Perm

  • Expand

    $8,152,500 Conversion to Co-Living, 68% LTC, Heavy-Lift Bridge-to Perm Loan; San Francisco, CA

    November 11, 2020

    Transaction Description:
    George Smith Partners placed the $8,152,500 bridge-to-mini perm loan for the conversion of an existing 12-unit multi-family community into a 17-unit 44-bed co-living community. The 68% LTC bridge loan converts to a 5-year mini-perm loan fixed at CMT + 2.5% with a 3.75% floor.

    Challenge/Solution:
    The Project came to GSP half-way through construction and was being funded by a lender that had filed bankruptcy with proceeds that were insufficient to complete the new business plan. GSP put the loan under application pre-COVID with a new business plan that included (as a condition in closing) approvals for a 4th floor penthouse/useable roof top level. While in application, the construction and the penthouse level approval process came to a halt due to COVID causing stress on both the existing loan (nearing maturity) as well as the new loan underwriting. The challenges associated with co-living as a new asset class resulted in additional scrutinization from the new lender as well as the appraisal which had a negative impact on value. GSP was able to resolve the valuation issues by successfully arguing the merits of the Project as well as successfully negotiating a waiver of the exit fee on the previous loan which resulted in zero impact to the loan proceeds and the Borrower’s out of pocket cash required at closing.

    Construction Loan:

    Rate: Prime plus 1% with 5% floor
    Term: 18 Months
    LTC: 68%
    LTV: 65%

    Mini-perm Loan:

    Rate: CMT + 2.25% with 3.75% floor
    Term: 5 Years
    Amortization: 30 years
    Prepayment: 5, 4, 3, 2, 1 open

  • Expand

    $4,700,000 Refinance with Cash-Out for Single-Tenant Manufacturing Industrial; El Cajon, CA

    November 4, 2020

    Transaction Description:
    George Smith Partners placed a $4,700,000 refinance loan with cash-out for a single-tenant industrial property in El Cajon, San Diego County. This highly specialized facility is one of only two locations in the US that is approved to manufacture key components and assemblies for military and commercial aircraft currently in service.

    The Sponsor acquired the Property in 2018 with a bridge acquisition loan. In March 2020, GSP was engaged to refinance the maturing bridge loan with permanent financing including cash-out proceeds. However, the California “stay-at-home” order was issued soon thereafter resulting in a challenging lending market for the Property.

    GSP helped the lenders become comfortable by focusing on the low leverage, the strength of the Sponsor and the Tenant, and the fact that the Property continued to operate at full capacity without interruption due to be a critical Department of Defense supplier. In addition, the Tenant recently exercised its third extension option to the existing lease with an increased cash flow closer to market rents, thereby continuing its long-term commitment to the Facility.

    While holdback reserves are increasingly common in the current environment, GSP negotiated to have reserve payments deferred until the fourth year of the loan and on a monthly schedule instead of the typical lump sum holdback at closing.

    Rate: 4.65%
    Term: 7 Years
    LTV: 51%
    DSCR: 1.30x
    Prepayment: None

  • Expand

    $6,790,000 Permanent Cash Out Financings for Walgreens and Jack in the Box; Murrieta, CA

    June 10, 2020

    Transaction Description:

    George Smith Partners arranged two loans totaling $6,790,000 in permanent financing with over $1,500,000 cash out for a freestanding Walgreens and Jack in the Box located in Antelope Square Shopping Center in Murrieta, California. Both loans are fixed for 5 years at 2.87%, which is one of the lowest fixed rate financings ever closed by GSP. Just as GSP went into application the impacts of Covid-19 resulted in Jack in the Box ceasing rent payments and many capital providers putting a pause on new deals. GSP was able to negotiate a high leverage, cash out refinance with no warm body for carve-outs. The Sponsor also agreed to hold back principal and interest reserves on the Jack in the Box.

    Rate: 2.87% Fixed
    Term: 5 Years
    Amortization: 30 Years
    Combined LTV: 65%
    Prepayment: 3,2,2,1,0
    Guaranty: Carve-outs to entity, no warm body

  • Expand

    $12,933,000 Permanent Loan to Refinance Existing Construction Debt for a Recently Completed 21-Unit Multifamily Property; 65% LTV; 2.92% Fixed, 1.35 DSCR; Los Angeles, CA

    April 22, 2020

    Transaction Description:

    George Smith Partners secured $12,933,000 in proceeds for a recently stabilized 21-unit multifamily building located in the Pico Robertson neighborhood of Los Angeles, CA. The non-recourse, par, permanent Fannie Mae loan was utilized to refinance the existing bank construction debt in the amount of ~$9.45M and return equity to the ownership. The loan represented 88% of cost and carries a 10-year term with 10-years of interest only payments. The loan is secured by a Class A five-story mid-rise multifamily building comprised of four 2-bedroom units and seventeen 3-bedroom units. Amenities at the Subject Property include controlled access entry and parking, an elevator, rooftop deck, and private balconies. The loan was placed into application prior to major Covid-19 concerns thus no index floor was contemplated. GSP worked with the Lender to underwrite revenue to a trailing one month of actual collections carefully navigating the waiver process so as not to trigger new business which would have resulted in an index significantly wider than the actual 10-year Treasury rate. Lastly, a six-month reserve for principal, interest, taxes, insurance, and reserves was held back at closing in the event of a shortfall, enabling the Lender to fund during the global pandemic. The reserve will be released within one year if the Subject Property maintains the minimum 1.35x DSCR for the same period.

    Rate: 2.92% Fixed
    Term: 10 Years
    Amortization: 10 Years Interest Only
    LTV: 56%
    DSCR: 1.35x
    Recourse: Non-Recourse
    Prepayment: Yield Maintenance
    Loan Fee: Par

  • Expand

    Abbot Kinney Co-Working Creative Office Conversion Bridge-to-Permanent Financing; Venice, CA

    April 15, 2020

    Transaction Description:

    George Smith Partners placed bridge to permanent financing for the creative office conversion of a co-working space on Abbot Kinney in Venice, California. GSP sourced a lender comfortable with the trophy project’s high basis per square foot and co-working business model. The Project is slated to be the only co-working option on Abbot Kinney, one of the most coveted retail thorofares in Los Angeles. The 4.75% fixed interest rate was locked at application and featured 24 months of interest only followed by 25-year amortization for the remaining 5-year term. The loan was recourse to an entity, as no warm body was available and carries no prepayment penalty.

    Rate: 4.75% fixed (locked at application)
    Term: 7 Years
    Amortization: Interest only for 24 Months; 25-year amortization thereafter
    Yield Maintenance: None
    Recourse: Entity-level only

  • Expand

    $4,517,000 Acquisition of a Multi-Tenant Retail Center, Villa Park, IL; Non-Recourse

    April 1, 2020

    Transaction Description:

    George Smith Partners secured $4,517,000 for the acquisition of a multi-tenant, retail center in Villa Park, Illinois. The non-recourse permanent loan is fixed at 3.75% for ten years with full-term interest only and a defeasance prepayment penalty structure.

    One of the tenants was a newly opened gym franchise with no historical sales information for this center. Also, during the loan process, the Seller was finalizing a subdivision of the parking lot which required multiple levels of municipality approvals.

    GSP identified a capital source who understood the strength of the asset, the experience of the Sponsor and its desirable suburb location, which is 20 miles outside of Downtown Chicago. The Capital Provider worked through the timing of the issuance of the subdivision approval and was able to close as soon as the approval was finalized. The efficiency of our Capital Provider allowed the Sponsor to be able to rate lock and close as soon as the approval was stamped, taking advantage of the low interest rate environment.

    Rate: 3.75% Fixed for 10 years
    Term: 10 years
    Amortization: 30 years
    Prepayment Penalty: Defeasance
    DCR: 1.30x
    Interest Only: 10 years
    Guaranty: Non-Recourse
    Origination Fees: Par

  • Expand

    $4,300,000 Non-Recourse Permanent Financing for a Trophy Property in West Hollywood, CA

    March 11, 2020

    Transaction Description:

    George Smith Partners placed $4,300,000 in non-recourse permanent financing for a trophy property in West Hollywood, CA. Bank execution, a non-recourse structure and a sub 4% all-in coupon were all requirements, which eliminated most lenders. However, GSP sourced a bank lender willing to offer a non-recourse structure and a 3.92% fixed interest rate. The 5 year loan carries a step-down prepayment penalty and amortizes over 30 years.

    Rate: 3.92% Fixed
    Term: 5 Years
    Amortization: 30 Years
    LTV: 50%
    Prepayment Penalty: Stepdown
    Guaranty: Non Recourse

  • Expand

    Cash-Out Refinance for 7-Unit Multifamily Property; North Hollywood, CA

    November 20, 2019

    Transaction Description:

    George Smith Partners successfully arranged a cash-out permanent refinance of a 7-unit multifamily property in North Hollywood, California. Loan proceeds were used to pay off the existing variable, higher interest rate loan and allow the Sponsor to obtain a lower interest, fixed rate loan. The equity also allowed the Sponsor to complete upgrades to the Property including roofing, flooring and various other deferred maintenance. GSP targeted a capital provider who is active in the multifamily segment and could maximize loan proceeds for the Sponsor in order to finish the Property upgrades.

    Rate: 4.30%
    Term: 7 Years Fixed, 30 Year Term
    LTV: 65%
    Amortization: 30 Years
    Prepayment Penalty: 3, 2, 2, 1, 1 with nothing after the 5th year
    Lender Fee: None

  • Expand

    $8,350,000 in Non-Recourse Permanent Bank (non CMBS) Financing for a Medical Office with 86% Occupancy, 3.88% Fixed Rate; Tampa, FL

    November 20, 2019

    Transaction Description:

    George Smith Partners secured $8,350,000 in non-recourse permanent bank financing for a 44,000 square foot medical office property in Tampa, Florida. Although the Property was only 86% leased at closing, the Sponsor required non-recourse, permanent financing from a portfolio lender and was not open to a CMBS execution. For tax purposes, the Sponsor also required a lender that would not require a new single purpose borrowing entity. After an extensive marketing effort, GSP sourced a bank lender that specializes in financing healthcare related properties. Sized to 65% of value, the 7-year execution carries a fixed rate of 3.88% as a result of a SWAP executed by the bank at application at no additional cost to the Sponsor. In addition to being non-recourse, the loan structure offers two years of interest only followed by a 30 year amortization (as opposed to a 25 year amortization, which is more common for a commercial, non-multifamily property). The loan carries no prepayment penalty apart from SWAP breakage.

    Rate: 3.88% Fixed as a result of a SWAP
    Term: 7 Years
    Amortization: 2 Years of Interest Only; Followed by 30 Years
    LTV: 65%
    Prepayment: None except for SWAP Breakage
    Guaranty: Non-Recourse

  • Expand

    Acquisition of an Apartment Building with One Master Lease in Place; San Diego, CA

    October 30, 2019

    Transaction Description:

    George Smith Partners arranged permanent financing for the acquisition of a master leased, multifamily property in San Diego, California. The complex is on a month-to-month master lease with a non-profit program that provides treatment and rehabilitation support to individuals and families facing substance abuse and behavioral health challenges. The Sponsor was in favor of this program and liked that it was promoting independent living and mental wellness. The Sponsor decided she wanted to keep the master lease in place instead of terminating it and turning the multifamily property into a traditional apartment building.

    Challenge:

    The Sponsor was in application with their relationship lender for over 6 weeks before finding out that they denied the loan. The Sponsor approached GSP immediately as their money had already gone hard and the Seller was growing impatient. In addition, the Seller had already identified the upleg of a 1031 Exchange and informed their agent to relist the Property and start fresh with a new buyer.

    Solution:

    GSP worked quickly to source a lender that allowed the Sponsor to keep the month-to-month master lease in place. GSP collaborated with the listing agent and buyer’s agent on getting an extension that everyone felt comfortable with. GSP closed the loan within the submitted time constraints.

    Rate: 4.20%
    Term: 5 Years Fixed, 15 Year Term
    Amortization: 30 Years
    Prepayment Penalty: 4,3,2,1
    Lender Points: None

  • Expand

    $4,100,000 Non-Recourse Cash-Out Refinance, 14-Unit Multifamily Property; West Los Angeles, CA

    October 23, 2019

    Transaction Description:

    George Smith Partners successfully secured a $4,100,000 non-recourse permanent refinance of a 14-unit, multifamily property in West Los Angeles. Loan proceeds were used to pay off the existing variable, higher interest rate bridge loan into a lower interest, fixed rate loan. There was significant cash-out to the Sponsor, who had recently completed an extensive reposition and upgrade of the Property. Due to the Sponsor’s business plan, flexibility and interest only were paramount. As such, GSP worked with the Lender to structure a 5-year fixed rate term with 3 years interest only and a step-down prepayment structure of 3%, 2%, 1%. This structure allows the Sponsor to maximize current cash flow while providing the flexibility of a step-down structure that burns off when the loan begins to amortize.

    Rate: 4.20%
    Term: 30 years; 5 years fixed then converts to floating rate at Libor + 2.25%
    Amortization: 3 Years Interest Only then 30 year amortization
    LTV: 65%
    Minimum DSCR: 1.20x
    Guaranty: Non-Recourse
    Prepayment: Stepdown, 3%, 2%, 1%, open

  • Expand

    $7,800,000 in Permanent Financing for a 247-Unit Apartment Multifamily Project; Indianapolis, IN

    October 16, 2019

    Transaction Description:

    George Smith Partners secured $7,800,000 for the cash-out, refinance of a newly renovated, class B, 246-unit multifamily building located in Indianapolis. The structure allowed the Sponsor to pull out over $2,000,000 in cash and leave in place an affordable grant loan that was awarded to the Property for maintaining a certain number of affordable units.

    The Sponsor is a regional multifamily owner who has a strong relationship with an international bank. The in-place loan was originated by the Sponsor’s relationship bank. There were only three months of results after renovations. Due to the lack of results, the current Lender’s proposed offer to refinance the Property did not give the Sponsor credit for the upgrades and increased rents. It also would have required the payoff of an attractive loan from the City.

    GSP identified a national balance sheet lender that understood the strength of the asset, improvements and experience of the Sponsor. Using our vast experience in understanding this type of asset and proving out the large future increases in cash flow, GSP was able to secure financing that was far superior and allowed for cash-out to the Sponsor. The financing also allowed for the affordable grant loan to remain in place. GSP was able to negotiate no lender fees or prepayment. The loan GSP secured allowed for higher proceeds, cash out, longer term, and an overall lower cost.

    Rate: 4.40%
    Term: 7 Years Fixed / 30 year Term
    Amortization: 30 Years
    LTV: 75.0%
    Guaranty: Recourse
    Prepayment: None
    Lender Origination: None

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

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

Subscribe Here