Featured Financings
Recent Financings
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$2,800,000 Two Week Close Bridge Deal; Los Angeles, CA
June 17, 2020
Transaction Description:
George Smith Partners demonstrated our ability to provide full-service financing for a repeat client who is a prolific developer in the Los Angeles area. The quick close $2,800,000 financing was a bridge loan which took out a senior construction loan that was placed by GSP in 2018. The 12-month loan will allow for the Developer to execute on their business plan to market and sell the remaining homes in the Small Lot SFR development. The Project is in the heart of Los Angeles minutes from major job centers and consists of 11 high end fully constructed homes. The development opportunity was purchased in 2015 and the construction was completed in middle of 2019. GSP provided our expertise throughout the entire process, working with our client throughout the acquisition, entitlement, construction, and the for-sale process.
Rate: 7.9%
Term: 12 months Interest Only -
$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- Advisors: Antonio Hachem Wendy Wang John Choi
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$28,500,000 Land Loan for a Mixed-Use Multifamily Development Site
June 10, 2020
Transaction Description:
George Smith Partners arranged a $28,500,000 non-recourse bridge loan for the land acquisition and predevelopment of a large TOD site with the potential to accommodate more than 900 units. The financing facility was secured on behalf of best-in-class sponsor LaTerra Development, relating to its planned mixed-use multifamily development project. In the midst of unprecedented market uncertainty, GSP leveraged its network to identify land lenders who were still active in today’s environment and could provide certainty of execution. No appraisal was required for funding.
All Terms Confidential
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$6,790,000 Permanent Cash Out Financings for Walgreens and Jack in the Box; Murrieta, CA
June 3, 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- Advisors: Antonio Hachem John Choi Wendy Wang
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$13,500,000 Non-Recourse Bridge-to-Bridge Loan with a Cannabis User at 6.90%; Echo Park, CA
June 3, 2020
Transaction Description:
George Smith Partners arranged $13,500,000 in quick-close, cash out, bridge-to-bridge financing for a multitenant retail center in Echo Park, California. The Sponsor approached GSP with intentions of taking out their existing lender due to an issue with lease approval for a cannabis tenant. In order to purchase an outparcel on the Property, the cannabis user needed a lease in place so it could obtain a license from the local jurisdiction. If approvals were not granted, the Sponsor would have the ability to break the lease. GSP identified a non-bank lender who was comfortable approving a lease on a space which may never be occupied. The Lender’s flexible prepayment structure allowed the Sponsor to execute their business plan as the cannabis tenant planned to acquire an outparcel on the Property after receiving approvals from the City. The first trust deed was sized to 60% of value with no hold back requirement for interest reserve or capital expenditures. The non-recourse, interest only loan does not carry any prepayment penalties. The Sponsor plans to take out the loan within 12 months with long-term fixed rate debt.
Rate: 6.90%
Term: 12-month term with one 12-month extension option
LTV: 60%
Guaranty: Non-recourse -
$13,000,000 Acquisition and Reposition Financing on a 47-Unit Student Housing Property; Adjacent to a Major Southern California University
May 27, 2020
Transaction Description:
George Smith Partners arranged the $13,000,000 first mortgage on a 1960’s vintage, 102-bed student housing property in Los Angeles. The national balance sheet lender provided the Sponsor non-recourse financing at 70% of total project cost including 100% of future CapEx funds totaling $42,500/per unit to complete extensive interior and exterior renovations. Interest expense is not incurred on CapEx funds until drawn. The Sponsor’s cash flow was maximized as the loan is interest only during the initial three-year term. The 30-Day LIBOR plus 3.35% coupon required interest rate risk protection and in order to minimize associated sponsor cost the Capital Provider structured the interest rate cap with a two-year duration at closing plus an obligation to renew for the third year of the initial term. Due to a lack of cash flow for 12 months, the Capital Provider structured an interest reserve to cover debt service during the peak reposition period.
Rate: 30-Day LIBOR + 3.35%
Term: Three years plus two 12-month extensions
Amortization: 36 months interest only
Max Loan to Cost: 70%
Prepayment: 21-month minimum interest period
Guaranty: Non-recourse
Lender Fee: 1.00% -
$1,690,000 Freddie Mac Multifamily loan; Killeen, TX
May 20, 2020
Transaction Description:
George Smith Partners secured $1,690,000 in Freddie Mac permanent financing for the acquisition of a stabilized 72-unit multifamily property located in Killeen, Texas. The Property is located four miles southeast of Fort Hood, the largest active-duty armored post in the U.S. military, occupying more than 218,000 acres of land in Bell and Coryell Counties.Challenges:
As GSP went into application, the world was entering into the COVID-19 pandemic. Most lenders had either stopped lending or become much more cautious. Most agency lenders require Borrowers to have a track record with multiple projects before they will be considered for a Freddie Mac or Fannie Mae loan. In this case, the Sponosr was a first-time agency borrower. To make it even more challenging, the Property was in a small market with a high concentration of military personnel and the Sponsor required the ability to have prepayment flexibility.Solution:
GSP used its relationship with a capital provider who closed multiple loans with our firm. GSP recently closed a loan in a similar small market and we were confident that they would understand the demographics and market characteristics. For this type of financing, the Lender’s typical structure is to offer a 10-year term with Yield Maintenance. Thanks to GSP’s long-standing relationship with this Lender, we were able to secure an attractive rate, high leverage, and a step-down prepayment of 3,1,0,0,0 on a 5-year term. The new capital allows the Sponsor to expand their Texas Multi-Family portfolio.Rate: 4.59%
Term: 5 Years
Amortization: 30 Years
Prepayment: 3%, 1%, 0%- Advisors: Bryan Shaffer Ruben Bohbot Michael Smilove
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$1,400,000 of Permanent Financing for 5-Unit Apartment Building; Silver Lake, CA
May 13, 2020
Overview:
George Smith Partners secured $1,400,000 to refinance a stabilized multifamily building in Silver Lake, CA. The Property, which was built by the Sponsor in 1991, is 100% occupied. The Sponsor has owned and managed the building for over 25 years, but this is currently the only asset in his portfolio. Refinancing provided the ability to achieve a lower interest rate and return equity to increase his liquidity position. The non-recourse financing carries a fixed interest rate of 4.05% for 5 years.
Challenges:
The Sponsor’s lack of real estate experience and non-third-party property management deterred some capital providers from offering non-recourse financing. The Sponsor also had limited pre-closing liquidity which made it difficult to qualify for the most attractive rates. Lastly, the eventual lender required a 6-month interest reserve due to recent uncertainty surrounding the multifamily market.
Solution:
Even though the Sponsor has limited real estate exposure, GSP was able to highlight the strong historical occupancy that the Sponsor has been able to maintain while self-managing the subject property for over two decades. GSP identified a lender that only required liquidity equal to 5% of the loan amount to qualify for their non-recourse program. The interest reserve was structured as pre-paid interest that goes directly to pay the first six months of principal and interest payments. This avoids having a held-back reserve that would only release upon hitting certain covenants in the future.
Rate: 4.05% Fixed
Term: 5 Years
Amortization: 30 Years
LTV: 62%
DSCR: 1.15x
Recourse: Non-Recourse
Prepayment: 1.75% for Years 1-3, 1.00% for Years 4-5
Loan Fee: Par- Advisors: Patrick O’Donnell
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$5,575,000 Acquisition Loan for 38-Unit Los Angeles Multifamily Property; Los Angeles, CA
May 6, 2020
Transaction Description:
George Smith Partners placed a $5,575,000 acquisition loan for the purchase of a 38-unit multifamily unit located in the Los Angeles MSA. The loan has a rate of 3.6% for a 7-year term and includes three years of Interest Only payments. The term sheet was signed shortly before the COVID-19 crisis and ensuing economic volatility. Despite these conditions, the original rate and leverage was kept intact.
The Property has several vacant units which represented an opportunity for our Sponsor to add value. The Capital Provider was able to underwrite the income on these units to post-renovation market rents. Market comparable data was used to support the buyer’s conservative rent assumptions. Additionally, the Capital Provider used a market vacancy factor and proposed to withhold 12 months of Principal and Interest reserves at loan closing. GSP pointed out that the loan had IO payments during the first 3 years. After discussion, the reserve was changed to 12 months of interest payments only. The loan closed in less than 60 days.
Rate: 3.60% Fixed
Term: 7 Years
Amortization: 3 Years Interest Only
Loan-to-Value: 60%
DSCR: 1.20x
Prepayment: 3,2,1
Loan Fee: Par -
$4,410,000 Non-Recourse Acquisition Bridge Financing up to 90% of Purchase Price; Glendale, CA
April 29, 2020
Transaction Description:
George Smith Partners arranged $4,410,000 in quick-close, acquisition bridge financing for a 17-unit, 1960s built, value-add multifamily project in Glendale, California. The Sponsor approached GSP with an extremely tight closing time frame due to a reverse 1031 exchange. He valued certainty of execution above all else so he could close on the Property in short order. The Sponsor will use his own equity to renovate the Property. GSP identified two, non-bank lenders with a long history of providing quick close, bridge execution. The first trust deed is sized to 60% of purchase with no hold back requirement for interest reserve or capital expenditures. GSP also sourced a second trust deed up to 90% of purchase price. Both loans were non-recourse, interest only, and do not carry prepayment penalties. The Sponsor plans to take out the two loans within 12 months with agency or long-term fixed rate debt.
1st TD:
Rate: 7.10%
Term: 1 year
LTV: 60%
Fees: 1% in/0% out
Guaranty: Non-Recourse2nd TD:
Rate: 12%
Term: 1 Year
LTV: 90%
Fees: 2% in/0% out
Guaranty: Non-Recourse -
Trophy Gas Station; 3.1% Interest Rate for 10 Years; Orange County, CA
April 22, 2020
George Smith Partners secured $5,000,000 of senior financing for a gas station located at a premier Orange County intersection. The loan is fixed at 3.10% for the entirety of the 10-year term. This is one of the lowest fixed rate financings ever placed by GSP even though gas stations are typically priced with an interest rate premium.
The asset class presented a unique challenge when marketing the Project. GSP was able to arrange the loan with a money center bank by highlighting the strong cash flow, extensive experience in management and operations, and irreplaceable site location. The Lender did not require a depository relationship from the Sponsor, even though she was not an existing client.
The Sponsor showed concerns about having a large loan balance towards the end of the loan term, believing that the continuing growth of electric vehicles could diminish the value of gas stations in the future. GSP negotiated to allow the Sponsor to pay down up to 15% of the outstanding loan balance every year. The amortization was also reduced to 20 years to accelerate the principal paydown.
Rate: 3.10% Interest Rate
Term: 10 Year Term
LTV: 40% LTV
Amortization: 20 Years
Lender Fee: Par
Guaranty: Full Recourse- Advisors: Patrick O’Donnell Paul Monsen
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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- Advisors: Zachary Streit
