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Single Family Rental Communities

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    $13,300,000 (total proceeds) Revolver Loan Placement for the Construction of a Pre-Sold 66-Unit Single Family Community for Rent; Montgomery, Texas

    March 30, 2022

    Transaction Description

    George Smith Partners successfully placed a revolving loan with a maximum line of credit of $6,900,000 (80% LTC) and total projected debt proceeds of $13,300,000 for the construction of 66 single family homes for rent in Montgomery, Texas. The loan is a floating rate of LIBOR plus 800 bps with a floor of 25bps and has an 18-month term with two, 3-month extension options. The Sponsors found a partner to acquire the homes at Certificate of Occupancy with a portion of the deposit on the sale to be released to the Sponsors as additional equity to help acquire the land. GSP leveraged its extensive expertise in the single-family rental sector to source revolving debt options that minimized the equity upfront and allowed the Sponsors to take down the entire Project without the need for an equity investor. This is one of the first of many built-for-rent transactions for the local Houston sponsors who have a strong track record in homebuilding.

    Rate: 8.00% Over Libor
    Term: 18 Months
    Amortization: Interest-Only
    LTC: 80%
    Guaranty: Non-Recourse

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    $12,100,000 Bridge Loan for 127 Unit SRO Outside of Downtown LA

    September 4, 2018

    Transaction Description:
    George Smith Partners successfully placed the $12,100,000 bridge loan for a 127 unit Single Resident Occupant (SRO) apartment building located just outside of Downtown Los Angeles. The loan allowed the Borrower to recapture $3,000,000 of capital he had spent out of pocket for the renovation and lease up of a 1920’s vintage building. Work included installing new plumbing, a new roof and electrical, upgrading units and common areas, and buying out tenants. The recourse loan was sized to 70% of the Property’s stabilized value, and has no prepayment penalty. The loan has a 5 year term and a rate of Prime + 0.25%, which today is 5.25%.
    Prior to engaging George Smith Partners, the Borrower attempted to finance this asset with multiple capital providers, but was unsuccessful due to its SRO use. SROs are essentially studio apartments with a sink and kitchenette, but provide residents with shared bath and kitchen privileges. The lack of kitchens and full baths in the units, along with past operating issues of Hotel SROs, make them challenging to finance. The Borrower also required a return of capital given his length of ownership, management, and continued maintenance of the Asset which is typically a challenge on un-stabilized assets.
    GSP used its extensive market expertise and lender relationships to identify a Southern California based capital provider with unique bridge loan programs that would allow the Borrower to execute his business plan on an un-stabilized project. With an in-depth understanding of this product type and the Downtown Market, GSP secured a loan for 70% of the stabilized value, including the return of all capital expenditures spent by the Borrower out of pocket.

    Rate: Prime + 0.25% (5.25% today)
    Term: 5 Years
    Amortization: 30 Years
    Prepayment Penalty: No Prepay
    LTV: 70%
    Origination Fee: ½ Point
    Guarantee: Recourse