$14,370,000 Non-Recourse Bridge Financing for a Multifamily Asset; Los Angeles, CA

Transaction Description:

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.

Transaction Description:

George Smith Partners successfully arranged the cash-out refinance of a 200+ unit multifamily property. The loan is floating at a starting rate of 2.56% and allows the Sponsor to complete a value-add strategy to increase the NOI and refinance into a permanent loan at higher proceeds in 18-24 months.

While processing the loan, GSP worked with the Lender to understand the historical cash flow which was extremely choppy due to the inconsistent rent payments during the Covid-19 pandemic. The analysis resulted in a $3,000,000 increase to the loan amount and an additional year of interest only payments.

Transaction Description:

George Smith Partners placed a $41,100,000 Non-Recourse, stretch senior construction loan for the ground-up development of a 6-story micro unit/co-living project in Hollywood, California. When complete, the Project will consist of 180 fully furnished, all-inclusive micro units within 49 pods with an average micro unit size of 276 sf. The Project lies in an Opportunity Zone.

Several hurdles presented themselves such as concerns about the newness of the asset class and the availability of direct comparable properties. Also, the Sponsor had already begun excavation & shoring work which created challenges in obtaining full title insurance coverage.

GSP focused on the Project’s per micro unit price rather than a per pod price to get the Lender comfortable with comparable projects. Further attention was given to the Project’s affordability as each micro unit comes fully furnished with an all-inclusive rental rate. GSP also stressed the Project’s unparalleled location, walkability to every major amenity in Los Angeles, the number of local employer hubs, and significant demand drivers from transient tenants looking for fully furnished offerings. GSP worked with the title company to successfully resolve all title insurance challenges that were presented and executing a high-profile marketing campaign to ensure that the capital markets appropriately understood the unique asset type. The process also included structuring and marketing the deal with several different capital stack variations (including a concurrent separate marketing effort for an A/B structure) to find the best financing option for the transaction. These efforts resulted in a successfully expedited process with a close in approximately 45 days from entering application.

Transaction Description:

George Smith Partners successfully placed $21,000,000 in bridge financing for a 111-unit apartment community in St. Louis, Missouri that retired a high-leverage construction loan, funded a lease-up and operating reserve, converted from a recourse to non-recourse structure, materially lowered the Borrower’s cost of capital, and provided enough proceeds at close (100% of loan proceeds were released upon loan closing) to cash out 105% of the Borrower’s cost basis, although the Property was less than 10% occupied. The eighteen-month loan term provides the Borrower with time to stabilize and season the asset prior to either selling or refinancing it with long-term permanent debt in today’s low interest rate environment. GSP leveraged its expertise of the St. Louis market, long-standing lender relationships, and capital markets creativity to achieve the Borrower’s goals, which was primarily the maximum return of capital.

Transaction Description:

George Smith Partners secured a $15,500,000 bridge loan for three newly constructed, pre-Certificate of Occupancy multifamily assets located in Los Angeles, CA. The non-recourse loan provided significant cash-out proceeds to the sponsor, refinanced outstanding construction debt and capitalized construction completion costs. The loan is sized at 70% LTC on a 4.90% fixed rate, non-recourse, 12-month term. The loan did not require an interest reserve or capitalized carrying costs.

The loan is secured by three new construction multifamily assets in the Koreatown and Eagle Rock submarkets of Los Angeles, totaling 57 units, in various stages of completion. All will be complete by Q1 2021, with lease up occurring throughout the balance of 2021. Given COVID related delays and slower-than-anticipated leasing velocity, GSP was able to identify a lender comfortable with the high quality, new construction product, and the long-term stability of these submarkets. The loan closed three weeks from term sheet execution.

Transaction Description:

George Smith Partners successfully arranged $18,880,000 in permanent financing for a 192-unit multifamily community. The loan is fixed for 15 years at 3.03% with interest-only payments for the entire term and significant cash-out proceeds. Despite the severe impacts of the COVID-19 pandemic throughout the spring and summer, the Property was able to remain above 95% occupancy with minimal declines in rent collections. GSP capitalized on the Property’s quality, market resiliency, strength of the Sponsor and low leverage to attract quality offers from several lenders.