Don't Miss a Fact,
Sign Up for FINfacts!

FINfacts is a weekly newsletter highlighting recent financings and economic insights.

Subscribe Here

$14,250,000 ($229,839/unit) Cash-Out Permanent Financing for a 62-unit, Two-Property Multifamily Portfolio; Los Angeles, CA

Rate: 3.350% fixed for 7 years, converts to floating for remaining loan term
Term: 30 Years
LTV: 67%
Amortization: 5 Years Interest Only followed by 30 Year Amortization
Guaranty: Non-Recourse except for standard carve outs, “bad acts”, and environmental

Transaction Description:

George Smith Partners successfully placed $14,250,000 ($229,839/unit) in a cash-out, uncrossed (two loans) refinance of two multifamily properties totaling 62 units in Los Angeles, during the COVID-19 pandemic. The loan is fixed at rate of 3.350% for the first 7 years, then converts to a floating rate. Despite the economic uncertainty during the transaction, GSP leveraged the firm’s collective production and relationship with the Lender to close the loans with loan terms as originally structured. GSP worked the lender to diligently ensure a quick closing and to maximize proceeds while addressing COVID related concerns. Both properties had undergone extensive renovations and upgrades since the acquisition in 2018 and have maintained over 95% occupancy throughout 2020 despite the pandemic.

Advisors

Related Financings

  • $3,825,000 Cash-Out Permanent Financing for 30-Unit, Multifamily Property; Los Angeles, CA

    February 17, 2021

    Transaction Description:

    George Smith Partners arranged $3,825,000 in cash-out permanent financing (70% LTV) for the refinance of a 30-unit multifamily property located in Los Angeles, CA. The Sponsor used GSP with intentions of taking out their existing expensive lender. The Sponsor recently completed exterior and interior renovations including common area upgrades. The recent improvements allowed the Sponsor to increase rents thus increasing the value of the Property. GSP was able to provide the Sponsor with a 30-year term with the first 5 years being fixed at a very low rate. The rate will then reset every 5 years for the remainder of the term. Rather than most loans having a balloon payment in 5,7 or 10 years, this loan structure allows for flexibility because the loan matures in 30 years. The flexible prepayment structure is equal to 1.75% for the first 3 years, 1% for years 4 and 5, and 0% thereafter. The loan structure allows the Sponsor to refinance out of an expensive loan with a fixed rate of 3.15%, while also receiving cash out. The Sponsor is using cash-out proceeds to continue their business plan of purchasing and renovating additional properties.

    Rate: 3.15% (Fixed for 5 Years)
    Term: 30 Years
    LTV: 70%
    DCR: 1.20

  • $54,075,000 Perm at 3.01%, 15-Year Fixed with Cash Out, for a 173-Unit, Multifamily; Ventura, CA

    October 7, 2020

    Transaction Description:
    George Smith Partners has secured $54,075,000 in permanent financing for a newly completed and leased, 173-unit, luxury resort-style multifamily community in the city of Ventura, CA. The loan is fixed for 15 years at 3.01% with interest-only payments for the first 7 years and with cash out above the construction loan.

    Challenges:
    When GSP was initially engaged in January the Project’s final phase had yet to receive its certificate of occupancy. While overall leasing had been strong, its current occupancy was about 60%. The state-mandated COVID-19 stay-at-home orders slowed new leasing activity throughout the Spring. When initially taking the financing proposal to market, GSP faced both the occupancy issue as well as a new-found, COVID-19, lender conservatism which negatively impacted the potential loan terms.

    Solution:
    GSP continued to work throughout the Summer to make lenders comfortable with the resiliency of the Ventura market, the Property’s quality, as well as the Sponsor’s strength and long-term experience in the market. By late Spring the leasing program regained its pre-Coronavirus lockdown pace. With improving capital markets, GSP was able to narrow the field to the one lender that would provide the optimal combination of loan proceeds, term and rate. Upon reaching 85% leasing the Sponsor executed an early rate lock to hedge against potential swings in the Treasury prior to close. This occurred upon reaching 95% occupancy.

    Rate: 3.01% Fixed (T+ 2.49%)
    Term: 15 Years
    Amortization: 30 Years with 7 Years I/O
    LTV: 70%
    Guaranty: Non-Recourse