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multifamily

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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

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    $9,000,000 Construction Financing for 28-Unit Apartment Building; Los Angeles, CA

    August 17, 2022

    Transaction Description:

    George Smith Partners secured $9,000,000 of senior construction financing for the development of a 28-unit ground-up multifamily Building in Los Angeles, California. The Project will be a conventional 28-unit property with 4 stories, including 12 one-bedroom units and 16 two-bedroom units. The construction loan floats at a rate of Prime + 1%. The 75% loan-to-cost construction loan also comes with the option to convert to a 5-year mini-perm loan upon completion; based on the 5-Year Treasury plus a margin of 2.75%, with a 3.95% floor, eliminating any future financial risks. GSP sourced a Lender that was able to move efficiently and most importantly accommodate the Borrower’s development timeline and experience. 

    Rate: Prime +1%, with a Floor Rate of 5.00%
    Term: 18 Months with Two 6-Month Options to Extend
    LTC: 75%
    Stabilized LTV: 65%
    Guaranty: Recourse
    Mini-perm Option: 5-Year Treasury + 2.75% with a 3.95% Floor

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    $6,850,000 Multifamily, Cash-Out Refinance; Los Angeles, CA

    August 10, 2022

    Transaction Description:

    George Smith Partners secured $6,850,000 for the refinance of a stabilized 58-unit Los Angeles apartment building. The loan is fixed at 4.15% for five years and has full-term interest-only payments. The Lender offered a 60-day rate lock, which provided a great benefit to the Borrower because interest rates increased while the loan was in application. A fast-paced closing process was required to keep the rate locked at 4.15%. GSP ensured that all stakeholders adhered to the timeline and that the loan successfully closed on the required date. There were no changes to the term sheet.

    Rate: 4.15% Fixed for 5 years; 30-Day Average SOFR + 2.35% Thereafter
    Term: 30 years
    Prepayment Penalty: 3, 1, 1, 1%
    LTV: 55%
    DCR: 1.20x
    Origination Fees: Par

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    $9,907,500 Financing for Beneficial Treatment Center; San Francisco, CA

    July 27, 2022

    Transaction Description:

    George Smith Partners successfully arranged a $9,907,500 loan for a very special project in San Francisco that provides huge benefits to the City and the Community. Utilizing our relationship with a community development lender, GSP was able to secure a 3.5% interest rate, 10 year loan, for a drug-free rehab facility in the South of Market (SoMa) area of San Francisco. The Facility aims to transform the lives of the surrounding community with help from the City. The Project was a vacant hotel with shared bathrooms, bordering some of the roughest areas of San Francisco. Most lenders passed on the project, but because of GSP’s experience with SRO properties, we were able to negotiate a below market rate for 10 years to enable the Project to move forward.

    The loan allowed for the rehab and redevelopment of an old SRO (Single Room Occupancy) tourist hotel with shared baths into the updated 80 room facility, which included new private bathrooms in each unit. It is great to not only successfully close a difficult loan, but to see the way the Sponsor was able to transform lives and solve community challenges.

    The Project will house people who are struggling with substance use from the streets to a safe place indoors. They can access clean bathrooms, showers, food, and a place to rest. Afterwards, the staff can help participants connect with medical care, mental health, substance use, and housing services. The Center was designed to improve safety for both participants and neighbors by creating a safe place for people experiencing a drug related crisis.

    Rate: 3.5%
    Amortization: 30 Year
    Term: 10 Years
    LTV: 80%

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    CO-GP Joint Venture for a 207-Unit Multifamily Ground-Up Construction Project; Denver, CO

    July 6, 2022

    Transaction Description:

    George Smith Partners successfully advised our client to create a $2,520,000 Co-General Partner Joint Venture for a 207-unit multifamily ground-up, modular construction project in Denver, Colorado. The relationship created by GSP combines an investment team with a strong financial institutional backing with a sponsorship team of well-established development experts, into a general partnership team taking on a project in one of the fastest-growing markets in the country.

    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, playgrounds, sports courts, 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. The Project will be constructed modularly, thereby saving on costs and time. Modular projects can be developed in half the time as traditional construction, with approximately 60% – 90% of construction performed inside a factory while site work is simultaneously completed.

    The investment was paired with a bridge loan to close on the land, complete the working drawings and complete all the pre-development work. The Project is estimated to break ground in Q1 of 2023. To close, GSP will assist in obtaining a construction loan and LP Equity.

    Terms Confidential 

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    $65,410,000 Acquisition Bridge Financing for a 232-Unit Multifamily Property; San Bernardino, CA

    July 6, 2022

    Transaction Description:

    George Smith Partners secured $65,410,000 in proceeds for the acquisition of a 232-unit multifamily property in San Bernardino County. The bridge loan is structured as $63,020,000 at close and $2,390,000 in future funding. The fully-funded proceeds represent 75% LTC. The loan floats at a rate of 30-Day SOFR + 3.20% with a 0.35% floor on SOFR.

    GSP discussed the transaction with over 40 different capital providers and received a wide range of feedback. Many lenders declined due to the Property being constructed in the 1970s. Other lenders provided quotes but were limited to a maximum of 70% LTC ($60,800,000). Several quotes had pricing of SOFR + 4.0%.

    GSP was able to source a lender that provided 75% LTC with pricing of SOFR + 3.20%, which is well below market. The Lender underwrote to an exit debt yield of only 6.0%, resulting in maximum proceeds. There was no required interest reserve or any type of cash management during the initial loan term. The spread of 3.20% over SOFR was maintained despite many other lenders widening their spreads while the loan was in app. The loan closed with no changes to the original term sheet.

    Another challenge facing floating rate bridge loans is the requirement to purchase a cap. Until several months ago, the cost of a cap was negligible. However, the expense has become exorbitant due to the current volatility in interest rates. GSP was able to lower the up-front cap cost by reducing the period of the cap from 3 years down to 2 and increasing the rate at which the cap is triggered (strike price).

    Rate: Floating at SOFR + 3.20% with a 0.35% SOFR Floor
    Term: 3 Years, Two 12-Month Extensions
    LTV: 77% Initial / 65% Stabilized
    LTC: 75%
    Debt Yield: 4.5% In / 6.0% Out
    Guaranty: Non-Recourse

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    Perm Financing for a Multifamily Property; Houston, Texas

    June 29, 2022

    Transaction Description:

    George Smith Partners secured permanent financing for an eight-unit multifamily property located in Houston, Texas. The loan is fixed at a rate of 4.00% and locked in for 7 years. The deal went into application during the Fed run-up in rates and the rate was never locked. However, due to GSP’s relationship with the Lender, we were able to hold the rate and term down substantially. The financing does not require any deposit relationship with the bank and did not require any funds to be held back for reserves. The Lender’s processing/application fee was $2,000 all in.

    Rate: 4.00%, Fixed for 7 Years
    Term: 30 Years
    Amortization: 30 Years
    LTV: 70%
    Prepayment: 5, 4, 3, 2, 1%
    Depository Relationship: None Required

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    $38,500,000 Bridge Financing for a Two-Property Multifamily Portfolio; Sanford, FL

    June 29, 2022

    Transaction Description:

    George Smith Partners successfully placed a $38,500,000 bridge loan for the acquisition and renovation of two multifamily properties located in Sanford, Florida. The two Properties total 260 units and are located across the street from one another. GSP sourced a lender that was able to maximize proceeds at a low rate by crossing the properties with release provisions. The two properties were allocated at different loan amounts for their release provisions. One property is a 1970’s vintage single-story, 120-unit, apartment complex that had an initial loan of $14,150,000. The other property is a 1990’s vintage, two-story, 140-unit, garden-style apartment complex that was allocated at an initial loan amount of $20,800,000. The loan was sized to 79% LTC and includes the portfolio’s capital improvement and renovation budget. The Sponsor intends on renovating approximately 75% of the units within the 3-year loan term.

    Rate: One Month CME Term SOFR + 3.60% (0.25% Floor Rate)
    Term: 3 Years, Two 12-Month Extensions
    Amortization: Full Term Interest-Only
    LTV: 80% (As-Is LTV)
    LTC: 79%
    Prepayment: 15 Months Minimum Interest Period
    Loan Fee: 1% Origination Fee, 0.25% Exit Fee
    Guaranty: Non-Recourse

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    Perm Loan Debt for Two Multifamily Communities; San Diego, CA

    June 15, 2022

    Transaction Description:

    George Smith Partners secured permanent financing for two newly renovated/repositioned Class C apartment communities in San Diego. Two separate loans were originated for the same Sponsor for the 14-unit and 5-unit multifamily communities.

    The Properties were in the process of being completed and leased when the Borrower went under application with a bank. Despite the longer than normal application process and rising interest rate environment, GSP was able to get the bank to extend the rate lock and obtain a favorable coupon.

    Rate: 3.30% Fixed for 7 Years, Floating Thereafter at S+2.25%
    Term: 30 Years
    Amortization: 3 Years Interest-Only
    LTV: 70%
    DSCR: 1.20x
    LTC: 85%
    Guaranty: Non-Recourse