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

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

Subscribe Here

$15,800,000 Cash-Out Permanent Financing for a 47-Unit Multifamily Property, Fixed at 3.01% for 10 Years; Torrance, CA

Rate: 3.01%
Term: 10 Years
LTV: 65%
Amortization: Seven Years Interest Only; 30-Year Amort Thereafter
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners arranged $15,800,000 in permanent financing secured by a 47-unit garden-style, multifamily property located in Torrance, CA. The non-recourse loan carries a 3.01% fixed rate for 10 years with 7-years of interest only payments. The recapitalization provided significant cash-out to the Sponsor and reduced their previous interest rate considerably.

The Property had recently undergone an extensive renovation program and had limited seasoning on the new, higher rental rates achieved on the repositioned units. The Property did however, maintain stable occupancy and collections throughout 2020 despite COVID-19 regulations in California allowing tenants to defer rent payments.

Amidst a time of market volatility and economic uncertainty, GSP was able to leverage market interest to secure the most competitive terms available by focusing on the desirable location as well as the Sponsor’s track record and familiarity with the asset.

Advisors

Related Financings

  • Perm Debt – 10-Years Interest Only – Stabilized Multifamily; Los Angeles, CA

    March 24, 2021

    Transaction Description:

    George Smith Partners secured senior permanent financing for a stabilized multifamily property in Los Angeles, CA. The non-recourse debt totaling $12,300,000 was utilized to refinance existing debt and return equity to the Ownership. The loan was structured with a 10-year term and interest only payments for the full duration. The loan was collateralized by a Class-A 34-Unit multifamily building, the Subject was 94% leased at closing and located in a highly desirable West Los Angeles neighborhood.

    GSP selected a lender that was able to refinance the Sponsor’s existing debt, cover prepayment penalties and return a significant amount of equity to the Borrower, while simultaneously locking in interest only payments for the next ten years at a very desirable rate. GSP worked with the Lender to minimize debt service reserves while addressing Lender concerns for potential COVID related shortfalls; cash-out proceeds were secured on the loan despite several COVID related delinquencies.

    Rate: 3.43%
    Term: 10 years
    Max LTV: 65%
    Min DCR: 1.35x
    Amortization: None; 10-Years Interest Only
    Origination Fee: Par
    Prepayment: Yield Maintenance

  • $4,600,000 Cash Out Refinance of 38 Unit Multifamily Property; Fixed at 3.30% for 5 Years; Seattle, WA

    March 17, 2021

    Transaction Description:

    George Smith Partners secured $4,600,000 in proceeds for the cash-out refinance of a 38-unit multifamily property located near Seattle, WA. The Borrower has completed a value-add business plan over the past two years. The Lender gave full credit for the newly signed leases and higher net operating income at the Property. Only one month of stabilized operating history was required to underwrite to the in-place income. Proceeds were maximized by applying the debt coverage ratio constraint to the actual note rate, rather than using a higher underwriting rate.

    The previous loan was originated during a cyclical peak in interest rates and carried a note rate of 4.70%. The new refinance loan lowered the Borrower’s interest rate by 140 basis points while simultaneously providing a return of equity. Fixed at 3.30% for five years, the first three years are interest only before rolling into a 30-year amortization schedule.

     

    Rate: 3.30% fixed for 5 years, then floating at 1-year CMT + 2.75%
    Term: 10 years
    Amortization: 3 years Interest Only followed by 30-year amortization
    Prepayment Penalty: 3,2,1,1,1%
    LTV: 70%
    DCR: 1.25x
    Guaranty: Non-Recourse

  • $16,500,000 Senior Construction Financing, 79% LTC for 57-Unit Multifamily Development; Toluca Lake, CA

    March 3, 2021

    Transaction Description:

    George Smith Partners secured $16,500,000 of senior construction financing for the development of a 57-unit multifamily building in Toluca Lake, CA. The Sponsor purchased three contiguous lots with this development in mind. The combined land area of the lots allowed them to increase the density of the single-building Project.

    The uncertainty brought on by the pandemic had lenders heavily scrutinizing projected rental rates at completion. GSP secured a capital source that understood the long-term growth that the submarket should experience post-pandemic. The strong financial position of the Sponsor, along with the lengthy track record of the general contractor, helped to push the leverage up to 79% LTC. The financing allows the Sponsor to provide the area with quality rental housing, which is sorely needed in the undersupplied submarket.

    The recourse financing is priced at WSJ PRIME + 0.375% with a floor rate of 4.650%. The 18-month term is coupled with a 0.625% origination fee and is open to prepayment. There is also the ability to roll the construction loan into permanent financing at the option of the Sponsor. The rate cannot be locked until building stabilization but would be priced at 2.80% for a 5-year term at today’s rates.

    Rate: WSJ PRIME + 0.375% (4.650% Floor Rate)
    Term: 18 Months plus Two, 3-Month Extension Options
    Amortization: Interest Only
    LTC: 79%
    Prepayment: Open Prepayment
    Guaranty: Full Recourse
    Lender Fee: 0.625%

  • $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

  • 2.97% Fixed Rate for 75% LTV Refinance of Apartment Complex; Oregon City, OR

    February 17, 2021

    Transaction Description:

    George Smith Partners successfully obtained $6,487,000 of permanent debt for the refinance of a 43-unit apartment complex in Oregon City, OR. The unique property has a very low density for the area, appealing to residents who are looking for a less condensed living environment. The financing was secured after the Sponsor’s acquisition and renovation plan was implemented. The senior loan was able to provide the Sponsor with cash out above the original basis to return to investors. The 10-year loan is fixed at 2.97%. The financing, which is sized to 75% of appraised value, is non-recourse and carries 5 years of interest only.

    Rate: 2.97% Fixed
    Term: 10 Years
    Amortization: 30 Years
    Interest Only: 5 Years
    LTV: 75%
    Guaranty: Non-Recourse

  • $26,141,000 Permanent Debt – 12-Years Interest Only – Stabilized Multifamily; Los Angeles, CA

    February 10, 2021

    Transaction Description:

    George Smith Partners secured senior permanent financing for two stabilized multifamily properties in Los Angeles, CA. The two non-crossed loans totaling approximately $26,100,000 were utilized to refinance existing debt and return equity to the Sponsor. Each loan was collateralized by a stabilized multifamily property. The first asset was a 28-unit building that was 100% leased at closing and located in Culver City, CA while the second asset was a 46-unit building that was 97% leased at closing and located in Hollywood, CA. The loans were both structured with a twelve-year term and interest-only payments for the full duration.

    GSP secured a lender that was able to refinance the Sponsor’s existing debt, cover prepayment penalties and return equity while simultaneously lowering the Sponsor’s debt service payments for the next twelve years. GSP worked with the Lender to minimize debt service reserves while addressing lender concerns for potential COVID related shortfalls. Cash-out proceeds were secured on both loans despite two COVID related delinquencies. Lastly, the Sponsor was completing a complicated partnership dissolution. GSP insured the Lender accommodated the Sponsor’s timeline with an accelerated no-cost rate-lock and an extended closing period.

    Rate: 3.00%
    Term: 12 Years
    Amortization: 12 Years Interest Only
    Min DSCR: 1.35x
    Max LTV: 65%
    Loan Fee: Par
    Personal Guaranty: None
    Prepayment: Yield Maintenance