Term: 24 Months + One 12 Month extension
Recourse: Completion Only
Prepayment Penalty: None
George Smith Partners placed an $11,000,000 non-recourse construction loan for the ground up development of 40 multi-family units in the Conejo Valley sub-market of Los Angeles County. The area has high barriers to entry for new product in regards to entitlements and design review, and took several years to gain all necessary approvals. As a result this project will be the first new development that has broken ground in the sub-market since 2004. Equipped with sub-2% market vacancy, GSP secured a non-recourse loan with an institutional capital provider at leverage of 75% LTC and priced at LIBOR + 375. The loan also provides for extension options and has no prepayment penalty.
Senior Vice President
Senior Vice President
Assistant Vice President
Construction Loans Los Angeles | $6,000,000 Non-Recourse Predevelopment Financing for Construction of 170-Unit Multifamily Project in Tarzana, CA
October 24, 2018
George Smith Partners secured $6,000,000 in non-recourse predevelopment financing for a 170-unit ground-up multifamily project in the Tarzana community of Los Angeles, CA. The site is a collection of five contiguous lots, parceled together by the Sponsor to create an opportunity for larger scale development in the area. This financing facility allowed the Sponsor to recuperate some of the invested equity to be used towards continued advancement of the predevelopment for the Project, including but not limited to design and construction drawings, entitlement costs and permits. The Sponsor is currently building another ground-up multifamily project nearby and is an active local investor and developer, owning several retail and mixed-use assets in the area.
GSP sourced a lender who offered a fixed-rate financing facility to lessen the burden of development costs on the Project, recapturing nearly 65% of invested dollars for a bridge through the pre-development phase; it will ultimately be taken out by the construction loan when the Project breaks ground. The identified capital group was already familiar with the site, and was able to offer a flexible and low-cost structure without a prepayment penalty. The application was an expeditious process; GSP was able to facilitate a closing less than three weeks from the date the term sheet was signed. The twelve month fixed rate note was priced at 6.90%, and was sized to 64.5% of cost basis.
$53,900,000: $42.6MM “Non-Recourse” Construction + $11.3MM Preferred Equity Financing for 228-Unit Multifamily Development
April 26, 2017
George Smith Partners secured a $42,600,000 non-recourse senior construction loan along with $11,300,000 preferred equity placement to develop a 228-unit Class A multifamily property in Orange County, CA.
The sponsorship required a non-recourse solution at an appropriate leverage to achieve the entire project’s capitalization during a time when many lenders were pulling back on construction financing in general and reducing leverage if able to lend at all.
GSP utilized its significant experience and deep relationships with active capital providers to secure the non-recourse construction financing. GSP was also able to secure preferred equity in lieu of sponsorship bringing in additional equity which allowed the transaction to be appropriately capitalized for the developer to hit their pro forma return on equity.