Rate: 7.00% + LIBOR
Term: 24 Months with Two Six-Month Extension Options
Amortization: Full Term Interest Only
Prepayment: 12 Months’ Minimum Interest
George Smith Partners successfully arranged the non-recourse, construction financing of a 144,000 SF flex-industrial property in Madera, California. The Property is a 74-unit flex industrial/warehouse that will target the underserved small-scale user. The Sponsors are capitalizing on the very low vacancy rate in the Madera/Fresno industrial market. The Sponsors are very knowledgeable in this market, but have not completed a ground-up construction project. Their lack of direct experience and the smaller market made it difficult for many lenders to provide financing. George Smith Partners was able to educate the selected Lender on the need for this product in this market and the industrial experience of the Sponsorship. This allowed the Lender to get comfortable with the transaction and provide very favorable financing.
David R. Pascale, Jr.
Senior Vice President
Senior Vice President
January 18, 2022
George Smith Partners sourced a $3,925,000 loan for the acquisition of a 21-unit property in West Los Angeles. The loan provided 65% leverage and is fixed at a rate of 3.15% for 3 years. The Lender gave the Borrower full credit for newly signed leases and was able to underwrite to the most recent month’s income. Net operating income was underwritten at the actual note rate, which resulted in higher proceeds compared to other lenders. The Property had some deferred maintenance, but the Lender was willing to have the Borrowers complete it after closing. The 3-year declining prepay fit with the Borrower’s value-add business plan.
$27,300,000 Non-Recourse Construction Financing for Multi-Tenant Spec Industrial Development; Mesa, AZ
January 18, 2022
George Smith Partners arranged $27,300,000 in non-recourse construction financing for the development of a 173,193 SF, Class-A, light industrial project in Mesa, AZ. The Project will consist of smaller unit sizes in 10 total buildings ranging in size from 2,500 to 15,000 SF.
This Project was built entirely to spec. Tenants signing smaller leases typically do not pre-lease space before a project breaks ground. Due to supply chain constraints and inflationary pressures, raw materials and labor costs increased significantly. While there have been many large box industrial projects developed in the market, there has been limited development of small bay product and therefore limited comparable lease and sales transactions. Most of the Sponsor team are foreign nationals whose assets lie outside of the United States.
GSP successfully obtained several financing options and selected a lender who had flexible execution, a strong understanding of the growing demand for small bay industrial space and was comfortable with rising construction prices. GSP arranged a co-guarantor to subsidize the non-recourse carve-out guarantees.
January 18, 2022
George Smith Partners secured $129,000,000 in construction financing for a 280-unit mixed-use multifamily development featuring 25,000 SF of ground-floor retail/office space and best-in-class amenities. Located in the heart of the Cornfield-Arroyo Seco Specific Plan (CASP) area, the Property is adjacent to the high-traffic Los Angeles State Historic Park, USC+LAC Medical Center; the Project site is within a 5-minute walk from more than 34 upcoming bars, restaurants (Momofuku by David Chang), cafes and entertainment venues. The financing provided funding for future capital expenditures and related construction costs.
The top-tier Sponsorship group focused on minimizing their equity contribution through a high leverage debt facility to execute their business plan. GSP was able to identify non-recourse capital with strong local knowledge and confidence in the long-term fundamentals of the high-growth submarket. These efforts were aided by the site’s development potential, given the prime location and thousands of surrounding demand drivers.
$30,875,000 Construction Financing (65% LTC) for Assisted Living and Memory Care Facility; Southern California
January 12, 2022
George Smith Partners arranged financing for the construction of a Class-A Assisted Living Facility in Southern California. The Facility was designed similarly to a 4-star hotel property with luxury interior design and a top tier culinary program. Amenities include: gourmet exhibition kitchen and dining area, wellness center, full service spa, hair salon, landscaped outdoor space, private dog park and dog services. The Sponsors have made a tremendous effort to offer a one-of-a-kind experience, with residents being able to tend their own vegetable gardens, attend wellness classes and more. The Facility will also be able to accommodate residents who require memory care.
This is the sponsor’s first Assisted Living project. GSP was able to structure a strategic partnership to boost the experience profile of the Sponsor. This was essential for the capital provider to get comfortable with the project.
The financing structure provides flexibility to the Sponsor; after an initial 18-month construction term, the Sponsor can extend the construction loan for 6 months. After construction, the loan converts to a 24-month bridge loan during lease up/stabilization for a total loan term of up to 4 years.
Interest Rate: Prime Rate + 0.50%
Term: 18-Month Construction Loan with 6 Month Extension Option (0.25% Extension Fee)
Converts to 24-Month Bridge Loan During Stabilization at No Additional Fee
Lender Origination Fee: 0.75%
Prepayment Penalty: None
January 12, 2022
George Smith Partners successfully placed construction-to-perm financing of $6,250,000 for the development of a 19-unit multifamily community in West Los Angeles, CA. The 4-story building will provide 1, 2 and 3-bedroom units in a supply-constrained submarket. The recourse loan provides for two-years of interest-only financing with a 6-month extension that converts to a perm loan with a combined term of 10 years. The starting rate is fixed for 7 years then amortizing. The loan represents 60% of stabilized value and 70% of cost and allows for open prepayment based on a prepayment fee of 2%,2%,1%,1% in years 1 to 4. The Project will be Type-V construction consisting of 4-stories, a rear 750 SF community courtyard, partial ground level and partial subterranean parking. Unit mix includes studio, one and two-bedroom units including two low-income units. All units include covered patios however non-studio units include larger than average outdoor living terraces that range from 130 to 193 SF. Community amenities include a rear courtyard with firepit lounge and BBQ grill. The units average 654 SF in size. The Project represents the Client’s second multifamily construction project. GSP was able to assist in bringing in a qualified general contractor and get the Lender comfortable with the Borrower’s ability to execute despite their limited development track record.
Rate: 3.6% Fixed 7-years
Term: 10 years
Amortization: Interest-Only Years 1-2 then 30-year amortization
Extensions: One 6-Month Option
Loan Fee: 1%
- Advisors: Alina Mardesich
$55,500,000 Debt and JV Equity Financing for a Ground-Up Single-Family Build-to-Rent Development; Tucson, AZ
January 12, 2022
George Smith Partners successfully secured a combined $55,500,000 in non-recourse debt and JV equity financing for the development of a ground-up, single-family, build-to-rent community in Tucson, AZ. Spanning 17.1 acres, the Project features 225 units across 168 stand-alone residential buildings and is part of a multi-phase master planned community (expected to span approximately 4,800 acres). The financing allowed for the acquisition of the development site and an anticipated groundbreaking in Q1 2022.
The Sponsor, a best-in-class homebuilder based in the Southwest, identified the site given its strategic proximity to Tucson’s fast-growing tech corridor. Build-to-rent communities have gained significant traction during a time where vacant rental units are being absorbed in less than 15 days in the Tucson submarket. The Sponsorship team recognized the substantial value behind the grand vision of the master planned community, supported by local knowledge and industry expertise in BTR developments. GSP was able to identify a non-recourse construction lender who not only understood the rapidly growing demand for rental units in a high-growth submarket, but also the Sponsor’s ability to execute on the business plan. GSP was also able to identify a joint venture equity partner that is actively targeting new investments in the BTR space nationwide.