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multifamily

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    Unentitled Land Financing for Infill Multifamily Development; Los Angeles, CA

    January 25, 2023

    Transaction Description:

    George Smith Partners successfully closed a 1st and 2nd Trust Deed at 85% of the purchase price for unentitled land in the Koreatown neighborhood of Los Angeles, CA. The two loans have a blended rate of 9.98% for the twelve-month initial term. The Sponsor will have a six-month extension option available. GSP was able to identify two lending sources, to maximize leverage, who understood the market and the demand for multifamily development in this location.

    First Trust Deed
    Rate: 8.90% Fixed
    Term: 12 months with One 6-month Extension Option
    LTV: 65%
    Amortization: Interest Only
    Origination Fee: 1.00%
    Exit Fee: None
    Prepayment: Open
    Guaranty: Non-Recourse

    Second Trust Deed
    Rate: 13.50% Fixed
    Term: 12 months with One 6-month Extension Option
    LTV: 65% – 85%
    Amortization: Interest Only
    Origination Fee: 3.00%
    Exit Fee: None
    Prepayment: 6 Months Minimum Interest
    Guaranty: Non-Recourse

    Blended Debt
    Rate: 9.98% Fixed
    Term: 12 Months with One 6-month Extension Option
    LTV: 85%
    Amortization: Interest Only
    Origination Fee: 1.47%
    Exit Fee: None
    Guaranty: Non-Recourse

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    Permanent Multifamily Financing; Los Angeles, CA

    January 11, 2023

    Transaction Description:

    George Smith Partners arranged $3,800,000 in permanent financing for the refinance of a stabilized 39-unit multifamily property in Los Angeles, California. The Sponsor locked rate in early summer of 2022 during a time of rapidly increasing interest rates. Due to some unforeseen events, the transaction got delayed multiple times. GSP was able to get the rate lock extended multiple times due to our relationship with the Capital Provider. The rate lock was extended without a single increase to the rate or any additional fees. The loan includes a flexible prepayment penalty structure that allows the Sponsor plenty of options during the next 5 years as well as over $1,500,000 in cash-out proceeds.

    Rate: 4.25%
    Term: 5 Years Fixed
    Amortization: 30 Years
    Prepayment Penalty: 3/2/1, Then Open
    Deposits Required: None
    Guaranty: Non-Recourse

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    $3,830,000 Refinance of a 11-Unit Multifamily Property; Los Angeles, CA

    January 5, 2023

    Transaction Description:

    George Smith Partners arranged $3,830,000 in permanent financing on a newly stabilized 11-unit multifamily property located in Austin, TX. The loan is fixed at a rate of 6.00% for 10 years and a 3-3-3-2-1 prepayment structure. Although some lenders were hesitant to provide competitive permanent financing terms on a former condo multifamily property with less than a year of operating history, GSP was able to source competitive financing ahead of the rising interest rate environment with flexible prepayment. Thanks to our long-standing relationship with this repeat lending relationship, GSP was able to meet the Sponsor’s deadline and close this transaction within 43 days from signing the term sheet.

    Rate: 3.50%
    Term: 10 Years
    LTV: 70%
    Prepayment: 5, 4, 3, 2, 1%

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    Construction Multifamily Takeout Financing; Los Angeles, CA

    December 15, 2022

    Transaction Description:

    George Smith Partners arranged permanent financing for the refinance of a stabilized 12-unit multifamily property in Los Angeles, California. The Sponsor finished construction on the Property in the middle of the current rate hike cycle. GSP identified a Capital Provider who allowed an early rate lock before Certificate of Occupancy was issued. The Lender allowed the borrower to go into application with very little lease up, but with the understanding that the property would be stabilized by closing. Although the closing took slightly longer than the 60 day term of the rate lock, the Lender held the rate for no additional charge. The bank did not require deposits to be held at their branch except for the subject property’s operating account.

    Rate: 4.65%
    Term: 5 Years Fixed
    Amortization: N/A, Interest Only for all 5 Years
    Prepayment Penalty: Stepdown; 3/3/2/1/1
    Deposits Required: None

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    $25,000,000 Bridge Financing for 200-Unit Multifamily Acquisition; Irving, Texas

    December 7, 2022

    Transaction Description:

    George Smith Partners successfully placed a $25,000,000 bridge loan for the acquisition and renovation of a 200-unit, 1970 vintage apartment community in Irving, Texas. GSP sourced a Lender that was able to maximize proceeds while providing future capital expenditure funding for the sponsor. The loan was sized to 74.1% of As-Is Value and includes future fundings for 100% of the capital improvements and unit renovations. The Sponsor plans on renovating approximately 75% of the units within the initial 3-year loan term.

    The lender prices over 30-Day Average SOFR, as opposed to the more common 30-Day Term SOFR. The average SOFR is based on the preceding 30 days rather than the upcoming 30 days and is 60 bps lower in today’s rising rate environment.

    Rate: 4.10% + 30-Day Average SOFR (4.88% floor rate)
    Term: 3 Years, Two 12-Month Extensions
    Amortization: Interest-Only (30 Year amortization during the extensions)
    LTV: 74.1% As-Is
    Prepayment: 18 Months Minimum Interest Period
    Loan Fee: 1% Origination Fee, 0.50% Exit Fee
    Guaranty: Non-Recourse

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    Permanent Financing for Acquisition of 12-Unit Multifamily Property; Los Angeles, CA

    October 26, 2022

    Transaction Description:

    George Smith Partners arranged $2,250,000 in permanent financing for the acquisition of a stabilized 12-unit multifamily property in Los Angeles, California. The Sponsor acquired the Property as interest rates were soaring and as the environment was changing drastically with the Fed raising rates. GSP identified a Capital Provider who allowed an early rate lock, required no holdbacks of any kind, no deposits to be held at their branch, and provided an extremely flexible prepayment penalty structure. This allows the Sponsor plenty of options during the next 5 years at an aggressive rate.

    Rate: 4.34%
    Term: 5 Years Fixed
    Amortization: 30 Years
    Prepayment Penalty: None
    Reserve Account: None
    Deposits Required: None

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    $23,750,000 LP JV-Equity for a 155-unit BTR Community; Loudon County, Virginia

    October 19, 2022

    Transaction Description:

    George Smith Partners is pleased to announce the arrangement of $23,750,000 of LP JV-Equity for the ground-up construction of a 155-unit build-for-rent community in Loudon County, Virginia. The Sponsor originally engaged GSP to capitalize the land from purchase to finalization of the site plan that would be sold to a homebuilder. As headwinds from rising interest rates started affecting homebuilders’ price indications, the Sponsor decided to pivot into developing all 155 units as rental units with a Limited Partner. Through GSP’s deep relationships and the Sponsor’s expertise in development, the transaction changed in scope and direction ending in a great partnership and transaction for the Sponsor.

    Terms Confidential

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    $20,950,000 Cash-Out Refinance for Three Multifamily Properties; Los Angeles, CA

    October 5, 2022

    Transaction Description:

    George Smith Partners secured cash-out refinance loans totaling $20,950,000 for 3 stabilized Los Angeles multifamily properties. The properties comprise a total of 145 units. The loans are fixed at 4.25% for 5 years and have at least 4 years of Interest Only payments. The lender gave the borrower full credit for income sources that had recently increased, including parking and utility reimbursements. Annualizing the most recent months of collections resulted in higher loan proceeds. A 60-day rate lock was signed at application. Since market interest rates increased by over 50 basis points while the loan was application, this provided a substantial benefit to the borrower. Although the closing process took longer than 60 days, the lender extended the rate lock for no charge.

    Rate: 4.25% Fixed for 5 years
    Term: 30 years
    Prepayment Penalty: 3,2,1%
    LTV: 60%
    DCR: 1.20x

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    $57,900,000 Participating Construction Financing for 187-Unit Multifamily; Tempe, AZ

    September 8, 2022

    Transaction Description:

    George Smith Partners successfully arranged $57,900,000 in non-recourse, construction financing for a mid-rise, Class A, 187-unit multifamily development in Tempe, AZ. The Project will serve the rapidly developing area of north Tempe. The Property is located immediately adjacent to a Valley Metro light rail stop, offering residents convenient access to Downtown Tempe, Arizona State University, Sky Harbor Airport, and downtown Phoenix.

    The Sponsor, headquartered in nearby Scottsdale with a successful track record of multifamily and commercial developments, engaged GSP in 2020 to source high-leverage, non-recourse financing. Despite being relatively early in the Project’s development stage, GSP sourced a Lender offering a 90% LTC loan, which includes a participating feature. This unique structure features the Lender sharing profits with the Sponsor in exchange for the high leverage financing.

    The construction budget grew significantly during the longer than expected entitlement and permitting process. Fortunately, thanks to GSP’s close relationship with the Lender, a commensurate increase in market rents, and the strength of the Sponsor, the final loan amount was nearly 40% higher than that of the original loan application in 2021.

    Rate: 4.25% Fixed
    Term: 5 Years
    Amortization: Interest Only
    LTC: 90%
    Guaranty: Non-Recourse

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    $120,115,000 Permanent Financing for 526-Unit Multifamily Property, Los Angeles, CA

    August 31, 2022

    Transaction Description:

    George Smith Partners has secured $120,115,000 in permanent financing for a 526-unit multifamily property, the Da Vinci Apartments. The Property is a 98% occupied, institutional quality, 5 and 6-story residential complex located in Downtown Los Angeles. The loan is fixed for 10 years at 4.38% with interest-only payments for the first 7 years.

    Despite Los Angeles’ COVID-based eviction and rent control issues, GSP was able to work with the Lender to underwrite the NOI to accomplish the targeted loan amount. GSP also facilitated an early rate lock to protect against changes in the interest rate prior to the loan’s closing.

    Rate: 4.38% Fixed (T+ 1.45%)
    Term: 10 Years
    Amortization: 30 Years with 7 Years IO
    LTV: 45%
    Guaranty: Non-Recourse

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    $35,000,000 Cash-Out Refinance of Newly Built 161-Unit Multifamily Property; Boise, ID

    August 24, 2022

    Transaction Description:

    George Smith Partners secured $35,000,000 in proceeds for the permanent refinance of a newly built 161-unit multifamily property in downtown Boise, ID. The Property has been achieving strong leasing velocity but was only 30% occupied when GSP began discussing the transaction with capital sources. Although the original loan request was structured with a forward rate lock and a future funding holdback, GSP was able to source a lender that funded the full proceeds at close.

    Some notable challenges were encountered when marketing the deal. Most perm lenders declined to bid because the Property was still in lease-up. Several other lenders would not loan in Boise, although there has been an uptick in institutional capital shifting their focus to Boise. Additional quotes were in the range of $30,000,000-$32,000,000 with a holdback, which was short of the Borrower’s desired leverage.

    GSP was able to source a lender that provided superior proceeds, rate, and structure. The Lender held the rate of 4.40% despite large fluctuations in rates while the loan was in application, with no rate lock deposit. The loan has no prepay, which will allow the Borrower to refinance as rents continue to season. The fully funded proceeds provided a considerable amount of cash out to the Borrower over their initial construction loan.

    Rate: 4.40% Fixed for 7 Years
    Interest Only: 3 Years
    Term: 7 Years with Optional 7 Year Extension
    Amortization: 3 Years Interest Only followed by 27 Year Amortization
    Prepayment Penalty: No Prepay
    LTV: 60%
    DCR: 1.20x

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    Cash-Out Refinance for a Recently Renovated 10-Unit Multifamily Property; San Diego, CA

    August 23, 2022

    Transaction Description:

    George Smith Partners successfully arranged $3,100,000 for the cash-out refinance of a recently renovated 10-unit property in the Pacific Beach area of San Diego, CA. GSP was able to find a lender to quote the permanent loan despite the fact that the Property was not yet leased/stabilized. Furthermore, GSP was able to get the Lender to rate lock the low fixed rate for 90 days. The minimum cash required on the property is 10% and the minimum required occupancy at closing is 90%. The loan went under application on April 6, 2022, and closed within 90 days. The financing took longer than expected because of the Lender underwriting and a title issue at the last minute with a mechanics lien. However, due to GSP’s strong relationship with the Lender, we convinced them to honor and extend the rate lock.

    Rate: 3.65% Fixed
    LTV: 75%
    Min DSCR: 1.25x
    Term: 7 Years
    Amortization: 30 Years
    Prepayment: 5, 4, 3, 2, 1%
    Guaranty: Recourse
    Lender Fee: 25bps