Financings

Recent Financings

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    $4,700,000, 75% LTC Loan-to-Cost Financing Fixed for the Acquisition/Reposition of a Rent Controlled Apartment Building in Los Angeles

    May 15, 2019

    George Smith Partners arranged the $4,700,000 non-recourse first mortgage for the acquisition and reposition of a value-add multifamily asset located within a rent controlled market of Los Angeles. The national balance sheet lender provided a non-recourse loan up to 75% of total project cost which includes $1,925,000 of capital expenditures for property improvements and 100% of the tenant buy-out expenses. Interest on future proceeds is not incurred until funds are drawn. A short spread maintenance schedule provides maximum flexibility to allow the Borrower to quickly execute its value-add strategy, prior to taking out financing with permanent debt or a sale. Cash flow is maximized as the loan is interest only during the initial three-year term and priced at 4.15% over 30-Day LIBOR. Due to low going-in cash flow, the Lender structured an interest reserve to cover debt service during the reposition period.

    Rate: L + 4.15%
    Term: 36 month initial term; Two 1- Year Extensions
    Amortization: Interest Only
    Max Loan to Cost: 75%
    Lender Fee: 1.0%
    Exit Fee: 1.0%
    Guaranty: Non-Recourse

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    $8,745,000 Refinance for 61-Unit Apartment Complex in East Bay, CA

    May 15, 2019

    GSP arranged a refinance that allowed the Sponsor to take cash out and strategically position the Property for future upside. The Sponsor purchased the Property in 2011 with an existing regulatory agreement mandating 80% median rents. The agreement expires in 5 years and the 7 year loan term will allow time for stabilization. The subject Property consists of 12 one-story and two-story stucco over wood frame buildings. It features large 2, 3 and 4 bedroom 2-level townhome style units. The units attract families in a market with barriers to home affordability. Amenities include an outdoor playground and covered parking.

    Rate: 4.05%
    Term: 7 years
    Amortization: Full term interest only
    LTV: 55%
    Lender Fee: 0.50%
    Guaranty: Non-Recourse

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    Non-Recourse Cash Out Refinance of Retail Strip Center in Los Angeles

    May 15, 2019

    George Smith Partners secured a non-recourse cash out refinance loan for a 12,695 SF retail strip center located in Los Angeles. The loan is fixed at a rate of 4.85% for 10 years and is sized to 65% LTV. The majority of the lenders that were surveyed used a 25 year amortization, but the selected lender was able to use a 30 year amortization. This resulted in a lower monthly payment and greater loan proceeds. The property has one vacancy comprising 11% of the space, which resulted in several lenders limiting their proceeds to the in-place loan amount. GSP pointed out that the space has only been vacant for a few months, and provided historical data showing that the center has consistent high occupancy and long-term tenants. As a result, the selected lender was comfortable providing a non-recourse, cash out refinance loan.

    Rate: Fixed for 10 years at 4.85%, followed by floating at 6 month LIBOR plus 2.5%
    Term: 30 years
    Amortization: 30 years
    Prepayment Penalty: 3,3,2,2,1,1,1
    LTV: 65% maximum
    DCR: 1.35x
    Origination Fees: Par
    Guaranty: Non-Recourse

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    Acquisition Financing for Single-Tenant Industrial Property in El Segundo, CA

    May 6, 2019

    Transaction Description:

    George Smith Partners arranged $2,830,000 of acquisition financing for the purchase of a 17,000-SF industrial-flex property in El Segundo, CA. The Sponsor was awarded the deal in an off-market transaction with a hard-close date to facilitate a series of 1031 exchanges for the Seller. GSP utilized its extensive lender relationships to identify a long-term, fixed-rate, non-recourse lender that would work diligently to close in accord with the required timing.

    The Property is 100% NNN leased to a credit-tenant on a recently signed 10-year lease. Situated in a business-friendly district of El Segundo, the Property has excellent adaptive reuse potential. The interest-only acquisition financing is fixed at 4.98% for 10 years.

    Rate: 4.98%
    Term: 10 years
    Amortization: Interest Only
    Guaranty: Non-Recourse
    Lender Fee: Par

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    $9,400,000 Non-Recourse Cash-Out Bridge Financing in Downtown Los Angeles, CA

    May 6, 2019

    Transaction Description:

    George Smith Partners secured a $9,400,000 non-recourse, cash-out, bridge refinance of a 208,000 square foot 9-level 414-parking stall garage located in Downtown Los Angeles. The Building has a historic designation and will be converted to a mixed-use project that will include creative office over parking and ground floor retail. The 12-month bridge loan is interest-only fixed at 7.50% with only four months of required yield maintenance. The debt coverage is less than 1.0 with interim cash flow while the adaptive-reuse business plan is finalized. The loan includes a holdback for interest carry shortfall and provided the Borrower cash-out proceeds of $300,000.

    Challenges/Solution:

    The Property was encumbered by a $12,800,000 loan of which ~$4,000,000 had been force-funded resulting in a heavy carry burden. GSP was able to negotiate a loan exit at a reduced cost (reduced exit fee and waiver of unused fees) while providing for cash out proceeds. GSP identified a capital source that understood the as-is value of the asset, the redevelopment potential, location and strength of the Sponsor (Developer). Based on these strengths, the Lender was able to underwrite in-place income while providing cash-out proceeds and significantly reducing the carrying cost of the Project while providing the necessary term (with extension) needed to complete and finalize an adaptive reuse plan.

    Rate: 7.50% Fixed
    Term: 1+1
    Amortization: Interest-Only
    Payment Penalty: 4 Months Minimum Yield Maintenance
    DSCR: 0.70:1.0
    Guaranty: Non-Recourse

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    $8,740,000 Acquisition Financing at 91% LTC on an SBA 504 Loan in Los Angeles, CA

    May 1, 2019

    Transaction Description:

    George Smith Partners arranged $8,740,000 of acquisition financing for an owner user retail property in Los Angeles. The Sponsor had been introduced to GSP after they received a loan cancellation from their direct bank. GSP jumped into the loan process right away and worked with the Sponsor, their CDC and the new Lender in order to ensure closing in a timely matter.  The selected Lender that GSP brought in was able to give the Sponsor a much more aggressive interest rate than their direct lender had promised in their LOI. This ended up saving the Sponsor 67 bps on the interest rate and over $240,000 in interest during the first 10 years of the loan.

    Rate: 4.57% fixed
    Term: 10 years
    Amortization: 25 years
    Loan to Cost: 91.1%
    Guaranty: Recourse
    Lender Origination Fee: None

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    $6,500,000 Bridge Refinance of Vacant Apartment Building with No Cash-Flow in Los Angeles, CA

    May 1, 2019

    Transaction Description:

    GSP recently arranged a $6,500,000 bridge loan on a vacant 30-unit apartment community near the Los Angeles CBD. The Property had structural issues and was red tagged by the City. The owner took the 1913 building down to the studs and completely rebuilt the Property. In order to reduce cost and finalize construction, the ownership requested bridge financing.

    With no cash flow and no signed leases several lenders were concerned about repayment. Using GSP’s relationships and market expertise we were able to place a Libor floating rate bridge loan. This financing provided the Sponsor the ability to payoff of the current loan. In addition, there was enough capital left over for completion construction and an interest reserve for lease-up.

    This take-out financing replaced more expensive financing and provided the Sponsor with the capital needed to finalize the renovation and move to permanent financing. With no prepayment premium and no interest rate cap, it was a very affordable way to bridge between the loans.

    Rate: 5.05 % – 30 Day Libor+ 255bps – No Rate CAP Required
    Term:
    2 Years
    Prepayment Penalty:
    None
    Lender Origination Fee:
    1%

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    $3,624,000 Multifamily Value-Add Recapitalization for 119 Units in San Antonio, TX

    April 24, 2019

    Transaction Description:
    George Smith Partners successfully arranged $3,624,000 to finance a value-add reposition of a 119-unit apartment in San Antonio, TX. The Lender funded $3,224,000 upon closing and held back $400,000 for capital expenditures to be invested over the next two years.

    Challenge:
    The Property had been purchased less than 1 year earlier with a 1-year seller note. There was substantial deferred maintenance that had not yet been completed, so the business plan was just starting. The client’s “go-to” lender was not interested in the financing due to the size and the still required “heavy lift”. Most lenders in this this size category require full recourse, which the Sponsor would not provide.

    Solution:
    George Smith Partners located a lender who the client didn’t previously know and who is accessed only thru a select group of mortgage brokers who looks for these types of transactions. The Lender agreed to provide an additional $400,000 for the renovations. Some negotiations were required to restructure the recourse provisions to springing recourse in the event of involuntary bankruptcy.

    Rate: L+535
    Term: 36 Months
    LTV: 65%
    Extension Options: Two 6-month options
    Amortization: Interest Only for the initial term, then 20 year amortization during extensions, if exercised
    Prepayment Penalty: None
    Guaranty: Non-Recourse

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    $15,000,000 Recapitalization Financing with $5,000,000 Cash-Out; San Francisco, CA

    April 24, 2019

    Transaction Description:
    In 2015 GSP financed a mixed-use retail/SRO-Hotel project in the “SoMa” (South of Market area) of San Francisco for $10,000,000. The Sponsor has continued to improve the Property and create additional value. Over the last several years the Property has doubled in value. The Sponsor was looking to recapitalize the original loan and take out $5,000,000 of cash equity.

    Challenges:
    The Sponsor did not want to pay prepayment penalties or incur a large refinance expense. The existing Lender did not have a program to allow for recapitalization or additional funding of their current loan.

    Solution:
    GSP underwrote and proposed a recapitalization program that would allow the Lender, with only a 25 bps increase, to provide a new $15,000,000 loan that provided the Borrower with $5,000,0000 cash-out. This allowed the Borrower to get the proceeds needed without refinancing expenses or prepayment penalties.

    Rate: 5.5% for years 1-10 and 5.85% for years 11-15
    Term: 15 Years
    Amortization: 30 Years
    Guaranty: Non-Recourse
    Prepayment: 5,4,3,2,1

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    $4,000,000 Non-Recourse and Cash Out of an Office Building in Beverly Hills, CA

    April 17, 2019

    Transaction Description:

    George Smith Partners arranged $4,000,000 of non-recourse and cash-out on a refinance of an office building in Beverly Hills. The non-recourse loan is fixed for the first 5 years at 4.48%. There is no requirement for a reserve account which is typically required for tenant improvements and leasing commissions when there are rollover leases in place. The Capital Provider was able to give the Sponsor credit for actual expenses, instead of historical P&Ls. The most recent P&Ls included many capital expenditures and non-recurring expenses, as the Sponsor has spent a great deal of funds in renovating and re-leasing a large portion of units

    Rate: 4.48%
    Term: Fixed for 5 years
    Prepayment Penalty: 5,4,3,2,1
    Guaranty: Non-Recourse

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    77% of Purchase Price Financing for the Acquisition of a Vacant 75,000 Square Foot Data Center in Northern California

    April 17, 2019

    Transaction Description:

    GSP arranged $5,475,000 in financing, composed of $4,275,000 non-recourse first mortgage from a REIT and $1,200,000 recourse second mortgage from a private-money lender, to acquire a 1980’s-vintage, 100% vacant data center. The 77% of purchase price financing provides 12 months of term to allow the Sponsor to 1) implement capital improvements, and 2) generate positive cash flow, prior to putting permanent financing on the Property. The Lenders did not require an appraisal or other third-party reports, and required only a four-month interest/carry reserve despite no in-place cash flow. The financing is prepayable without penalty throughout the loan term.

    Rate: 8.80% Fixed (Blended)
    Term: 12 Months
    Amortization: Interest Only
    Lender Fee: 1.33% (Blended)
    Prepayment: Open Full Term
    Guarantee: Non-Recourse (First), Recourse (Second)

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    $6,350,000 Cash Out Refinance of 28 Units in Los Angeles; Maximum Credit for Unit Renovations

    April 17, 2019

    Transaction Description:

    GSP secured $6,350,000 in proceeds for the refinance of two properties comprising 28 units in Los Angeles. Since acquisition, the Borrowers made significant upgrades to the Property, including renovating 12 units at a cost of nearly $30,000 per unit. These units were re-leased at market rate, resulting in a considerable increase in income. The selected Lender was able to give the Borrower maximum credit for the higher income without using a loan-to-cost constraint. Additionally, two of the renovated units were leased just a week before close. The Lender was able to use the additional income based on the signed leases, without requiring any seasoning. Fixed at 4.4% for 7 years, the loan provides three years of interest only payments before rolling into a 30 year amortization schedule. Proceeds were maximized by using a 1.15x Debt Coverage Ratio on the actual mortgage constant.

    Rate: 4.4% fixed for 7 years, then floating at 6M LIBOR + 2.25%
    Term: 30 years
    Amortization: 3 years Interest Only followed by 30 year amortization
    Prepayment Penalty: 3,2,1,0
    LTV: 65%
    DCR: 1.15x
    Guaranty: Non-Recourse

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