$13,469,000 Refinance of 61-Unit “Broken Condo”, 6.5% Debt Yield, 7 Years Interest-Only; Oceanside, CA

Transaction Description:

George Smith Partners secured a $13,469,000 first mortgage for a 61-unit multifamily “broken-condominium” located in Oceanside, CA. The 61 garden style apartment units are a part of a larger 72-unit project which was originally built in 1972 and was mapped for condominiums in the mid-2000’s. Each of the 72 units were then upgraded and listed for sale to individual buyers in 2006. The original developer sold 11 units, the last of which closed escrow in early 2008.

Due to housing market conditions, the remaining 61 units were converted back to for-rent apartments and purchased by the current Sponsor in 2008 (after extensive renovation in 2006). Since the acquisition, the Sponsor has kept occupancy rates at or above market levels (currently 100% occupied) and has maintained the Property with necessary capital improvements over the years. With strong property management, the Sponsor has been able to keep tenant turnover at a minimum and as a result stabilized the Property cash flows. The non-recourse financing is fixed at a 3.52%, full term interest-only, 7-year term. The 60% LTV financing provided a return of all initial equity invested.