifications and the ability to sell out at a higher valuation. GSP canvassed a broad range of lenders with long-standing relationships and fielded multiple proposals. GSP worked with the Sponsor to find a lender that reached a higher proceeds level and provided the flexibility to lease up the Property as multifamily, sell units as condos or a mix of the two.

    Term: 12-month term with 6-month extension option, extension fee @ 1.25%
    LTC: 85%
    Fee: 2 points in – 0 points out

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    2.52% Floating Rate – 7-Years IO – Cash-Out – Stabilized Multifamily; Kent, WA

    July 7, 2021

    Transaction Description:

    George Smith Partners secured a senior floating rate loan for a stabilized multifamily property in Kent, WA. The non-recourse debt totaling $12,200,000 was utilized to refinance existing acquisition bridge debt and return of a significant amount of equity to the Ownership. The loan was structured with a 7-year term and interest only payments for the entire duration. The loan was collateralized by a 95-unit multifamily building; the Subject was 97% leased at closing. The Sponsorship had recently renovated approximately 70 of the units with plans to complete the remaining 25 units over the next 18 months.

    GSP selected a lender that offered an extremely attractive coupon. The variable rate provided the Sponsorship flexible prepay in the event of a future sale while supplying cash-out proceeds at funding. GSP negotiated a very minimal 2-year rate cap, and the Lender waived all Covid debt service reserves. The Property appraised for more than expected and GSP worked with the Lender to both increase the proceeds and reduce the spread.

    Rate: 2.51% + 1-Mo SOFR
    Term: 7 years
    Max LTV: 60%
    Amortization: None; 10-Years Interest Only
    Origination Fee: 1%
    Prepayment: 1% Exit; 3-Months open; PP waived w/ Lender Refi

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    $45,570,000 Non-Recourse Construction Completion and Inventory Financing for a 77-Unit Residential Condominium Development; Downtown Los Angeles

    July 7, 2021

    Transaction Description:

    George Smith Partners successfully arranged a $45,570,000 construction completion and inventory loan for a mixed-used residential condominium development project in the Little Tokyo neighborhood of Downtown Los Angeles. The non-recourse loan refinanced the existing construction debt, provided additional proceeds to complete the development, and additional term for unit sales. The 77-unit project features 2,400 square feet of ground floor retail and an 8,000 square foot rooftop amenity area. It is slated to deliver in Q2 2022.

    GSP ran a robust process, fielded multiple proposals and was able to identify a lender with whom we shared a long-standing relationship offering favorable terms in a challenging market. The selected lender understood the story around recovery, the value of the asset due to a dearth of new condominium product in the market and the ability of the Sponsor to execute on the intended business plan.

    All Terms Confidential

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    Cash-Out Permanent Financing Loan for 4-Unit, Multifamily Property; West Hollywood, CA

    June 30, 2021

    Transaction Description:

    George Smith Partners arranged cash-out permanent financing (65% LTV) for the refinance of a 4-unit multifamily property located in West Hollywood, CA. The Sponsor had purchased and renovated the Property all cash. Building improvements included complete gutting of the units and exterior renovations. The recent improvements allowed the Sponsor to quickly lease-up the Property at market rents, thus increasing the value of the Property. Because the Sponsor had purchased the building and paid for most of the capital expenditures more than 12 months prior to the loan request, this was considered a 100% cash-out financing. This combined with the low unit count made securing a conventional lender challenging. GSP was able to leverage its resources and provided the Sponsor with a 5-year term at a low rate of 3.50%. GSP was able to structure the loan with 12 months of interest only payments, before converting to 30-year amortization thereafter. The prepayment structure is 5-4-3-2-1, giving the Sponsor additional flexibility in the coming years. The Sponsor had a short closing timeline to pull his equity out of this deal to purchase another property already in escrow. GSP worked closely with the Lender and closed the transaction in just 35 days. The Sponsor is using the cash-out proceeds to continue their business plan of purchasing and renovating additional properties.

    Rate: 3.50%
    Term: 5 Year, First 12 Months Interest Only
    Amortization: 30 Years
    LTV: 65%
    Prepayment: 5-4-3-2-1

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    $6,600,000 Refinance of 28 Units; Maximum Credit for Newly Signed Leases; Los Angeles, CA

    June 16, 2021

    Transaction Description:

    George Smith Partners secured $6,600,000 in proceeds for the refinance of two properties comprised of 28 units in Los Angeles. The loan is fixed at a rate of 3.35% for 5 years. The Borrowers had closed their previous loan during a cyclical peak in interest rates. With this refinance, they were able to lower their interest rate by over 1% and get 3 years of additional interest only payments.

    The original loan application had a loan-to-value stipulation of 60%. Shortly after the loan went into application in August 2020, the Property experienced an increase in vacancy. Additionally, the appraised value reflected some temporary challenges in the market. Since this Property was part of a portfolio refinance, the Lender agreed to raise the LTV to 67% and provide additional time for occupancy to recover. Ultimately, the loan terms and rate were held for 8 months until the Property was fully leased up. Once stabilization was achieved, the Lender underwrote cash flow based on newly signed leases and closed within 2 weeks.

    Rate: 3.35% fixed for 5 years
    Term: 30 years
    Amortization: 3 years Interest Only followed by 30-year amortization
    Prepayment Penalty: 3,2,1,0
    LTV: 67%
    DCR: 1.20x
    Guaranty: Non-Recourse

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    $12,083,000 Non-Recourse Cash-Out Agency Refinance for Multifamily Property; Western States

    June 16, 2021

    Transaction Description:

    George Smith Partners successfully arranged the cash-out refinance of a 200+ unit multifamily property. The loan is floating at a starting rate of 2.56% and allows the Sponsor to complete a value-add strategy to increase the NOI and refinance into a permanent loan at higher proceeds in 18-24 months.

    While processing the loan, GSP worked with the Lender to understand the historical cash flow which was extremely choppy due to the inconsistent rent payments during the Covid-19 pandemic. The analysis resulted in a $3,000,000 increase to the loan amount and an additional year of interest only payments.

    Rate: 2.55% + SOFR
    Term: 7 Years
    LTV: 65%
    Amortization: 3 Years Interest Only, 30 Year Am Thereafter
    Prepayment: 1-Year Lockout, then 1%
    Guaranty: Non-Recourse

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    $7,850,000 Acquisition Loan for 48 Unit Multifamily Property; Fixed at 3.30% for 7 Years; Hollywood, CA

    June 9, 2021

    Transaction Description:

    George Smith Partners successfully secured $7,850,000 in proceeds for the acquisition of a 48-unit multifamily property in Hollywood. The loan is fixed at a rate of 3.30% for 7 years and has 5 years of interest only payments. The Property’s location, a few feet from a fault line, raised a concern that earthquake insurance might be required. GSP conducted a comprehensive search of city records and engaged a seismic report to demonstrate that sufficient retrofit work had already been completed. As a result, the Lender waived the additional insurance. Several lenders required a reserve account of 6-12 months of P&I payments, but the selected lender had no holdbacks or reserves. The loan closed with no changes to the original application.

    Rate: Fixed for 7 years at 3.30% with initial 5-years IO
    Term: 7 years
    Amortization: 30 years
    Prepay: 3,3,2,2,1
    LTV: 65% max
    DCR: 1.20x
    Lender Fee: $0

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    $23,954,000 10-Year Fixed Rate Perm for 240-Unit Seniors Multifamily; Western US

    June 2, 2021

    Transaction Description:

    George Smith Partners secured a $23,954,000 loan for a 240-unit market rate, multifamily property in Western United States. While not deed restricted, the Property is marketed only to seniors. The first mortgage has a 10-Year term at a 3.61% fixed rate, 30-year amortization, with 60 months of interest only.

    Despite a requirement to pay defeasance to prepay an existing fixed rate loan two years prior to maturity, the Sponsor was able to generate over $5 million of net cash proceeds and reduce the borrowing rate by over 50 bps. The loan was priced in February when interest rates were particularly volatile and increasing rapidly. GSP negotiated a spread of 2.31% as well as having the Lender agree to do a forward index lock on the 10-year Treasury at 1.30%. When the loan closed, the 10-year Treasury had increased 43 bps to 1.73% which would have yielded an all-in rate of 4.04%. The higher rate would have significantly reduced the net proceeds and made the refinance non-economic; but, due to the early index lock, the all-in rate was effectively locked at 3.61% with the rate held though closing.

    Term: 10-Years
    Rate: 3.61%
    Lender Fee: .75%
    Amortization: 30 Years, I/O-Years 1-5
    LTV: 58%
    Prepayment: Defeasance
    Guaranty: Non-Recourse

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    $8,400,000 Non-Recourse Acquisition/Bridge Loan for a 50% Occupied Apartment Building; Hayward, CA

    May 19, 2021

    Transaction Description:

    George Smith Partners identified a national balance sheet lender with an intimate knowledge of the Hayward submarket and arranged $8,400,000 in acquisition and bridge financing for the purchase and reposition of a currently 50% occupied, 1960’s-built apartment complex located in Hayward, CA. The Sponsor placed the portfolio under contract during the COVID-19 pandemic.

    The loan includes $1,350,000 of future funding for extensive renovations of unit interiors and exterior upgrades, including an earthquake retrofit. Interest is not charged on the holdback until funds are drawn. This Capital Provider also structured and capitalized an interest reserve to cover the shortfall of cash flow during repositions. Sized to 76% of the total capitalization, the three-year bridge loan is interest only for 36 months and carries a floating rate of LIBOR + 4.25% and include two extension options for up to a term of five-years.

    Rate: LIBOR + 4.25%
    Term: 3 Years, with two 1-year extensions
    Amortization: Interest Only
    Loan-to-Cost: 76%
    Repayment: Carve-Outs Only
    Prepayment: 18 months
    Loan Fee: 1.0% in / 0.25% exit

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    $56,500,000 Construction Financing for a Coastal Infill Mixed-Use Asset; Solana Beach, CA

    May 19, 2021

    Transaction Description:

    George Smith Partners arranged $56,500,000 in construction financing for the development of a mixed-use coastal infill project in Solana Beach, CA. The mixed-use development features 55,000 square feet of office space, 9,000 square feet of retail and 25 apartment units.

    Located just one block from the beach and the Cedros Avenue Design District, the two-story development focused on sustainability will be the largest mixed-use project along Highway 101 in the past three decades. The dearth of comparable projects, especially ones with large office floorplates, presented a unique opportunity.
    Amidst a time of market volatility and economic uncertainty, GSP was able to identify capital who not only understood the value of all three components and the subsequent demand but also the ability of the Sponsor to execute on the intended business plan.

    All Terms Confidential