Featured Financings
Recent Financings
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$4,550,000 Refinance for a Newly Constructed 10-Unit Los Angeles Multifamily Property; Los Angeles, CA
November 13, 2019
Transaction Description:
George Smith Partners secured $4,550,000 to refinance a newly constructed 10-unit multifamily property in Los Angeles. The financing provided 65% LTV and is fixed at a rate of 3.80% for seven years. The Sponsor needed to begin the loan application process while the Property had only 5 out of 10 units leased. This eliminated Agency financing because they require a fully leased and stabilized property. GSP focused on Banks that would begin processing the loan while units were still being leased. The selected Capital Provider underwrote to the stabilized cash flow and simply required full occupancy before the loan closed. The Lender did not require any seasoning on the newly signed leases. Although the Capital Provider required a recourse guarantee at close, they stipulated that the loan would convert to non-recourse after one year of stabilized operations. A 60-day rate lock was signed at application and the Sponsor was able to lock in a low 7-year rate. The original close date was delayed because the Sponsor was waiting on the full certificate of occupancy from the City. The Capital Provider extended the rate lock with no charge and closed the loan upon receiving the C of O.
Rate: Fixed at 3.8% for 7 years, then floating at 6M LIBOR + 2.5%
Term: 30 years
Amortization: 30 years
Prepay: Stepdown
LTV: 65%
DCR: 1.2
Guaranty: One Year Recourse, then converts to Non-Recourse -
$7,200,000 Interest Only Refinance for a Retail Center; Fixed at 3.65% for 10 Years; Vista, CA
November 13, 2019
Transaction Description:
George Smith Partners secured $7,200,000 to refinance a 15-tenant retail center in Vista, CA. The Property, which was purchased by the Sponsor in 2016, was 30% occupied at acquisition. The Sponsor spent the last 3 years repositioning the center and leasing the vacant space to a diverse tenant mix of local businesses. The center is now 100% occupied and is anchored by a local grocer and a national bank. With the original business plan completed, there was a question of whether to sell or hold the asset.
GSP arranged 10-years of permanent financing that allowed the Sponsor to return a sizable portion of the initial equity investment back to investors. The loan is also interest-only for the entirety of the term, maximizing ongoing cash flow. Sized to 62.5% LTV, the non-recourse financing carries a fixed interest rate of 3.65%. The multiple benefits that the loan provides allowed the Sponsor to forgo the option of a sale.
Rate: 3.65%, Fixed
Term: 10 Years
Amortization: Full Term Interest-Only
Loan to Value: 62.5%
Prepayment: Defeasance
Lender Fee: None
Guaranty: Non-Recourse -
Non-Recourse Acquisition & Predevelopment Land Loan; Coastal Orange County, California
November 6, 2019
Transaction Description:
GSP arranged the $1,350,000 non-recourse first mortgage from a REIT to acquire two separate Target shadow-anchored outparcels totaling just over one acre. The Lender was comfortable with providing the acquisition financing due to the Borrower having previously entitled the land for a multi-tenant retail pad during the Borrower’s option period to purchase the land. The loan provides 12 months of bridge term while the Borrower pre-leases the project and finalizes construction drawings. Although the loan is non-recourse, the Lender did not require an appraisal or other third-party reports, nor did it require an interest or carry reserve although there is no in-place cash flow on either parcel. Sized to 60% of purchase price, the loan priced at 7.90% fixed for the 12-month loan duration.
Rate: 7.90% Fixed
Term: 12 Months
Amortization: Interest Only
Loan to Value: 60%
Lender Fee: 1.00%
Prepayment: Open Full Term
Guarantee: Non-Recourse -
High Leverage Custom Program for Quick Close Bridge Financing of Multi-Family Buildings; Los Angeles, CA
November 6, 2019
Transaction Description:
George Smith Partners arranged acquisition bridge financing for a value-add, multi-family property in Los Angeles, California. One of our more experienced multi-family owner/operators has become experienced in sourcing opportunities to quickly close on troubled multi-family properties. His ability to act quickly often allows him to become the chosen Buyer, purchasing these Properties at a large discount.
GSP worked with a local REIT to develop a program that includes a first and second mortgage of up to 85% of acquisition price. The loan is designed to provide the same surety of close as an all-cash buyer, with no appraisal needed and the ability to close as fast as 5 business days. The loan is non-recourse and has no prepayment penalty.
These loans are cheaper and easier than equity partners and allow the Sponsor to take advantage of smaller opportunities using very little cash. With less than $400,000 of equity, the Sponsor was able to purchase a $2,015,000 building. At close the Subject Property was worth close to $2,500,000, allowing the Sponsor to quickly flip the Property. This is the third time GSP has used this custom created loan program to procure financing for our client.
Blended Rate: 8.00%
Loan to Purchase Price: Up to 85% (83% on this transaction)
Term: 12 Months
Guaranty: Non-Recourse- Advisors: Bryan Shaffer Max Lehrman Ruben Bohbot
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Refinance for a Class C Multi-Tenant Office Building; Santa Monica, CA
October 30, 2019
Transaction Description:
George Smith Partners successfully arranged $1,500,000 of rate and term refinancing for a multi-tenant office building in Santa Monica, CA. The Property was constructed in 1975, and it has been recently renovated with 6,256 sf net rentable area. The Property is conveniently located near Santa Monica College, Downtown Santa Monica, and it is less than two miles away from Santa Monica State Beach. Santa Monica has been and still is one of the most highly sought-after office locations in the Los Angeles area by tenants and investors. The submarket has very significant supply constraints, though rental rates are lagging the metro average. The purpose of the refinance is to pay off the existing debt and take advantage of the low interest rate environment.
The Sponsor is self-managing the Property. They renovated the units recently and brought the rents up to market rate. The Building was 100% occupied by local and non-credit tenants at closing. All of the leases will roll within the first three years of the loan term.
GSP sourced a lender who is willing to offer a 7-year permanent loan term, without holding back Tenant Improvement and Leasing Commissions reserves. The loan is sized to 31%LTV, it has a fixed coupon of 3.46% with a 25-year amortization schedule.
Rate: 7-year LIBOR + 2.10% (all-in rate 3.46%), no floor
Term: 7 year fixed
Amortization: 25 years
Loan to Value: 31%
Prepayment: 5%, 4%, 3%, 2%, 1%
Guaranty: Recourse
Lender Fee: Par- Advisors: Gilda Rivera Irene Liu
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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- Advisors: Reuven Risch
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$25,000,000 Condo Construction Financing; Los Angeles, CA
October 30, 2019
Transaction Description:
George Smith Partners successfully arranged $25,000,000 in construction financing for a condominium project in an affluent area in Los Angeles County. The Project commenced construction in 2017, however due to construction delays and cost overruns, the Sponsor needed additional money to complete the Project. The existing Lender did not want to upsize their loan. GSP was able to identify two distinct lenders to structure a 1st and 2nd Trust Deed to complete and sell-out the building. The total loan was sized to 75% of the net sell-out value of the Property. The Sponsor has owned the Property for over 10 years so the majority of equity was imputed land equity allowing for loan proceeds of 100% of hard costs.
TERMS CONFIDENTIAL
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$3,300,000 Owner/User Warehouse Acquisition Financing; 75% LTV; Fixed at 3.36% for 10 Years; San Fernando Valley, CA
October 23, 2019
Transaction Description:
George Smith Partners secured $3,300,000 in proceeds for the purchase of a 19,680 sf warehouse located in the San Fernando Valley. The loan is fixed at 3.36% for 10 years. The Sponsor owns the adjacent property and intends to expand their business into additional warehouse space. Before discussing the deal with lenders, GSP fully underwrote the underlying business and demonstrated its substantial and recurring cash flow. As a result, many lenders were interested in the transaction at 75% LTV, which was above-market leverage for a non-SBA execution. The Borrower was able to select the loan with the best rate and structure. Additionally, the Lender provided an option to pre-pay 20% of the principal balance each year with no penalty.
Rate: Fixed at 3.36%
Term: 10 years
Amortization: 30 years
Fees: Par
Prepayment Penalty: Swap breakage
LTV: 75% -
$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 -
Acquisition Bridge Loan for an 11-Unit Multifamily Property; 72.5% Loan to Cost; Arlington Heights Area of Los Angeles, CA
October 16, 2019
Transaction Description:
George Smith Partners arranged acquisition bridge financing for a value-add multifamily property in the Arlington Heights Neighborhood of Los Angeles, California. The 11-unit, 1960’s vintage property had significant deferred maintenance and below market rents. The Sponsor’s business plan was to reposition the Property, buyout tenants and release the units at market rents. Sized to 72.5% of total project cost, the loan includes 100% of future funding for tenant buyouts, a full gut renovation of unit interiors and an exterior upgrade.
The two-year bridge loan is interest only and floats at a rate of Prime plus 0.50% (5.75% today) with no floor rate, which is important in a declining interest rate environment. The loan carries no prepayment penalty, and interest is not charged on the holdback until funds are drawn. The lender fee was negotiated down to 0.5%.
Rate: Prime + 0.5%
Term: 2 Years
Amortization: Interest Only
LTC: 72.5%, including 100% of future funding
Prepayment Penalty: None
Recourse: Full Recourse
Lender Fee: 0.5%- Advisors: Zachary Streit
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$3,350,000 Bridge Loan for Purchase of 13-Unit Multifamily Property; 70% LTC; LIBOR+3.65%; Los Angeles, CA
October 16, 2019
Transaction Description:
George Smith Partners secured $3,350,000 in proceeds for the purchase of a 13-unit multifamily property located in an infill area of Los Angeles. The loan is structured as $1,963,000 at closing and $1,387,000 in holdbacks for capital expenditures and interest reserves. Six of the thirteen units were vacant at close. The fully funded loan represents 70% of the project capitalization.
The Sponsor requested a loan with both low pricing and non-recourse execution. Several challenges were encountered in meeting both goals. The small size of the loan ruled out almost all debt fund lenders, who typically seek financings larger than $10,000,000. While banks offered rates in the 5% range, they required the Sponsor to sign full recourse. Private money lenders quoted the deal with prohibitive interest rates above 8.0%.
The selected Capital Provider was the only one to provide non-recourse execution with a rate in the 5’s. The loan did not stipulate a required debt yield based on the stabilized cash flow. Additionally, the Lender released additional money at closing for expenses the Buyer incurred while in escrow. This amount totaled $260,000 in reimbursements for soft costs. The loan closed about 45 days from the signed application.
Rate: Floating at 1 Month LIBOR + 3.65%
Term: 2+1+1
Amortization: Interest Only
Fees: 1.0% in/0.5% out
Prepayment Penalty: None
LTC: 70%
LTV: 75%
DY: None
Guaranty: Non-Recourse -
$6,870,000 Cash Out Refinance of Medical/Office Building; Los Angeles, CA
October 8, 2019
Transaction Description:
George Smith Partners secured a $6,870,000 cash-out refinance loan for a 43,435 square foot medical/office property in Los Angeles. The loan represented 70% of value and a 1.25x debt coverage ratio. Our team helped the Sponsor secure the previous loan about a year ago at a time when the Property had 20% vacancy. Due to the considerable upside potential, the Sponsor had deliberately chosen a loan with no prepay. Since then, they successfully signed several new leases and achieved 100% occupancy.
In a survey of the market, GSP found that other lenders were limited by a higher stress rate, an above-market vacancy factor, or a lower LTV constraint. The selected Capital Provider had none of these constraints and was able to provide proceeds $300,000 higher than the rest of the market. The new Capital Provider was also able to provide the Sponsor full credit for the new leases without a seasoning requirement. The Capital Provider also included cash flow from month-to-month tenants and short-term tenants in their underwritten cash flow. As a result, the loan provided a considerable return of equity to the Sponsor. The loan was quoted at a rate of 5 year CMT + 2.55% with no floor. During application, the index rate declined by about 30 basis points. At loan approval, the rate was fixed at 3.98% for 5 years.
Rate: 3.98%
Term: 5 years
Amortization: 30 years
Prepayment: None
LTV: 70%
DCR: 1.25
