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$16,500,000 Bridge Refinance for 173-Unit Multifamily Property; Sunnyvale, CA

Rate: 5.9% Fixed in Year 1; 6.9% in Year 2
Term: 12 Months + Extension Option for 12 Months
Lender Fee: 1% + 1% Extension
Amortization: Interest Only
LTV: 30%
Prepayment: Prepayable without penalty
Recourse: Non-Recourse

Transaction Description:

George Smith Partners secured a $16,500,000 loan for a 173-unit multifamily property in Sunnyvale, CA. The first mortgage has a 12-month term at 5.9% with no prepayment penalty. The loan may be extended for an additional 12 months at 6.9%. The Sponsor developed the Property and has owned it for over 40 years. In the past year, occupancy and collections were negatively affected by COVID-19’s effects on tenants’ ability to pay rent. Occupancy was also negatively affected by the significant upgrades and renovations made to a much larger neighboring property which undertook an aggressive post-renovation releasing program. The Sponsor engaged GSP to supply a quick-close solution when the existing lender declined to renew its loan. Unlike most lenders, GSP’s Lender did not require reserves for potential COVID rental interruptions and closed within 10 days of the issuance of its term sheet without requiring an appraisal or other third-party reports.


Related Financings

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    February 3, 2021

    Transaction Description:

    George Smith Partners secured an $83,000,000 senior bridge loan for the construction completion and lease up of a mixed-use community consisting of 250 multifamily units and 6,600 SF of ground-floor retail in the San Fernando Valley, just north of Los Angeles, CA. The non-recourse bridge financing carries a three-year term at LIBOR + 5.00%, reducing to LIBOR + 4.50% upon the Project’s receipt of Certificate of Occupancy.

    The loan provides proceeds for construction completion – anticipated to complete in early 2021 – while allowing for an extended lease up period prior to stabilization. The strength and track record of the Sponsor, coupled with the centralized location within the San Fernando Valley, ensured that the Project would complete and stabilize as anticipated.

    Rate: L+500 until construction completion, reducing to L+450 thereafter
    Term: 3-year with two 1-year extensions
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    LTV: 75.0%
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    Guaranty: Non-Recourse

  • $39,500,000 Non-Recourse Bridge Financing for a 148-Unit Multifamily Acquisition, Mid-Conversion from Office to Multifamily; Santa Ana, CA

    January 6, 2021

    Transaction Description:

    George Smith Partners arranged $39,500,000 in non-recourse financing for the acquisition of a vacant 10-story office building, currently mid-conversion to a 148-unit, Class-A multifamily building. The Property is the only high-rise apartment building in Downtown Santa Ana. The financing allows the Sponsor to complete the conversion, stabilize the Property, and refinance into long-term permanent debt. While the apartment market is very strong in Downtown Santa Ana, there are no other high-rise apartment buildings and no direct comparable properties. Not only did the Lender have to get comfortable with the construction completion, they also had to get comfortable with a new product type in this market.

    GSP identified a local lender that not only understood the market and demand for multifamily but was comfortable with the Sponsor’s ability to step-in and complete the conversion.

    Rate: LIBOR + 7.00%
    Term: 18 Months
    LTV: 77%
    LTC: 74%
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  • $15,500,000 Non-Recourse Bridge Financing for a Mid-Construction 3-Property Multifamily Portfolio; Los Angeles, CA

    December 16, 2020

    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.

    Rate: 4.90% Fixed
    Term: 12 Month
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  • $4,700,000 Non-Recourse, Bridge Financing for Mid-Construction Apartment Project; Pico-Robertson Area of Los Angeles, CA

    November 18, 2020

    Transaction Description:

    George Smith Partners arranged $4,700,000 in non-recourse, bridge financing for an 85% complete, 13-unit apartment project in the Pico-Robertson area of Los Angeles, CA. Despite marketing this deal as a construction take-out loan for an 85% complete project during the global pandemic, GSP successfully engaged a debt fund to take out the existing construction loan with additional funds to complete construction. The non-recourse bridge facility was priced at an interest-only rate of 5.90% with a 12-month term plus a 12-month extension option. Thanks to GSP’s long-standing relationship with this debt fund, we were able to close this transaction in just 8 business days.

    Rate: 5.90% Interest Only
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  • $8,152,500 Conversion to Co-Living, 68% LTC, Heavy-Lift Bridge-to Perm Loan; San Francisco, CA

    November 11, 2020

    Transaction Description:
    George Smith Partners placed the $8,152,500 bridge-to-mini perm loan for the conversion of an existing 12-unit multi-family community into a 17-unit 44-bed co-living community. The 68% LTC bridge loan converts to a 5-year mini-perm loan fixed at CMT + 2.5% with a 3.75% floor.

    The Project came to GSP half-way through construction and was being funded by a lender that had filed bankruptcy with proceeds that were insufficient to complete the new business plan. GSP put the loan under application pre-COVID with a new business plan that included (as a condition in closing) approvals for a 4th floor penthouse/useable roof top level. While in application, the construction and the penthouse level approval process came to a halt due to COVID causing stress on both the existing loan (nearing maturity) as well as the new loan underwriting. The challenges associated with co-living as a new asset class resulted in additional scrutinization from the new lender as well as the appraisal which had a negative impact on value. GSP was able to resolve the valuation issues by successfully arguing the merits of the Project as well as successfully negotiating a waiver of the exit fee on the previous loan which resulted in zero impact to the loan proceeds and the Borrower’s out of pocket cash required at closing.

    Construction Loan:

    Rate: Prime plus 1% with 5% floor
    Term: 18 Months
    LTC: 68%
    LTV: 65%

    Mini-perm Loan:

    Rate: CMT + 2.25% with 3.75% floor
    Term: 5 Years
    Amortization: 30 years
    Prepayment: 5, 4, 3, 2, 1 open

  • $16,100,000 Non-Recourse Acquisition Bridge Financing for a 30-Unit Trophy Multifamily Value-Added Project; West Los Angeles, CA

    October 14, 2020

    Transaction Description:

    George Smith Partners arranged $16,100,000 in non-recourse, acquisition bridge financing on a 30-unit trophy multifamily property in West Los Angeles, California. The Property featured significant below-market rents, deferred maintenance, and physical vacancy (in part due to roommates that decided to downsize in light of COVID-19). The value-add business plan will involve a large capital expenditure budget to renovate the Property’s exterior and units, and reposition the asset utilizing a specialist property manager focused on providing family-oriented housing product with amenities like technology integration, childcare services, and community programming. The Sponsor’s expertise coupled with the Property’s trophy location created a competitive lending environment despite the ongoing pandemic. GSP ran a robust process including marketing the deal to over 70 lenders and fielding multiple lender proposals. The non-recourse financing was sized to 70% LTC and featured a rate of 1-Month Libor plus 500 basis points for a three-year term plus extensions.

    Rate: 1-Month Libor + 500 basis points
    Term: 36-month term with two 6-month extension options (6.00% floor rate)
    LTV: 70%
    Guaranty: Non-Recourse