Don't Miss a Fact,
Sign Up for FINfacts!

FINfacts is a weekly newsletter highlighting recent financings and economic insights.

Subscribe Here

multifamily

  • Expand

    $41,100,000 Non-Recourse Stretch Senior Construction Loan for 180 Micro-Unit Multifamily Development; Hollywood, CA

    May 12, 2021

    Transaction Description:

    George Smith Partners placed a $41,100,000 Non-Recourse, stretch senior construction loan for the ground-up development of a 6-story micro unit/co-living project in Hollywood, California. When complete, the Project will consist of 180 fully furnished, all-inclusive micro units within 49 pods with an average micro unit size of 276 sf. The Project lies in an Opportunity Zone.

    Several hurdles presented themselves such as concerns about the newness of the asset class and the availability of direct comparable properties. Also, the Sponsor had already begun excavation & shoring work which created challenges in obtaining full title insurance coverage.

    GSP focused on the Project’s per micro unit price rather than a per pod price to get the Lender comfortable with comparable projects. Further attention was given to the Project’s affordability as each micro unit comes fully furnished with an all-inclusive rental rate. GSP also stressed the Project’s unparalleled location, walkability to every major amenity in Los Angeles, the number of local employer hubs, and significant demand drivers from transient tenants looking for fully furnished offerings. GSP worked with the title company to successfully resolve all title insurance challenges that were presented and executing a high-profile marketing campaign to ensure that the capital markets appropriately understood the unique asset type. The process also included structuring and marketing the deal with several different capital stack variations (including a concurrent separate marketing effort for an A/B structure) to find the best financing option for the transaction. These efforts resulted in a successfully expedited process with a close in approximately 45 days from entering application.

    Rate: LIBOR + 7.50 %
    Term: 30 Months + 6 Month Extension
    Loan-To-Cost: 80%
    Stabilized Loan-To-Value: 75%
    Amortization: Interest Only
    Guaranty: Non-Recourse

  • Expand

    79.5% LTV Acquisition Loan for 6-Unit Multifamily Property; Koreatown area of Los Angeles, CA

    May 5, 2021

    Transaction Description:

    George Smith Partners structured $1,590,000 of acquisition bridge financing for a 6-unit multifamily building in a well-located area of the Koreatown section of Los Angeles. The existing building is almost 100 years old and underutilizes the potential density that the site allows for. The Sponsor plans to entitle the site for a larger multifamily development down the line. A 12-month term will give them ample time to prepare to be shovel ready. GSP was able to secure a high leverage execution between a senior lender and a mezzanine lender that provided 79.5% LTV based on purchase price. The blended rate of the total debt stack is 8.84% and is interest only. While the senior loan is non-recourse, the mezzanine lender does require recourse on their portion.

    Blended Rate: 8.84%
    Term: 12 Months
    Loan-to-Purchase: 79.5%
    Prepayment Penalty: None
    Guaranty: Non-Recourse to Senior Lender, Recourse to Mezzanine Lender

  • Expand

    $14,250,000 ($229,839/unit) Cash-Out Permanent Financing for a 62-unit, Two-Property Multifamily Portfolio; Los Angeles, CA

    May 5, 2021

    Transaction Description:

    George Smith Partners successfully placed $14,250,000 ($229,839/unit) in a cash-out, uncrossed (two loans) refinance of two multifamily properties totaling 62 units in Los Angeles, during the COVID-19 pandemic. The loan is fixed at rate of 3.350% for the first 7 years, then converts to a floating rate. Despite the economic uncertainty during the transaction, GSP leveraged the firm’s collective production and relationship with the Lender to close the loans with loan terms as originally structured. GSP worked the lender to diligently ensure a quick closing and to maximize proceeds while addressing COVID related concerns. Both properties had undergone extensive renovations and upgrades since the acquisition in 2018 and have maintained over 95% occupancy throughout 2020 despite the pandemic.

    Rate: 3.350% fixed for 7 years, converts to floating for remaining loan term
    Term: 30 Years
    LTV: 67%
    Amortization: 5 Years Interest Only followed by 30 Year Amortization
    Guaranty: Non-Recourse except for standard carve outs, “bad acts”, and environmental

  • Expand

    $21,000,000 Cash-Out (105% of cost basis), Non-Recourse, Pre-Stabilization Bridge Financing on a Newly Constructed and 9% Leased Apartment Community; St. Louis City, Missouri

    May 5, 2021

    Transaction Description:

    George Smith Partners successfully placed $21,000,000 in bridge financing for a 111-unit apartment community in St. Louis, Missouri that retired a high-leverage construction loan, funded a lease-up and operating reserve, converted from a recourse to non-recourse structure, materially lowered the Borrower’s cost of capital, and provided enough proceeds at close (100% of loan proceeds were released upon loan closing) to cash out 105% of the Borrower’s cost basis, although the Property was less than 10% occupied. The eighteen-month loan term provides the Borrower with time to stabilize and season the asset prior to either selling or refinancing it with long-term permanent debt in today’s low interest rate environment. GSP leveraged its expertise of the St. Louis market, long-standing lender relationships, and capital markets creativity to achieve the Borrower’s goals, which was primarily the maximum return of capital.

    Rate: Blended to 4.95%, Floating
    Term: 18 Months
    Amortization: Full-Term Interest Only
    LTV: 80%
    Lender Fee: 1% in / 1% out
    Prepayment: Six Months Minimum Interest
    Guaranty: Non-recourse

  • Expand

    $58,000,000 Life Co. & Preferred Equity Non-Recourse Construction Financing; Culver City Adjacent, CA

    April 28, 2021

    Transaction Description:

    George Smith Partners successfully closed $58,000,000 in non-recourse construction financing for a seven-story, mixed use development across from Sony Pictures Studios and adjacent to Culver City, CA. The Project features 139 apartment units over 1,969 SF of ground floor retail. The Sponsor received a density bonus thanks to TOC incentives, in exchange for allocating 14 affordable units.

    While this is the second U.S. project – the first was also financed by GSP – for a successful international developer, the pool of capital providers was significantly reduced due to the borrowing entity being headquartered in a foreign country. Presenting this deal during the height of the COVID-19 pandemic also presented significant challenges. GSP leveraged its structured financing expertise, lender relationships, strength of the Project and the Culver City market to negotiate the most desirable terms for the Sponsor.

    The financings are comprised of $42,000,000 in senior construction debt from a Life Co. lender and $16,000,000 in preferred equity and includes a substantial amount in recap funds to the Sponsor at closing. The term is five years, with interest only payments and no prepayment penalty upon Certificate of Occupancy. The senior note is LIBOR + 390 and the preferred equity investment’s interest will be fully accrued during the entire term, thereby reducing the amount of interest reserve and the Sponsor’s initial cash equity contribution.

    Rate: L + 390 (senior)
    Term: 5 Years
    Amortization: Interest Only
    Prepayment: None upon Certificate of Occupancy
    Guaranty: Non-Recourse; Completion Guarantee with Standard Carveouts to an Entity

  • Expand

    $8,400,000 Non-Recourse Acquisition/Bridge Loan for a 50% occupied Hayward, CA Apartments

    April 21, 2021

    Transaction Description:

    George Smith Partners 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. Our Sponsor placed the portfolio under contract during the COVID-19 pandemic. The financing 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.

    GSP identified a national balance sheet lender with an intimate knowledge of the Hayward submarket. They 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

  • Expand

    Perm Debt – 1.20x DSCR & 3-Years Interest Only – Stabilized Multifamily, Los Angeles, CA

    April 7, 2021

    Transaction Description:

    George Smith Partners secured senior permanent financing for a stabilized multifamily property located in the Pico Robertson neighborhood of Los Angeles, CA. The non-recourse debt was utilized to complete the acquisition of the multifamily asset. The loan was structured with a 5-year term and interest only payments for the initial 3-years followed by a 30-year amortization schedule. The loan was collateralized by a Class B, three story, 16-Unit multifamily property. The Subject was 100% leased at closing but only 78% physically occupied.

    GSP selected a bank lender that was able to underwrite the income from three newly executed leases with no seasoning. The Lender funded the full proceeds with signed leases and rent checks although the tenants had yet to take possession. The Lender executed on excellent terms while closing on a firm acquisition deadline of 45 days. At application, the Lender offered an early rate lock to remove any pricing risk. GSP worked with the Lender to navigate the appraisal assumptions surrounding concessions and market rent stemming from various COVID risks while maximizing proceeds.

    Rate: 3.40%
    Term: 5 years
    Max LTV: 65%
    Min DCR: 1.20x
    Amortization: 3-Years Interest Only, 30-Year Schedule thereafter.
    Origination Fee: Par
    Prepayment: 3, 1, 1, 1
    Guaranty: Non-Recourse

  • Expand

    $7,750,000 Non-Recourse Bridge-to-Agency Refinance for a 36-Unit Recently Completed Multifamily Building; Tujunga, CA

    April 7, 2021

    Transaction Description:

    George Smith Partners arranged $7,750,000 in non-recourse financing for the lease-up and stabilization of a newly constructed 36-unit multifamily building located in Tujunga, CA. The Sponsor had just received the Property’s Certificate of Occupancy and wanted to lower the interest rate from the existing construction lender. This financing allows the Sponsor to finish the lease up of the Property, stabilize the asset, and exit the loan with long-term agency financing. The financing was $700,000 more than the construction loan and the extra proceeds were used to pay for cost overruns and build a larger interest reserve required for the slower lease up due to COVID. The Lender will cut their minimum required hold and exit fee after month seven if the Sponsor exits into an Agency loan with the Bridge Lender.

    Rate: LIBOR + 3.75%
    Term: 18 Months
    Amortization: Full Term Interest Only
    LTV: 75%
    LTC: 78%
    Prepayment: 9 Months
    Guaranty: Non-Recourse

  • Expand

    $7,685,000 Senior Construction Financing for a Mid-Developed Construction Building; Los Angeles, CA

    March 31, 2021

    Transaction Description:

    George Smith Partners secured a $7,685,000 construction loan for the completion of a development project in Los Angeles, California. The construction project was being fully paid out of pocket and had just finished two levels of subterranean parking. At this point of completion, the Sponsors decided to finance the remaining project costs instead of coming out of pocket the rest of the way. Many lenders didn’t want to finance the Project due to the mid-construction risk and those that did wanted some sort of banking relationship/deposit to come with the Project. GSP secured a capital source that was comfortable with the mid-construction project and didn’t require the Sponsors to bring in any fresh equity nor did they require any banking deposits.

    Rate: 5.50%
    Term: 24 months + two 6-month options to extend
    Amortization: Interest Only
    LTC: 55%
    Guaranty: Full recourse

  • Expand

    $16,500,000 Bridge Refinance for 173-Unit Multifamily Property; Sunnyvale, CA

    March 31, 2021

    Transaction Description:

    George Smith Partners secured a $16,500,000 loan for a 173-unit multifamily property in Sunnyvale, CA. The first mortgage has a 12-month term at 5.9% with no prepayment penalty. The loan may be extended for an additional 12 months at 6.9%. The Sponsor developed the Property and has owned it for over 40 years. In the past year, occupancy and collections were negatively affected by COVID-19’s effects on tenants’ ability to pay rent. Occupancy was also negatively affected by the significant upgrades and renovations made to a much larger neighboring property which undertook an aggressive post-renovation releasing program. The Sponsor engaged GSP to supply a quick-close solution when the existing lender declined to renew its loan. Unlike most lenders, GSP’s Lender did not require reserves for potential COVID rental interruptions and closed within 10 days of the issuance of its term sheet without requiring an appraisal or other third-party reports.

    Rate: 5.9% Fixed in Year 1; 6.9% in Year 2
    Term: 12 Months + Extension Option for 12 Months
    Lender Fee: 1% + 1% Extension
    Amortization: Interest Only
    LTV: 30%
    Prepayment: Prepayable without penalty
    Recourse: Non-Recourse

  • Expand

    Perm Debt – 10-Years Interest Only – Stabilized Multifamily; Los Angeles, CA

    March 24, 2021

    Transaction Description:

    George Smith Partners secured senior permanent financing for a stabilized multifamily property in Los Angeles, CA. The non-recourse debt totaling $12,300,000 was utilized to refinance existing debt and return equity to the Ownership. The loan was structured with a 10-year term and interest only payments for the full duration. The loan was collateralized by a Class-A 34-Unit multifamily building, the Subject was 94% leased at closing and located in a highly desirable West Los Angeles neighborhood.

    GSP selected a lender that was able to refinance the Sponsor’s existing debt, cover prepayment penalties and return a significant amount of equity to the Borrower, while simultaneously locking in interest only payments for the next ten years at a very desirable rate. 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 the loan despite several COVID related delinquencies.

    Rate: 3.43%
    Term: 10 years
    Max LTV: 65%
    Min DCR: 1.35x
    Amortization: None; 10-Years Interest Only
    Origination Fee: Par
    Prepayment: Yield Maintenance

  • Expand

    97% Financing; $39,650,000 Construction Debt and $18,750,000 Equity for 153-Unit Multifamily Opportunity Zone Development; Downtown Sacramento

    March 24, 2021

    Transaction Description:

    George Smith Partners successfully placed $39,650,000 in construction debt and $18,750,000 in limited partner equity for the ground up construction of an Opportunity Zone multifamily development with ground floor retail in Downtown Sacramento, at the peak of COVID. The challenges included uncertainty regarding COVID during the pre-vaccine period, political uncertainty, an offshore borrower, and California’s tenant friendly policies. Many investors were too cautious to make a commitment in the middle of COVID with no anticipated end in sight. These risks were offset by exceptional sponsorship, a strong market, and a well margined deal.
    The 153-unit Project is the first in a series of planned multifamily developments in the region by Anthem Properties Group of Canada. GSP leveraged its expertise and relationships to find a lender to serve the Sponsor and push through an arduous due diligence process to an expeditious closing. GSP helped structure the partnership agreement to best serve Opportunity Zone taxation rules and ensure the most beneficial long-term returns between the Capital Providers and the Sponsor.

    All Terms Confidential