$10,066,000 Non-Recourse Cash-Out Refinance for Los Angeles Multifamily Property

George Smith Partners secured a $10,066,000 non-recourse cash-out refinance loan for a 71-unit multifamily property in Los Angeles. Although the rental units at the property were fully occupied, the Sponsors were still in the process of implementing RUBS (Ratio Utility Billing System) and establishing storage income. Additionally, some tenants had rent increases that were scheduled to kick in during loan application. GSP sourced a lender that gave the borrower credit for all of the additional income based on signed leases, rather than requiring seasoning. This higher underwritten income resulted in proceeds that were much greater than those offered by the rest of the market. The lender also offered a 60-day rate lock during a time of rapidly rising interest rates.

During due diligence, several challenges were encountered that delayed the closing of the loan. The existing lender required a lengthy notice period in order to process the payoff which further delayed closing until after expiration of the 60-day rate lock. The new lender generously extended the rate lock for two additional weeks and held the rate in the original application.