November 20, 2019
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.
Term: 7 Years Fixed, 30 Year Term
Amortization: 30 Years
Prepayment Penalty: 3, 2, 2, 1, 1 with nothing after the 5th year
Lender Fee: None
- Advisors: Reuven Risch
$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
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
Prepayment: None except for SWAP Breakage
October 30, 2019
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.
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.
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.
Term: 5 Years Fixed, 15 Year Term
Amortization: 30 Years
Prepayment Penalty: 4,3,2,1
Lender Points: None
- Advisors: Reuven Risch
October 23, 2019
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.
Term: 30 years; 5 years fixed then converts to floating rate at Libor + 2.25%
Amortization: 3 Years Interest Only then 30 year amortization
Minimum DSCR: 1.20x
Prepayment: Stepdown, 3%, 2%, 1%, open
October 16, 2019
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.
Low Debt Yield, 3.77% Coupon Permanent Financing for the Acquisition of a Recently Developed Grocery-Anchored Retail Center; FL
September 25, 2019
George Smith Partners successfully placed $14,690,000 in non-recourse, ten-year fixed rate first mortgage debt for the acquisition of an approximately 54,000 square foot, 96% occupied, recently developed retail center in Western Florida. An investment-grade grocery anchor on a newly signed long-term lease comprises approximately 75% of the collateral. The anchor has no sales history at the Property and is not required to report sales going forward. GSP sourced a lender to provide full term non-recourse Interest-Only financing subject to a low 7.35% debt yield. The 65% leverage loan has a 3.77% fixed coupon over the ten-year term.
75% Leverage, 3.75% Coupon Non-Recourse Permanent Financing for a Neighborhood Retail Center; Western United States
September 18, 2019
George Smith Partners successfully placed a $5,740,000 non-recourse, ten-year fixed rate loan on an 89% leased, multi-tenant retail property, shadow-anchored by Savers and Big Lots. GSP worked with the Sponsor to overcome several environmental issues with the Property. GSP sourced a lender able to achieve 75% leverage, non-recourse financing and structure around the environmental issues. The loan was sized to the greater of an 9.75% debt yield or 1.40x debt service coverage ratio on the 3.75% fixed rate coupon.
July 24, 2019
George Smith Partners secured $3,744,000 of permanent financing for the acquisition of 3 single-tenant Starbucks. The drive-thru locations all have new leases with at least 8 years of term left and tenant options to extend. Each property is located in a different state across the middle of the country (Texas, Louisiana, Illinois). The Sponsor wanted to have a single capital source finance all three properties for ease of closing and ongoing servicing. GSP was able to find a lender that could accommodate the variety of locations and provide the same terms for each acquisition. All of the loans are fixed at 4.75% for 5 years and have a 30-year amortization schedule. Loan amounts were sized to a 1.25x DSCR, which resulted in an average LTV of 62%. The recourse financings do not have any prepayment penalties and can be refinanced at any time.
$3,900,000 Cash-Out Permanent Financing with Full Term Interest-Only After Exchange; Los Angeles, CA
July 2, 2019
George Smith Partners financed the purchase of a mixed-use retail/office building in Los Angeles, California, last year, using a 1031 exchange. GSP used our vast experience with tax differed exchanges to arrange a cash-out financing with a seven-year fixed rate and is full term interest-only. The cash- out was used to purchase a new property and the Sponsor was able to reinvest their entire exchange in the purchase to differ any taxable gain. The new refinance allowed the Sponsor to pull cash out from the property tax free and use that cash to grow his real estate portfolio. While the cap rate at purchase was very low, the Property’s value will continue to increase due to its location in a great Los Angeles neighborhood. In a traditional loan, the Borrower would be limited on the loan size and cash flow but structuring the full term interest-only loan allowed the Sponsor to achieve positive cashflow and acquire the new asset without issue.
August 1, 2018
GSP successfully placed $1,022,000 in non-recourse permanent debt to take out an existing recourse mini-permanent bank loan on a mixed-use multifamily and retail property located in the heart of St. Louis City, Missouri. The 70% leverage loan has a fixed coupon of 4.90% for the duration of the ten-year term. The financing provides significant cash-out to the Borrower and maximizes cash flow via three years of interest only payments prior to converting to 30-year amortization. GSP leveraged its lender relationships to achieve the most competitive loan terms for the Borrower which included structuring multiple pricing and loan-to-value exceptions.
July 11, 2018
George Smith Partners secured $2,849,250 in acquisition financing for a single-tenant Tractor Supply Company in Las Vegas, New Mexico. The Sponsor purchased the 19,000 square foot building for $3,800,000 at a very attractive cap rate for the product type. The tenant has 10 years remaining on their original lease with 10% rental increases every 5 years. GSP was able to mitigate the risk that the market presented by highlighting the Sponsor’s track record with similar assets. Sized to 75% of purchase price, the permanent loan is fixed for 7 years then floats for the last 3 years of the 10-year term.
June 20, 2018
George Smith Partners arranged permanent financing for a 6-unit multi-family property in Santa Monica, CA. Despite the property’s spectacular location, footsteps from Santa Monica College, the property was operating well below market rents. GSP identified a lender that was willing to rely solely on the Sponsors strong global cash flow, perfect credit history and experience managing and owning multi-family and commercial properties to size the loan down to a 1.01x DCR. Most conventional lenders require a minimum 1.15x DCR on their multi-family loans and could not reach the loan dollars needed for this transaction. Using its long standing relationship with the lender, George Smith Partners mitigated the below market rents by stressing the strength and experience of the Sponsor with a portfolio bank and obtained fixed-rate leverage at maximum loan proceeds.
Rate: 4.80% fixed for 5-years
Term: 30 Years
Amortization: 30 Years
Recourse: Full Recourse
Prepayment Penalty: 3/2/1
Lender Fee: Par
- Advisors: Reuven Risch
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